Price-setting behaviour in New Zealand

Release date
01/08/2014
Reference
DP2014/04
Author
Miles Parker
Main file
New evidence from a large survey of over 5300 firms provides insight into price-setting behaviour in New Zealand. There is considerable heterogeneity in behaviour both between and within sectors, and marked asymmetry in the responses to shocks. The median number of prices reviews is twice per year, but the median number of changes is just once. Multi-product firms reset prices more frequently, even accounting for other firm characteristics. Explicit and implicit contracts and strategic complementarity are the most widely recognised causes of price stickness. Menu costs and sticky information are not widely recognised.