The Price-Setting Behavior of Austrian Firms: Some Survey Evidence
68 Pages Posted: 20 May 2005
Date Written: March 2005
This paper explores the price-setting behavior of Austrian firms based on survey evidence. Our main result is that customer relationships are a major source of price stickiness in the Austrian economy. We also find that the majority of firms in our sample follows a time-dependent pricing strategy. However, a substantial fraction of firms deviates from time-dependent pricing in the case of large shocks and switches to a state-dependent pricing strategy. In addition, we present evidence suggesting that the price response to various shocks is subject to asymmetries.
Keywords: Price-setting behavior, Price rigidity
JEL Classification: C25, E30
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