Fix- or flex-price behavior?: evidence from the Malaysian manufacturing sector

Abstract

Industries can be classified into fix-price and flex-price sectors according to their pricing behavior. Although  Hicks [1985] and Morishima [1984] have broadly classified manufacturing industries into fix-price and the rest of the economy into flex-price, using the cost-based input-output model, the present paper reclassifies the Malaysian manufacturing industries into fix-price and flex-price categories. By compiling annual  sectoral price indices, both for intermediate and primary inputs, the paper found that most of the flex-price manufacturing industries are from non-agro-based industries whereas most of the fix-price industries are from agro-based industries.

JEL classification: D4