The speed and stability of price adjustment in Australian manufacturing

Harry Bloch, Michael Olive*

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

Abstract

A model of industry speed of price adjustment is derived from firm pricing behaviour. The model is applied to quarterly two-digit Australian manufacturing data for the period 1985.(Q3) to 2002.(Q3). The results suggest that the industry speed of price adjustment is positively related to the average size of large firms within the industry and is negatively related to industry concentration. We also find that import share has a role in attenuating the effects of industry concentration and that growth in a moving average of real gross domestic product reduces the speed of price adjustment. Calculated industry speeds of price adjustment are both stable across the period of examination and small, suggesting that manufacturing prices are sticky.

Original languageEnglish
JournalEconomic Record
Volume83
Issue numberSUPPL. 1
DOIs
Publication statusPublished - Sep 2007

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