Why Are Prices Sticky? The Dynamics of Wholesale Gasoline Prices

Journal of Money, Credit and Banking

Volumn 36, Issue 1, 2004, Pages 17-37

  Davis, Michael C ^a   Hamilton, James D ^b  

^a MISSOURI UNIVERSITY OF SCIENCE AND TECHNOLOGY   (United States)

^b UNIVERSITY OF CALIFORNIA   (United States)

Author keywords

Menu cost; Price adjustment; Sticky prices

Indexed keywords

EID: 1642325175     PISSN: 00222879     EISSN: None     Source Type: Journal    
DOI: 10.1353/mcb.2004.0003     Document Type: Review

References (58)

1. Aguirregabiria, Victor (1999). "The Dynamics of Markups and Inventories in Retailing Firms." Review of Economic Studies 66, 275-308.
2. Balke, Nathan S., Stephen P.A. Brown, and Mine K. Yucel (1998). "Crude Oil and Gasoline Prices: An Asymmetric Relationship?" Federal Reserve Bank of Dallas Economic Review First Quarter, 2-11.
3. Ball, Laurence, and Gregory N. Mankiw (1994). "Asymmetric Price Adjustment and Economic Fluctuations." Economic Journal 104, 247-261.
4. Barro, Robert J. (1972). "A Theory of Monopolistic Price Adjustment." Review of Economic Studies 39, 17-26.
5. Benabou, Roland (1988). "Search, Price Setting and Inflation." Review of Economic Studies 55, 353-376.
6. Benabou, Roland (1992). "Inflation and Markups: Theories and Evidence from the Retail Trade Sector." European Economic Review 36, 566-574.
7. Bennett, John, and Manfredi M.A. La Manna (2001). "Reversing the Keynesian Asymmetry." American Economic Review 91, 1556-1563.
8. Bils, Mark, and Peter J. Klenow (2002). "Some Evidence on the Importance of Sticky Prices." University of Rochester Working Paper.
9. Blanchard, Olivier, and Nobu Kiyotaki (1987). "Monopolistic Competition and the Effects of Aggregate Demand." American Economic Review 77, 647-666.
10. Blinder, Alan S., Elie R. Canetti, David E. Lebow, and Jeremy B. Rudd (1998). Asking About Prices. New York: Russell Sage Foundation.
11. Borenstein, Severin, and Andrea Shepard (2002). "Sticky Prices, Inventories, and Market Power in Wholesale Gasoline Markets." RAND Journal of Economics 33, 116-139.
12. Borenstein, Severin, A. Colin Cameron, and Richard Gilbert (1997). "Do Gasoline Prices Respond Asymmetrically to Crude Oil Price Changes?" Quarterly Journal of Economics 112, 305-339.
13. Calvo, Guillermo A. (1983). "Staggered Prices in a Utility-Maximizing Framework." Journal of Monetary Economics 12, 383-398.
14. Carlson, John A. (1992). "Some Evidence on Lump Sum Versus Convex Costs of Changing Prices." Economic Inquiry 30, 322-331.
15. Carlton, Dennis W. (1986). "The Rigidity of Prices." American Economic Review 76, 637-658.
16. Cecchetti, Stephen G. (1986). "The Frequency of Price Adjustment: A Study of the Newsstand Prices of Magazines." Journal of Econometrics 31, 255-274.
17. Chalkley, Martin (1997). "An Explicit Solution for Dynamic Menu Costs with Zero Discounting." Economic Letters 57, 189-195.
18. Dahlby, Bev (1992). "Price Adjustment in an Automobile Insurance Market: A Test of the Sheshinski-Weiss Model." Canadian Journal of Economics 25, 564-583.
19. Danzinger, Leif (1999). "A Dynamic Economy with Costly Price Adjustments." American Economic Review 89, 878-901.
20. Dixit, Avinash (1991). "Analytical Approximations in Models of Hysteresis." Review of Economic Studies 58, 141-151.
21. Dutta, Shantanu, Mark Bergen, Daniel Levy, and Robert Venable (1999). "Menu Costs, Posted Prices, and Multiproduct Retailers." Journal of Money, Credit, and Banking 31, 683-703.
22. Eden, Benjamin (1990). "Marginal Cost Pricing When Spot Markets are Complete." Journal of Political Economy 98, 1293-1306.
23. Eden, Benjamin (2001). "Inflation and Price Adjustment: An Analysis of Microdata." Review of Economic Dynamics 4, 607-636.
24. Engle, Robert F., and Jeffrey Russell (1997). "Forecasting the Frequency of Changes in Quoted Foreign Exchange Prices with the Autoregressive Conditional Duration Model." Journal of Empirical Finance 4, 187-212.
25. Engle, Robert F., and Jeffrey Russell (1998). "Autoregressive Conditional Duration: A New Model for Irregularly Spaced Transaction Data. " Econometrica 66, 1127-1162.
26. Fama, Eugene (1970). "Efficient Capital Markets: A Review of Theory and Empirical Work." Journal of Finance 25, 383-417.
27. Galí, Jordi, and Mark Gertler (1999). "Inflation Dynamics: A Structural Econometric Analysis." Journal of Monetary Economics 44, 195-222.
