This paper documents five stylised facts relating to price adjustment in the euro area, using various micro price datasets collected in a period with relatively low and stable inflation. First, price changes are infrequent in the core sectors. On average, 12% of consumer prices change each...

We report the results of surveys we conducted in the US and Israel in 2020, a time when many prices increased following the spread of the COVID-19 pandemic. To assess respondents’ fairness perceptions of price increases, we focus on goods whose prices have increased during the pandemic,...

We test the predictions of the sticky information model using a survey dataset by comparing the shoppers’ accuracy in recalling the prices of regulated and comparable unregulated products. Regulated product prices change less frequently, vary less across stores and between brands, and are sold...

When and under what circumstances might people interpret a price increase as fair and acceptable is an important question in behavioral economics. We report the results of surveys we conducted in the US and Israel in 2020, a time when many prices increased following the spread of the COVID-19...

We test the predictions of the sticky information model using a survey dataset by comparing shoppers' accuracy in recalling the prices of regulated and comparable unregulated products. Because regulated product prices are capped, they are sold more than comparable unregulated products, while...

We examine how macroeconomic news affects firms' extensive-margin price-setting plans in a survey that we rolled out with randomized daily invitations. These plans predict future realized inflation. Using a high-frequency event study framework, we find that inflation and employment surprises...

Studies of micro-level price datasets find more frequent small price increases than decreases, which can be explained by consumer inattention because time-constrained shoppers might ignore small price changes. Recent empirical studies of the link between shopping behavior and price attention...

We characterize optimal monetary policy under state-dependent pricing. The framework gives rise to nonlinear inflation dynamics: The flexibility of the price level increases after large shocks due to an endogenous rise in the frequency of price changes. In response to large cost-push shocks,...

We assess the role of cognitive convenience in the popularity and rigidity of 0-ending prices in convenience settings. Studies show that 0-ending prices are common at convenience stores because of the transaction convenience that 0-ending prices offer. Using a large store-level retail CPI data,...

We document that about 33% of the core inflation basket in the euro area is sensitive to monetary policy shocks. We assess potential theoretical mechanisms driving the sensitivity. Our results suggest that items of a discretionary nature, as reflected in a higher share in the consumption baskets...

Many central banks worldwide announce numerical inflation targets, typically ranging from zero to two percent in advanced economies and higher in developing countries. Historically, a significant gap existed between the inflation targets pursued by central banks and those recommended by academic...

We study Israel's "price rounding regulation" of January 1, 2014, which outlawed non-0-ending prices, forcing retailers to round 9-ending prices, which in many stores comprised 60%+ of all prices. The regulation's goals were to eliminate (1) the rounding tax-the extra amount consumers paid...

The recent unprecedented global inflation has focussed attention on the supply side inflation dynamics, The Indian inflation episodes, however, have been largely associated with supply shortages and, on average, remained elevated through the last four decades, with different policy phases...

We study the global dynamics of the fully stochastic nonlinear version of the New Keynesian model and analyze the efficacy of various policies as equilibrium selection tools in this context. First, we unveil a new class of equilibria, characterized by selffulfilled beliefs about output...

In this paper we model monthly UK inflation and find that there is some small but significant autocorrelation, particularly at 12 months. We find that this autocorrelation in monthly inflation leads to significant persistence in the headline annual inflation figure. A one-off shock to monthly...