Convenient prices, currency, and nominal rigidity: Theory with evidence from newspaper prices

A-Tier
Journal: Journal of Monetary Economics
Year: 2008
Volume: 55
Issue: 7
Pages: 1303-1316

Score contribution per author:

4.022 = (α=2.01 / 1 authors) × 2.0x A-tier

α: calibrated so average coauthorship-adjusted count equals average raw count

Abstract

Certain items' prices are often set to simplify and expedite transactions, by coinciding with available monetary units, requiring few pieces of money, or requiring little change. In this sense, these prices are more convenient than other proximate prices. This paper models a firm that explicitly incorporates convenience into its pricing decisions--where convenience is quantified by the number of currency units in a transaction--and illustrates the theoretical behaviors that can arise. Newspaper cover price data empirically support the theory. Across a broader range of goods and services, convenience appears to play a role in effecting above-average nominal price rigidity.

Technical Details

RePEc Handle
repec:eee:moneco:v:55:y:2008:i:7:p:1303-1316
Journal Field
Macro
Author Count
1
Added to Database
2026-01-25