8/2006 Aurelijus Dabušinskas ja Martti Randveer. Comparison of pricing behavior of firms in the euro area and Estonia

Working Papers of Eesti Pank. No 8, 2006

In this paper, we review the price setting survey of Estonian firms and compare our findings with the results of similar research in the euro area summarized by Fabiani et al. (2005). Generally, the price setting patterns that emerge from our survey are quite similar to those in the euro zone. There is some evidence, however, that price setting may be somewhat more flexible in Estonia. The findings that suggest more price flexibility in Estonia are as follows: the incidence of time-dependent pricing is lower, the share of firms that are price takers is larger, price changes are more frequent, and, finally, the speed of price adjustments to shocks is higher.
JEL Code: E30, D40
Key words: price setting, nominal rigidity, in.ation persistence, price survey

* We thank the staff of the Estonian Institute of Economic Research (EKI) for helping to design the questionnaire and conducting the survey. We are particularly grateful to Evelin Ahermaa and Marje Josing as well as Kiira Martens, Aet Vanamölder, Lia Lepane, Viivika Savina, Annika Hansman, Merje Kelgo, Bruno Pulver, and Mati Reiman. We also thank Karsten Staehr and Eesti Pank's public seminar and Baltic States Central Banks' seminar participants for their comments and suggestions. The usual disclaimer applies.

Authors' e-mail addresses: aurelijus.dabusinskas [at] epbe.ee, martti.randveer [at] epbe.ee

The views expressed are those of the authors and do not necessarily represent the official views of Eesti Pank.

Contents

1. Introduction
2. General information about the firm and its market
3. Price reviews
4. Price changes
5. Price stickiness
6. Determinants of price changes
7. Conclusions
References
Appendices
Appendix 1. Stylized facts
Appendix 2. Questionnaire

Comparison of Pricing Behavior of Firms in the Euro Area and Estonia, Working Papers of Eesti Pank No 8/2006 (PDF*)

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