Working paper No. 80
By Simon Hall and Anthony Yates
This paper tests for the presence of a downward floor to prices by examining the hypothesis that as mean inflation falls, the skewness of price changes rises. Using tests for Granger-causality between the mean and skewness of inflation, the paper concludes that on balance there is no convincing evidence of downward nominal rigidity in retail or producer prices in the United Kingdom.
Are there downward nominal rigidities in product markets?