Price Setting Policy Determinants: Micro Evidence from Brazil

Informações

Código: FIN1948
Divisão: FIN - Finanças
Tema de Interesse: FIN-B - Finanças Corporativas

Autores

Marcelo Leite de Moura e Silva

Resumo

The paper studies frequency of price changes from a survey data on Brazilian companies. Thedata set has the advantage of including all the economic sectors: agricultural and foodproducts, trading, industry and services. Strong evidence of price nominal rigidities is foundon the data with average and median price durations around 10.1 and 8.1 months, which isvery close to results reported for the euro area and the United States. Using econometricmodeling through an ordered probit we find that price change duration is mostly explained bythe degree of competition, product specialization, firm size and economic sector dummies.The empirical results refute somewhat common used macroeconomic modeling for monetarypolicy evaluation, particularly those models that rely heavily on time-independent andhomogenous pricing rules. Those results shed light on some necessary stylized facts that amacroeconomic pricing setting model would need to reproduce.

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