TY  - JOUR
AU  - Bils,Mark
AU  - Klenow,Peter J.
TI  - Some Evidence on the Importance of Sticky Prices
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 9069
PY  - 2002
Y2  - July 2002
UR  - http://www.nber.org/papers/w9069
L1  - http://www.nber.org/papers/w9069.pdf
N1  - Author contact info:
Mark Bils
Department of Economics
University of Rochester
Rochester, NY 14627
Tel: 585/275-0488
Fax: 585/256-2309
E-Mail: bils@troi.cc.rochester.edu

Peter J. Klenow
Department of Economics
579 Serra Mall
Stanford University
Stanford, CA  94305-6072
Tel: 650/725-8169
Fax: NA
E-Mail: Pete@Klenow.net
AB  - We examine the frequency of price changes for 350 categories of goods and services covering about 70% of consumer spending, based on unpublished data from the BLS for 1995 to 1997.  Compared with previous studies we find much more frequent price changes, with half of prices lasting less than 4.3 months.  The frequency of price changes differs dramatically across categories.  We exploit this variation to ask how inflation for 'flexible-price goods' (goods with frequent changes in individual prices) differs from inflation for 'sticky-price goods' (those displaying infrequent price changes).  Compared to the predictions of popular sticky price models, actual inflation rates are far more volatile and transient, particularly for sticky-price goods.  The data appendix for this paper can be found at http://www.nber.org/data-appendix/w9069/
ER  -