Sticky Prices and Moderate Inflation

32 Pages Posted: 10 Oct 2009

Date Written: October 10, 2008


Recent evidence shows that there is great heterogeneity in the price setting frequency across sectors, and that those changing prices frequently do so even under low inflation. What happens to price setting strategies of sticky price goods under moderate inflation? We built a dataset of monthly newspaper and magazine prices for Colombia, for the period 1960-2005, an exceptional example of prolonged moderate inflation. Within this macroeconomic scenario, and the novel database, we study the frequency of price adjustment, the relative importance of time- and state-dependent theories, and their evolution as inflation declined from moderate rates to single digits.

Keywords: Sticky Prices, Moderate Inflation, Disinflation

JEL Classification: E31, E52, F41

Suggested Citation

Hofstetter, Marc, Sticky Prices and Moderate Inflation (October 10, 2008). Available at SSRN: or

Marc Hofstetter (Contact Author)

Universidad de los Andes ( email )

Carrera Primera # 18A-12
Bogota, DC D.C. 110311

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