Survey evidence on price‐setting patterns of Romanian firms

Abstract This paper presents for Romanian firms the results of the first survey on price‐setting patterns among the New Member States of the EU. Diverging from Inflation Persistence Network (IPN) findings, generally small firms perceive higher competitive pressure and adopt the market price, using a state‐dependent rule, while lower perceived competition is consistent with medium and large firms using mark‐up pricing. Prices are reviewed and changed more often than for EMU firms and are more flexible than wages. Similar to IPN evidence, contracts are the main sources of price stickiness. The survey suggests full price transmission of large unanticipated financial shocks. Copyright © 2009 John Wiley & Sons, Ltd.