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Pricing Decisions in the Euro Area
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Pricing Decisions in the Euro Area: How Firms Set Prices and Why

Silvia Fabiani, Claire Suzanne Loupias, Fernando Manuel Monteiro Martins, and Roberto Sabbatini

Abstract

Theoretical research undertaken over the last decades showed that the nature of nominal rigidities plays a key role in determining the effects of different shocks on the economy. This research has made clear that a thorough understanding of the extent and causes of the sluggish adjustment of nominal prices is crucial to the design and conduct of monetary policy. This book presents the main results of a research program undertaken by the Eurosystem central banks on price setting decisions by firms in the euro area. Its objective is to deepen our understanding of the behavioral mechanisms drivin ... More

Keywords: Price setting, euro area firms, nominal rigidities, survey data, monetary policy, producer prices, consumer prices

Bibliographic Information

Print publication date: 2007 Print ISBN-13: 9780195309287
Published to Oxford Scholarship Online: September 2007 DOI:10.1093/acprof:oso/9780195309287.001.0001

Authors

Affiliations are at time of print publication.

Silvia Fabiani, editor
Bank of Italy

Claire Suzanne Loupias, editor
Bank of France

Fernando Manuel Monteiro Martins, editor
Bank of Portugal

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Contents

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Introduction

Silvia Fabiani, Claire Loupias, Fernando Martins, and Roberto Sabbatini

Part I Firms' Pricing Behavior in the Euro Area: An Overview

1 The Use of Survey Data to Investigate Price Setting

Stephen G. Cecchetti, Fernando Martins, Roberto Sabbatini, and Harald Stahl

2 Summary of Results for the Euro Area

Silvia Fabiani, Claire Loupias, Martine Druant, Ignacio Hernando, Claudia Kwapil, Bettina Landau, Fernando Martins, Thomas Mathä, Sabbatini Roberto, Harald Stahl, and Ad Stokman

Part II Country-Specific Findings

3 Price Reactions to Demand and Cost Shocks

Claudia Kwapil, Josef Baumgartner, and Johann Scharler

4 Why Are Prices Sticky?

Luc Aucremanne, and Martine Druant

5 Asymmetries in Price Setting

Claire Loupias, and Roland Ricart

7 The Pricing Behavior of Italian Firms

Silvia Fabiani, Angela Gattulli, and Roberto Sabbatini

8 A Survey of Price Setting Practices of Luxembourg Firms

Patrick Lünnemann, and Thomas Mathä

9 The Pricing Behavior of Dutch Firms

Marco Hoeberichts, and Ad Stokman

11 The Pricing Behavior of Spanish Firms

Luis J. Álvarez, and Ignacio Hernando

Part III Comparative Analysis

12 A Comparison Based on International Survey Evidence

Patrick Lünnemann, and Thomas Mathä

13 Competition and Price Adjustment in the Euro Area

Luis J. Álvarez, and Ignacio Hernando

14 What Quantitative Micro Data Reveal about Price Setting Behavior

Roberto Sabbatini, Luis J. Álvarez, Emmanuel Dhyne, Marco Hoeberichts, Hervé Le Bihan, Patrick Lünnemann, Fernando Martins, Fabio Rumler, Harald Stahl, Philip Vermeulen, Giovanni Veronese, and Jouko Vilmunen

Part IV Concluding Remarks and Implications

15 Policy Lessons and Directions for Ongoing Research

Vítor Gaspar, Andrew Levin, Fernando Martins, and Frank Smets