Price Setting in Lithuania: More Evidence from the Survey of Firms

The paper examines price setting in Lithuania based on ad hoc survey of the Bank of Lithuania “On Price and Wage Setting”. The study extends the survey data analysis presented in Virbickas (2009). The paper points to the incidence of both the time-dependent and the state-dependent price reviewing policies used by the investigated firms, though the price reviewing practices appear to be somewhat tilted to the state-dependent pricing. Analysis provides evidence on the reasons for upward and downward stickiness of prices. Delayed price adjustment is found to be mostly related to the price adjustment stage rather than the price reviewing stage. The most momentous explanations for not adjusting prices upwards or downwards rest on the cost-based pricing and the explicit contracts. The study finds an asymmetric influence of some of the price factors. In particular, the cost factors are found to be decisive in invoking the price increase rather than the price decrease.