28. Godby, Rob, Anastasia Lintner, Thanasis Stengos, and Bo Wandschneider (2000). "Testing for Asymmetric Pricing in the Canadian Retail Gasoline Market." Energy Economics 22, 349-368.
29. Hall, Simon, Mark Walsh, and Anthony Yates (2000). "Are UK Companies' Prices Sticky?" Oxford Economic Papers 52, 425-446.
30. Hamilton, James D., and Oscar Jorda (2002). "A Model for the Federal Funds Rate Target." Journal of Political Economy 110, 1135-1167.
31. Hansen, Per Svejstrup (1999). "Frequent Price Changes Under Menu Costs." Journal of Economic Dynamics and Control 23, 1065-1076.
32. Henly, John, Simon Potter, and Robert Town (1996). "Price Rigidity, the Firm, and the Market: Evidence from the Wholesale Gasoline Industry During the Iraqi Invasion of Kuwait." Federal Reserve Bank of New York Working Paper.
33. Karrenbrock, Jeffrey D. (1991). "The Behavior of Retail Gasoline Prices: Symmetric or Not?" Federal Reserve Bank of St. Louis Review (July/August 1991), 19-29.
34. Kashyap, Anil K. (1995). "Sticky Prices: New Evidence from Retail Catalogs." Quarterly Journal of Economics 110, 245-274.
35. Konieczny, Jerzy D. (1993). "Variable Price Adjustment Costs." Economic Inquiry 31, 488-498.
36. Lach, Saul, and Daniel Tsiddon (1992). "The Behavior of Prices and Inflation: An Empirical Analysis of Disaggregate Price Data." Journal of Political Economy 100, 349-389.
37. Levy, Daniel, Shantanu Dutta, and Mark Bergen (2002). "Heterogeneity in Price Rigidity: Evidence from a Case Study Using Microlevel Data." Journal of Money, Credit, and Banking 34, 197-220.
38. Levy, Daniel, Mark Bergen, Shantanu Dutta, and Robert Venable (1997). "The Magnitude of Menu Costs: Direct Evidence From Large U.S. Supermarket Chains." Quarterly Journal of Economics 112, 791-825.
39. Mankiw, N. Gregory (1985). "Small Menu Costs and Large Business Cycles: A Macroeconomic Model of Monopoly." Quarterly Journal of Economics 100, 529-537.
40. Mankiw, N. Gregory, and Ricardo Reis (2002). "Sticky Information Versus Sticky Prices: A Proposal to Replace the New Keynesian Phillips Curve." Quarterly Journal of Economics 117, 1295-1328.
41. McCallum, Bennett T. (1989). Monetary Economics. New York: MacMillan Publishing Co.
42. Noel, Michael (2002a). "Edgeworth Price Cycles, Cost-Based Pricing and Sticky Pricing in Retail Gasoline Markets." UCSD Working Paper.
43. Noel, Michael (2002b). "Edgeworth Price Cycles: Firm Interaction in the Toronto Retail Gasoline Market." UCSD Working Paper.
44. Okun, Arthur M. (1981). Prices and Quantities: A Macroeconomic Analysis. Washington, DC: Brookings Institution.
45. Park, Joon, and Peter C.B. Phillips (2000). "Nonstationary Binary Choice Models." Econometrica 68, 1249-1280.
46. Peltzman, Sam (2000). "Prices Rise Faster than They Fall." Journal of Political Economy 108, 466-502.
47. Rotemberg, Julio J. (1982). "Monopolistic Price Adjustment and Aggregate Output." Review of Economic Studies 49, 517-531.
48. Rotemberg, Julio J. (2002). "Customer Anger at Price Increases, Time Variation in the Frequency of Price Changes and Monetary Policy." NBER Working Paper No. 9320.
49. Samuelson, Paul (1965). "Proof that Properly Anticipated Prices Fluctuate Randomly." Industrial Management Review 6, 41-49.
50. Sbordone, Argia M. (2002). "Prices and Unit Labor Costs: A New Test of Price Stickiness." Journal of Monetary Economics 49, 265-292.
51. Schwarz, Gideon (1978). "Estimating the Dimension of a Model." Annals of Statistics 6, 461-464.
52. Sheshinski, Eytan, and Yoram Weiss (1977). "Inflation and the Costs of Price Adjustment." Review of Economic Studies 44, 287-303.
53. Sheshinski, Eytan, and Yoram Weiss (1983). "Optimum Pricing Policy Under Stochastic Inflation." Review of Economic Studies 50, 287-303.
54. Sims, Christopher A. (1998). "Stickiness." Carnegie-Rochester Conference Series on Public Policy 49, 317-356.
55. Slade, Margaret E. (1998). "Optimal Pricing with Costly Adjustment: Evidence from Retail-Grocery Prices." Review of Economic Studies 65, 87-107.
56. Slade, Margaret E. (1999). "Sticky Prices in a Dynamic Oligopoly: An Investigation of (s, S) Thresholds." International Journal of Industrial Organization 17, 477-511.
57. Stiglitz, Joseph E. (1984). "Price Rigidities and Market Structure." American Economic Review 74, 350-355.
58. Tsiddon, Daniel (1993). "The (Mis)Behavior of the Aggregate Price Level." Review of Economic Studies 60, 889-902.