Central Bank of Peru paper investigates price stickiness
A paper published by the Central Bank of Peru on Saturday finds that while retailers incur menu costs from adjusting prices, there is little evidence of price stickiness.
Alberto Cavallo and Roberto Rigobon, the paper's authors, measure the number of modes in the price change distribution by using three statistical tests and data from individual-product prices in 36 supermarkets across 22 countries. The authors note that the distribution of the size of price changes and number of modes is
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