Abstract

Abstract In this chapter, price stickiness in Portugal is analyzed on the basis of qualitative data coming from a survey conducted by the Banco de Portugal. The main conclusions are the following. First, there is a considerable degree of price stickiness: most firms do not review or change their prices more than once a year, while time lags in price adjustments after shocks were found to be significant. Second, prices seem to go down more frequently than what is normally assumed: slightly more than 30 percent of total price changes are price decreases. Finally, customers' preference for stable prices, which take the form of implicit contracts, is apparently the main reason for the stickiness observed in prices

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