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The Cyclicality of Sales, Regular and Effective Prices :, Business Cycle and Policy Implications, Olivier Coibion, Yuriy Gorodnichenko, Gee Hee Hong

We study the cyclical properties of sales, regular price changes and average prices paid by consumers ("effective" prices) in a dataset containing prices and quantities sold for numerous retailers across a variety of U.S. metropolitan areas. Both the frequency and size of sales fall when local unemployment rates rise and yet the inflation rate for effective prices paid by consumers declines significantly with higher unemployment. This discrepancy can be reconciled by consumers reallocating their expenditures across retailers, a feature of the data which we document and quantify. We propose a simple model with household shopping effort and store-switching consistent with these stylized facts and document its implications for business cycles and policymakers
Table Of Contents
Cover; Abstract; Contents; References; I. Introduction; II. Data Description; III. The Cyclicality of Effective, Regular and Sales Price Changes; 3.1 The Cyclicality of Posted and Effective Prices; 3.2 The Cyclicality of Sales and Regular Price Changes; 3.3 Implications of Sales and Effective Price Cyclicality; IV. Household Store-Switching; 4.1 Cross-sectional variation in the sensitivity of pricing to business conditions; 4.2 Households' choices of shopping outlets as a function of business conditions; V. Cross-Good Substitution; VI. Aggregate Implications of Store-Switching
Literary Form
non fiction
Description based upon print version of record
Physical Description
1 online resource (76 p.)
Specific Material Designation
Form Of Item

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