COMPARISON OF PRICING BEHAVIOR OF FIRMS
IN THE EURO AREA AND ESTONIA
Aurelijus Dabušinskas
Martti Randveer*
Working Papers of Eesti Pank
No 8, 2006
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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@epbe.ee, martti.randveer@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
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