Recent empirical work suggests that small price changes are relatively
common. This evidence has been used to criticize classic
menu-cost models. In this paper, we use scanner data from a national
supermarket chain and micro data from the Consumer Price
Index to reassess the importance of small price changes. We argue
that the vast majority of these changes are due to measurement error.
We conclude that the evidence on the prevalence of small price
changes is much too weak to be used as a litmus test of nominal
"How Frequent Are Small Price Changes?"
American Economic Journal: Macroeconomics,
Methodology for Collecting, Estimating, and Organizing Macroeconomic Data; Data Access
Price Level; Inflation; Deflation
Production, Pricing, and Market Structure; Size Distribution of Firms
Retail and Wholesale Trade; e-Commerce