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What a difference a decade makes - survey evidence from Icelandic firms

Author

Listed:
  • Adalheidur O. Gudlaugsdottir
  • Karen A. Vignisdottir
  • Lilja S. Kro

Abstract

Understanding firms' price-setting behaviour is of vital importance for central banks charged with maintaining price stability. This paper presents the results of a survey conducted among Icelandic firms in 2019, following a period of relative price stability, and contrasts it with the results from an almost identical survey taken in 2008, during a period of extreme volatility and uncertainty. The survey responses show that firms both review and change their prices less frequently in 2019 than they did in 2008. Furthermore, respondents indicate that the impact of changes in the exchange rate on pricing decisions is more symmetric than before, as firms are likelier to lower their prices following a currency appreciation, and a larger share of them report that a sizeable depreciation would be needed to prompt them to raise prices.

Suggested Citation

  • Adalheidur O. Gudlaugsdottir & Karen A. Vignisdottir & Lilja S. Kro, 2022. "What a difference a decade makes - survey evidence from Icelandic firms," Economics wp90, Department of Economics, Central bank of Iceland.
    • Handle: RePEc:ice:wpaper:wp90
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    More about this item

    JEL classification:

    • D40 - Microeconomics - - Market Structure, Pricing, and Design - - - General
    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms

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