Inflation Uncertainty and Price Setting Decision of Firms

Last registered on May 13, 2024
View Trial History

Pre-Trial

Trial Information

General Information

Title
Inflation Uncertainty and Price Setting Decision of Firms
RCT ID
AEARCTR-0013599
Initial registration date
May 13, 2024

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
May 13, 2024, 12:44 PM EDT

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

Locations

Country
New Zealand
Region
Auckland

Primary Investigator

Name
Saten Kumar
Affiliation
Auckland University of Technology
Contact Primary Investigator

Other Primary Investigator(s)

PI Name
Matthias Meier
PI Affiliation
University of Mannheim
Contact Investigator
PI Name
Timo Reinelt
PI Affiliation
European Central Bank
Contact Investigator

Additional Trial Information

Status
On going
Start date
2024-04-08
End date
2024-09-30
Keywords
Other
Additional Keywords
Firm expectations, firm decisions
JEL code(s)
E3
Secondary IDs
Prior work
This trial is based on or builds upon one or more prior RCTs.
Abstract
We conduct a survey of firms in New Zealand to document how exogenous variation in the inflation uncertainty perceived by firms affects their price-setting decisions. We use randomized information treatments that provide different types of information about future inflation to generate exogenous changes in the perceived inflation uncertainty of some firms. The effects on their decisions relative to their initial plans as well as relative to an untreated control group will be measured in a follow-up survey three months later.
External Link(s)

Registration Citation

Citation
Kumar, Saten, Matthias Meier and Timo Reinelt. 2024. "Inflation Uncertainty and Price Setting Decision of Firms." AEA RCT Registry. May 13. https://doi.org/10.1257/rct.13599-1.0
Sponsors & Partners
Experimental Details

Interventions

Intervention(s)



Intervention Start Date
2024-04-08
Intervention End Date
2024-07-05

Primary Outcomes

Primary Outcomes (end points)
Number of employees
Operating margin
Qualification
Inflation uncertainty
Real GDP growth uncertainty
Real wage uncertainty
3-months ahead change in average prices
3-months ahead change in sales
3-months ahead change in operating margin
3-months ahead fixed price contract
3-months ahead average duration of fixed price contracts
3-months ahead change in price of new fixed price contracts
Probability distribution of inflation outlook
Probability distribution of real GDP growth outlook
Probability distribution of real wage growth outlook
Price effect of one-month fixed price contract
Operating margin effect of one-month fixed price contract
Price effect of 24-months fixed price contract
Operating margin effect of 24-months fixed price contract


Primary Outcomes (explanation)

Secondary Outcomes

Secondary Outcomes (end points)
Secondary Outcomes (explanation)

Experimental Design

Experimental Design
We will run two waves of a survey of firms in New Zealand. The first wave of
the survey is between April and July 2024. The second wave will be between July and September 2024. We conduct the survey through New Zealand Market Research and Surveys Limited, which is a private limited company specializing in conducting surveys. Following the Australia and New Zealand Standard Industrial Classification 2006 (ANZSIC06), firms are classified into two broad industries: manufacturing and services. The latter included firms from sectors such as professional and financial services, trade, construction, communication and transportation. Firms are recruited according to their size (at least six employees) and annual turnover of at least $30,000.

The survey is conducted primarily through phone. The randomly controlled trial takes place in the main wave. Firms are randomly assigned into three groups of approximately equal size. The first group of firms are referred as the control group. The second and third groups of firms are referred as the treatment groups. The treatment groups get new information about the future inflation outlook. We will assess how the treatment information affects the expectations (inflation, real GDP growth and real wage growth) and price setting decisions of these firms relative to firms in the control group.
Experimental Design Details
Not available
Randomization Method
Randomization done in office by a computer
Randomization Unit
Individual firms are subject to randomization. Firms are randomly assigned into three groups. Target is to keep the groups of approximately equal size. Group 0 is control group. Group 1 receive a treatment. Firms in group 2 receive a different treatment relative to group 1.
Was the treatment clustered?
Yes

Experiment Characteristics

Sample size: planned number of clusters
2000 firms
Sample size: planned number of observations
2000 firms
Sample size (or number of clusters) by treatment arms
Approximately 650 firms control, 650 firms treatment 1, and 650 firms treatment 2.
Minimum detectable effect size for main outcomes (accounting for sample design and clustering)
Supporting Documents and Materials
IRB

Institutional Review Boards (IRBs)

IRB Name
Auckland University of Technology Ethics Committee
IRB Approval Date
2024-03-28
IRB Approval Number
21/343
Analysis Plan