Firm inflation expectations, wage and price setting

Last registered on January 03, 2023
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Pre-Trial

Trial Information

General Information

Title
Firm inflation expectations, wage and price setting
RCT ID
AEARCTR-0010464
Initial registration date
December 20, 2022

Initial registration date is when the trial was registered.

It corresponds to when the registration was submitted to the Registry to be reviewed for publication.

First published
January 03, 2023, 4:44 PM EST

First published corresponds to when the trial was first made public on the Registry after being reviewed.

Locations

Country
Switzerland
Region

Primary Investigator

Name
Anne Kathrin Funk
Affiliation
Swiss National Bank
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Other Primary Investigator(s)

PI Name
Sarah Lein
PI Affiliation
University of Basel
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PI Name
Michael Lamla
PI Affiliation
University Lüneburg
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PI Name
Klaus Abberger
PI Affiliation
ETH Zurich
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PI Name
Stefanie Siegrist
PI Affiliation
ETH Zurich
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Additional Trial Information

Status
On going
Start date
2022-11-24
End date
2023-01-04
Keywords
Firms & Productivity, Other
Additional Keywords
Monetary Economics, Inflation expectations, Wages
JEL code(s)
E24, E31, E52
Secondary IDs
Prior work
This trial does not extend or rely on any prior RCTs.
Abstract
In this study we investigate the interaction of firms’ price and wage setting behaviour and their inflation expectations. In particular, we study how inflation expectations are passed through into prices and wages. While theoretically there is a broad consensus about the relevance of the price setting of firms for inflation as well as economic activity, we know relatively little about how and to what extent firms build their inflation expectations into their prices and wages. We analyse these questions using a new firm-level survey with an RCT design that we conduct in Switzerland. Switzerland provides an ideal setting as it has a history of low and stable inflation and a flexible labor market with a low degree of wage indexation. Besides eliciting firm specific variables, and expectations about prices and wages we provide firms with information treatments and scenarios. Treatments are used to either allude to current price changes or to the history of stable prices in Switzerland. We hope that we will be able to provide new insights on the role of perceptions and expectations for firms’ decision making.
External Link(s)

Registration Citation

Citation
Lein, Sarah et al. 2023. "Firm inflation expectations, wage and price setting." AEA RCT Registry. January 03. https://doi.org/10.1257/rct.10464-1.0
Sponsors & Partners
Experimental Details

Interventions

Intervention(s)
Intervention Start Date
2022-11-24
Intervention End Date
2023-01-04

Primary Outcomes

Primary Outcomes (end points)
Expected wage change in 2023, expected price change in 2023, inflation expectations 6 months ahead, 1 year ahead and 5 years ahead
Primary Outcomes (explanation)

Secondary Outcomes

Secondary Outcomes (end points)
Secondary Outcomes (explanation)

Experimental Design

Experimental Design
The survey participants are representatives from Swiss firms, which are invited to participate in an online survey. The firms are sampled according to industry classification (NOGA) and size (full time employees). In this online survey, we first elicit inflation expectations, and firms’ expectations about their own wages and prices, in addition to collecting information about the firms’ price and wage setting processes. After this, firms are randomly selected into groups where different information is provided (all the information is true). After the information treatment, they are asked whether they would like to adjust their previously voiced expectations in light of the information treatment provided.
Experimental Design Details
The survey participants are representatives from Swiss firms, which are invited to participate in an online survey. The firms are sampled according to industry classification (NOGA) and size (full time employees). In this online survey, we first elicit inflation expectations, and firms’ expectations about their own wages and prices, in addition to collecting information about the firms’ price and wage setting processes. After this, firms are randomly selected into groups where different information is provided (all the information is true). After the information treatment, they are asked whether they would like to adjust their previously voiced expectations in light of the information treatment provided. We plan to study how price and wage setting behavior interacts with inflation expectations and how changes in inflation expectations are passed through into prices and wages and to what extent different information treatments change inflation expectations and potentially feed through into prices and wages. The survey is conducted in German, French, Italian and English.
Randomization Method
Randomization at login, equal probabilities for all treatments.
Randomization Unit
Firm
Was the treatment clustered?
No

Experiment Characteristics

Sample size: planned number of clusters
The RCT has two treatment groups and one control group. Each treatment group has the same size (about 1000 firms each).
Sample size: planned number of observations
Approx. 3000 respondents invited for participation. Randomly selected into treatment groups where different information is provided
Sample size (or number of clusters) by treatment arms
Approx. 3000 respondents invited for participation. Each treatment group has the same size (about 1000 firms each).
Minimum detectable effect size for main outcomes (accounting for sample design and clustering)
Supporting Documents and Materials

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IRB

Institutional Review Boards (IRBs)

IRB Name
IRB Approval Date
IRB Approval Number
Analysis Plan

Post-Trial

Post Trial Information

Study Withdrawal

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Intervention

Is the intervention completed?
No
Data Collection Complete
Data Publication

Data Publication

Is public data available?
No

Program Files

Program Files
Reports, Papers & Other Materials

Relevant Paper(s)

Reports & Other Materials