price stickiness

price stickiness

the tendency for PRICES to adjust slowly in response to EXCESS SUPPLY and EXCESS DEMAND in product markets.

Price stickiness is often encountered in oligopolistic markets where interdependence between suppliers makes each supplier cautious about making price changes. See OLIGOPOLY, KINKED DEMAND CURVE.

References in periodicals archive ?
In this section, I demonstrate that when the exchange rate changes by the same magnitude as the BAT--that is, [epsilon]'/[epsilon] = (1 - [tau])--then two forms of price stickiness, namely, producer currency pricing and local currency pricing, maintain neutrality, while a third, dollar currency pricing, which arguably is a more realistic description of price stickiness in international trade, leads to a breakdown of neutrality.
If the adjustment in the prices of goods and services is slow due to price stickiness or other frictions, the fall in the relative price of non-traded goods would take place gradually.
They find that the aggregate inflation dynamics are mainly determined by the inflation dynamics of the durable goods sector, irrelevant of its size and price stickiness. One puzzle that they encountered is that output in different sectors is negatively correlated in response to a monetary policy shock, which is inconsistent with empirical findings.
In recent discussions, Bagus and Howden (2012) argue that price stickiness is a poor justification for advocating a flexible supply of money.
Carvalho, "Heterogeneity in Price Stickiness and the New Keynesian Phillips Curve," B.E.
We show that increasing price stickiness in a model with deep habits hinders the crowding-in of consumption.
In the real-business-cycle tradition, cyclical fluctuations arise from productivity shocks passed on to the real economy through a well-functioning price system devoid of monetary nonneutralities and nominal price stickiness. Of course, only the first two horses contended in the debate during the Great Inflation.
But, in the case of the euro crisis, price stickiness caused inflation to increase more in debtor countries than in creditor countries, making adjustment even more painful.
Key risks to our view are (1) steep decline in crude prices and base oil price stickiness in local market in line with the trend seen in 2008, (2) NRL not passing down the impact of potential cut in Federal Excise Duty (FED) on base oil.
When exporters set prices in their native currency and there is nominal price stickiness, in that case exchange rate movements will change a country's terms of trade (Engel, 2009).
The main focus of this paper is the study of Keynes's theory of liquidity preference and his analysis of price stickiness. In this paper I am particularly interested in exploring the existence of behavioral insights in Keynes's work, his monetary theory of the rate of interest, and his revolutionary logical analysis of an entrepreneurial economy.