Price Rigidity in Slovakia: Some Facts and Causes
This paper examines the price adjustment patterns, at the store level, in a transition economy. Empirical estimates of the extent of price rigidities are provided for selected final goods and services in Slovakia, and are compared with similar estimates from selected developed economies, namely the eurozone countries and U.S. The patterns of price changes found in Slovakia are somewhat similar to what was found for the western developed economies. Survival time analysis is employed to identify the effects of various macroeconomic indicators on the price change probabilities. Results show that variables such as productivity, wages, currency value and oil prices play important roles in the price adjustment process in Slovakia.