Determinants of the Frequency of Price Changes in Vietnam
The- Anh Pham *
Department of Economics, National Economics University, 207 Giai Phong Road, Hanoi, Vietnam
Duc- Hung Nguyen
Department of Economics, National Economics University, 207 Giai Phong Road, Hanoi, Vietnam
Mai- Huong Dinh
Department of Economics, National Economics University, 207 Giai Phong Road, Hanoi, Vietnam
*Author to whom correspondence should be addressed.
Abstract
The paper aims to study the determinants of price stickiness proxied by the frequency of price changes in Vietnam by using the Poisson regression model with survey data. We find that the frequency of price changes is positively and negatively related with firms’ choice of time dependence and rule of thumb, respectively. Importantly, we also reveal that the coordination failure, the existence of contracts and temporary shocks are the three most important reasons for price rigidity. Finally, we find the degree of competition, firm size, the share of state ownership, quantity discount practice, sales destination and market share all matter for how often firms adjust their prices.
Keywords: Price stickiness, the frequency, survey data, the poisson regression