WHAT PRICE‐LEVEL DATA CAN TELL US ABOUT PRICING CONDUCT IN SOUTH AFRICA

Abstract

Abstract This article reports the findings of a study of two unique microdata sets, which are the unit level basis of South Africa's measured Consumer Price Index and Producer Price Index, over the period December 2001‐December 2007. In particular, based on techniques that have been used in comparable international studies, findings are reported on the frequency and magnitude of price changes, the duration of prices, and heterogeneity in pricing. The results for South Africa are compared with the stylised facts for pricing conduct, which have been presented in recent international studies. The article offers an illustration of how microdata‐based findings on pricing conduct may impact on the modelling of monetary policy by introducing micro‐founded results into an open economy dynamic stochastic general equilibrium model for the South African economy. The article concludes by identifying areas for further research, where it has not as yet been determined how South African pricing conduct compares with certain stylised pricing facts identified in the international literature.

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