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 recent discussions, Bagus and Howden (2012) argue that price stickiness is a poor justification for advocating a flexible supply of money.
We show that increasing price stickiness in a model with deep habits hinders the crowding-in of consumption.
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.
This paper considers a closed economy version of DSGE model with various nominal frictions vis-a-vis monetary- cum-fiscal blocks to seek the basic query that how monetary policy impacts while in the presence of nominal frictions, like price stickiness, staggered wages, etc.
During the 1960s, theories based on assumptions of widespread wage and price stickiness dominated the landscape.
The parameter [theta] measures the degree of price stickiness.
As I will discuss, both of them emphasized simultaneous wage and price stickiness.
As Cukierman points out, policy analyses using models based on price stickiness, which encompass most new open-economic macrotheories, assume that prices are set before monetary policy decisions take place and fail to adjust simply because of the assumed price stickiness, presumably due to menu costs.
Chapters 10 and 11 deal with Hawtrey, Harvard and Chicago, and the delightfully irreverent chapter 12 on the long history of wage and price stickiness in the macroeconomic literature from Hume to Pigou proves that while New Classical Economics may indeed be New, it certainly is not Classical.
The authors argue that both price stickiness and the existence of non-Ricardian consumers are necessary for an increase in government spending to raise consumption.
Finally, some types of market frictions are less problematic with electronic commerce, such as price stickiness, due to menu costs.