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Consumer price behaviour: evidence from Luxembourg micro data

Author

Listed:
  • Patrick Lünnemann

    (Banque centrale du Luxembourg, Economics and Research Department, 2, boulevard Royal, L-2983 Luxembourg)

  • Thomas Y. Mathä

    (Banque centrale du Luxembourg, Economics and Research Department, 2, boulevard Royal, L-2983 Luxembourg)

Abstract

We analyse micro-level consumer price data in Luxembourg with a particular view on price change reversals and wage indexation. The median duration is roughly 8 months. On an average, price decreases are as large as price increases. With the exception of services, individual prices do not show signs of downward rigidity. Excluding price change reversals reduces the weighted frequency of price change from 17 to 12%. Accumulated price and wage inflation, automatic wage indexation, and the cash changeover increase the probability of a price change, whereas pricing at attractive pricing points and price regulation have the opposite effect. Copyright © 2010 John Wiley & Sons, Ltd.

Suggested Citation

  • Patrick Lünnemann & Thomas Y. Mathä, 2010. "Consumer price behaviour: evidence from Luxembourg micro data," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 31(2-3), pages 177-192.
    • Handle: RePEc:wly:mgtdec:v:31:y:2010:i:2-3:p:177-192
    DOI: 10.1002/mde.1490
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    More about this item

    JEL classification:

    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • C41 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Duration Analysis; Optimal Timing Strategies

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