Economic literatureįocuses on the micro reasons of the frequency of price changes, on the other hand, Have higher average inflation than the developed countries. This difference is originated from the reality that the developing countries Generally have a rigid prices but developing countries have a relatively flexible Monetary and fiscal policy have a real effects on the output.

When the prices change infrequently or prices change slowly, The effect of monetary and fiscal policy on the output depends on the frequency (vi) There is some evidence that firms adjust their behaviour according to the state of the economy in particular, firms facing higher rates of inflation adjust prices more frequently. (v) Firms respond to expected cost shocks at the date of their occurrence VAT rate changes do not lead to more price adjustments before they take effect. (iv) There is no indication of general downward price stickiness even in the case of positive inflation, 41.3% of all price adjustments are decreases and the distributions of price changes do not show substantial asymmetries. (iii) Price changes are sizeable the median absolute size amounts to 9.4%. (ii) Price-setting behaviour is heterogeneous across sectors and outlet characteristics. (i) Prices are sticky the median duration amounts to 4.6 quarters. Six main findings emerge from the analysis. The data set covers the years from 1993 to 2005. This paper investigates price-setting behaviour of firms based on the individual price quotes underlying the Swiss consumer price index.

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