External rigidity is behind lumpy price adjustment
External rigidity, not infrequent price changes, is the reason for large adjustment costs, research published by the Banque de France finds.
Asymmetry in price adjustments could also be due to trends in marginal costs and/or desired mark-ups rather than asymmetric cost of adjustment bands.
The paper uses a simple model of state-dependent pricing that allows identification of the relative importance of the degree of price rigidity that is inherent to the price setting mechanism and that which is
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