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:: Volume 8, Issue 1 (Winter 2013) ::
3 2013, 8(1): 75-108 Back to browse issues page
Price Setting in Iran: Some Stylized Facts from CPI Micro Data
Maryam Hemmaty , Saeed Bayat
Researcher and Ph.D. Student of Economics MBRI
Abstract:   (2284 Views)

Understanding the degree of price stickiness and the nature of price setting is necessary for analyzing the effects of monetary policy on economy. To the best of our knowledge, no comprehensive study has examined the degree of price stickiness in Iran yet. For this reason, we examine the basic features of retail price setting behavior using a large data set containing the micro data underlying the construction of the CPI over the period 2004:5 to 2011:9. First we calculate the frequency and size of price changes for 359 categories of consumer goods and services in order to obtain the degree of nominal rigidity of consumer prices. We then investigate what models of price setting, including time dependent and state dependent models, are more consistent with price adjustment pattern in Iran. Based on our results, Consumer prices are highly flexible and there is a high degree of downward rigidity. Also, there is a considerable amount of heterogeneity across sectors both in terms of the frequency and size of price changes. The methods used in this paper for identifying the pattern of pricing supports the existence of both time and state-dependent pricing patterns.

JEL Classification: E30, E31, E5

Received: 9/22/2013                     Approved: 12/26/2013

Keywords: Price rigidity, Price setting, Frequency of price changes, Duration, State dependent pricing models, Hazard function
Full-Text [PDF 971 kb]   (1170 Downloads)    
Type of Study: Research | Subject: Economics
Received: 2014/10/1 | Accepted: 2014/10/1 | Published: 2014/10/1
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Hemmaty M, Bayat S. Price Setting in Iran: Some Stylized Facts from CPI Micro Data. 3. 2013; 8 (1) :75-108
URL: http://jme.mbri.ac.ir/article-1-85-en.html


Volume 8, Issue 1 (Winter 2013) Back to browse issues page
Journal of Money and Economy Journal of Money And Economy
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