Why Do Prices in Sierra Leone Change So Often? A Case Study Using Micro-level Price Data

February 1, 2006

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

We use cross-section and time-series techniques to analyze pricing behavior in Sierra Leone. In cross-sectional data, we find that inflation volatility and product diversification are the main factors explaining differences in the frequency of price adjustments. We show that variance in the fraction of prices subject to change is a key determinant of inflation volatility in Sierra Leone, indicating that retail prices are sensitive to economic events. We explain variations in this fraction over time with past inflation and monetary growth, which are important policy variables.

Subject: Consumer price indexes, Food prices, Inflation, Inflation persistence, Sticky prices

Keywords: price, price change, price data, WP

Pages:
29
Volume:
2006
DOI:
https://doi.org/10.5089/9781451863130.001
Issue:
053
Series:
Working Paper No. 2006/053
Stock No:
WPIEA2006053
ISBN:
9781451863130
ISSN:
1018-5941

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