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Price Setting in Retailing: the Case of Uruguay

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  • Borraz, Fernando
  • Zipitría, Leandro

Abstract

We use a rich and unique dataset of 20 million daily prices in groceries and supermarkets across the country to analyze stylized facts of the behaviour of consumer prices. Our findings are as follows: i) The median duration of prices is little over 2 months. Therefore, retail prices in Uruguay are less sticky than in the US but stickier than in the UK. ii) We do not find evidence of a seasonal pattern in the likelihood of price adjustments. iii) The frequency of price adjustment varies positively with expected inflation for the food and personal care product categories. However, in the alcohol and soft drink categories we find that firms increase the percentage points of the adjustment and not its frequency. iv) The probability of price change in the first day of the month is seven times higher than in any another day. v) The probability of a price change is not constant over time.

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Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 27712.

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Date of creation: 27 Dec 2010
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Handle: RePEc:pra:mprapa:27712

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Keywords: Retail; micro data; prices; price volatility; sticky prices;

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  1. Emi Nakamura & Jón Steinsson, 2008. "Five Facts about Prices: A Reevaluation of Menu Cost Models," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 123(4), pages 1415-1464, November.
  2. Emi Nakamura, 2008. "Pass-Through in Retail and Wholesale," NBER Working Papers 13965, National Bureau of Economic Research, Inc.
  3. Gita Gopinath & Roberto Rigobon, 2008. "Sticky Borders," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 123(2), pages 531-575, 05.
  4. Klenow, Peter J. & Malin, Benjamin A., 2010. "Microeconomic Evidence on Price-Setting," Handbook of Monetary Economics, Elsevier, in: Benjamin M. Friedman & Michael Woodford (ed.), Handbook of Monetary Economics, edition 1, volume 3, chapter 6, pages 231-284 Elsevier.
  5. Gastón Chaumont & Miguel Fuentes & Felipe Labbé & Alberto Naudon, 2011. "A Reassessment of Flexible Price Evidence Using Scanner Data: Evidence from an Emerging Economy," Working Papers Central Bank of Chile, Central Bank of Chile 641, Central Bank of Chile.
  6. Ellis, Colin, 2009. "Do supermarket prices change from week to week?," Bank of England working papers 378, Bank of England.
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Cited by:
  1. Gastón Chaumont & Miguel Fuentes & Felipe Labbé & Alberto Naudón, 2011. "A Reassesment of Flexible Price Evidence Using Scanner Data: Evidence from an Emerging Economy," Working Papers Central Bank of Chile, Central Bank of Chile 632, Central Bank of Chile.

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