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French companies may have used the tax credit for competitivness and employment (CICE), a broad operating cost lowering policy to decrease their prices. In this paper, we investigate this effect with aggregated data at a reffined sectoral level (4 digits NACE). We use a factor model to control for both temporal and cross-sectionnal price dynamics heterogeneity. A counterfactual sectoral inflation is fitted on price series to display common shocks like raw materials price variation or seasonal factors. Our model allows for temporal lags in the tax credit effect to account for the possible delayed responses of the firms. Preliminary analysis tend to show that the tax credit plays a role in the price moderation in the largest receivers sectors. However, these results remain weak and cannot be disentangled from a general price moderation contemporaneous of the reform and not directly correlated to the sectoral amount of tax credit. We investigate the possibility of tax credit diffusion through inter sectoral linkages since such effects may jeopardize the detection of a direct effect of the policy on prices.
