Affiliation:
1. Federal Reserve Bank of New York
2. Federal Reserve Bank of Cleveland
3. Federal Reserve Bank of Atlanta
4. Brandeis University
5. University of Southern California
Abstract
We examine businesses' price-setting practices via open-ended interviews and in a quantitative survey module with business contacts from the Federal Reserve Banks of Atlanta, Cleveland, and New York in December 2022 and January 2023. Businesses indicated that their prices were strongly influenced by demand, a desire to maintain steady profit margins, and wages and labor costs. Survey respondents expected reduced growth in costs and prices of about 5 percent on average over the next year. Backward-looking, forward-looking, and hypothetical scenarios reveal average cost-price passthrough of around 60 percent, with meaningful heterogeneity across firms.
Publisher
Federal Reserve Bank of Cleveland
Reference34 articles.
1. 1. Adams, William C. 2015. "Conducting Semi-Structured Interviews." In Handbook of Practical Program Evaluation, 492-505. John Wiley & Sons, Ltd. https://doi.org/10.1002/9781119171386.ch19.
2. 2. Amirault, David, Carolyn Kwan, and Gordon Wilkinson. 2006. "Survey of Price Setting Behavior of Canadian Companies." Working Paper 2006-35. Bank of Canada. https://www.bankofcanada.ca/wp-content/uploads/2010/02/wp06-35.pdf.
3. 3. Amiti, Mary, Sebastian Heise, Fatih Karahan, and Ayşegül Şahin. Forthcoming. "Inflation Strikes Back: The Role of Import Competition and the Labor Market." In NBER Macroeconomics Annual 2023. Vol. 38. University of Chicago Press. https://www.nber.org/chapters/c14851.
4. 4. Amiti, Mary, Oleg Itskhoki, and Jozef Konings. 2019. "International Shocks, Variable Markups, and Domestic Prices." The Review of Economic Studies 86 (6): 2356-2402. https://doi.org/10.1093/restud/rdz005.
5. 5. Apel, Mikael, Richard Friberg, and Kerstin Hallsten. 2005. "Microfoundations of Macroeconomic Price Adjustment: Survey Evidence from Swedish Firms." Journal of Money, Credit and Banking 37 (2): 313-38. https://doi.org/10.1353/mcb.2005.0018.