Journal of money credit and banking· 2026Q1
Price Setting before and during the Pandemic: Evidence from Swiss Consumer Prices
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- Q1SCImago
- 2026year
Short summary
Swiss firms increased price change frequency in the decade before the pandemic, driven by online price collection, but this trend muted during the pandemic, masking heterogeneity where demand contractions and interventions reduced frequency while amplifying size.
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Key points
- Price change frequency in Switzerland increased from 2008-2025, primarily due to online price collection methods.
- During the pandemic, aggregate price adjustment frequency was muted, but heterogeneity increased.
- Demand contractions and government interventions reduced price adjustment frequency but increased adjustment size.
- Firms primarily adjust price size over frequency in response to aggregate shocks, aligning with time-dependent pricing.
- Under high price flexibility or strong price selection, firms adjust both frequency and size, leading to reduced monetary non-neutrality and a switch to state-dependent pricing.
AI-generated from the title and abstract; the full text is not read.
Abstract
Abstract Using microdata underlying the Swiss consumer price index from 2008 to 2025, we document new features of price rigidity and assess their implications for inflation dynamics. The frequency of price changes increased in the decade before the pandemic, driven by items shifting to online price collection, as confirmed by causal identification from an event study around a collection‐mode switch. During the pandemic, the aggregate frequency response was muted, masking large cross‐sectional heterogeneity: demand contractions and stricter government interventions each reduced the frequency of adjustments, while demand contractions amplified their size. In response to aggregate shocks, firms adjust mainly the size rather than the frequency of price changes, consistent with time‐dependent pricing. However, nonlinear local projections reveal that when price flexibility is high or price selection is strong, firms respond along both margins, monetary nonneutrality falls, and the appropriate macro model switches from time‐dependent to state‐dependent.
The authors' abstract, as published at the source. Journal of money credit and banking, 2026 · DOI ↗
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Field: General Economics, Econometrics and Finance
General Economics, Econometrics and FinanceEconomics, Econometrics and Finance