Costs, Demand, and Producer Price Changes

Claire Loupias; Patrick Sevestre

doi:10.1162/rest_a_00276

Costs, Demand, and Producer Price Changes

Claire Loupias¹; Patrick Sevestre^2,3,4

¹ Université d'Évry Val-d'Essonne · ² Banque de France · ³ Université Paris 1 Panthéon-Sorbonne · ⁴ Paris School of Economics

The Review of Economics and Statistics 2013

Using business survey data, we estimate an ordered probit model to explain the occurrence of producer price increases and decreases in the French manufacturing industry. Our results show that changes in intermediate input prices are the main driver of producer price changes. Changes in firms' labor costs, their production level, or the producer price index of their industry contribute less to the occurrence of price changes. Moreover, when they face a change in their costs, firms adjust their prices upward more often and more rapidly than they do it downward, especially when the shock is perceived as permanent.

DOI: 10.1162/rest_a_00276
Volume: 95 (1)
Pages: 315-327
Language: en
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