Why inflation may respond faster to big shocks: The rise of state-dependent pricing

Inflatie

Macroeconomic models distinguish time-dependent pricing, where firms change prices at fixed intervals, from state-dependent pricing, where firms change prices in response to changing demand or costs. This column presents new evidence on how firms set prices using direct questions from a large, economy-wide survey of UK firms. State-dependent pricing has increased since 2019 and is more common in smaller firms, those with higher non-labour costs, and those reporting higher uncertainty.

Tag-uri: Inflatie

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