Description

This paper characterizes the dynamics of pri ce adjustments in Chile using data at the establishment level of goods in the CPI basket. Our results show that nominal rigidities are lower when measured at micro-level compared to estimates based on macro data. The frequency of price adjustments appears to be relatively stable over the sample period 1999-2005. On the other hand, if we decompose price adjustments in upward and downward changes, we observe that these frequencies of adjustments for some gr oups of products are correlated with the level of aggregate inflation. Thus, the data shows that the intensive and extensive margins of price adjustment play a role in determining price dyna mics. Finally, we find a considerable degree of synchronization in price adjustments across establishments and a moderate increase in price dispersion since 1999.