Price stickiness in Bangladesh macro and micro approach

Abstract

This paper investigates the degree of price stickiness in Bangladesh using both macroeconomic and microeconomic approaches. While price rigidity has been extensively studied in developed economies, empirical evidence for developing countries remains limited, particularly in environments with relatively high inflation. This study addresses this gap by estimating price stickiness through a New Keynesian framework and disaggregated price data. The findings suggest that high inflation does not necessarily imply flexible pricing in developing economies. Instead, aggregate price rigidity may arise from the coexistence of highly sticky and relatively flexible prices within the consumption basket.nominal rigidity