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Temporary sales in response to aggregate shocks

Author

Listed:
  • Benjamin Eden

    (Vanderbilt University)

  • Maya Eden

    (Brandeis University)

  • Jonah Yuen

    (Vanderbilt University)

Abstract

This paper studies the role of temporary sales in the reaction to aggregate shocks. Using scanner data from supermarkets, we establish the following stylized facts: (a) The fraction of stores that offer sale prices fluctuate over weeks; (b) Goods with more fluctuations in regular prices have also more sales; (c) Temporary sales contribute substantially to the weekly variation of the average cross-sectional price of the typical good; (d) High prices appear to be more rigid than low prices. These findings can be rationalized by a model in which prices are completely flexible and temporary sales are reactions to unwanted inventories which accrue in response to aggregate demand shocks.

Suggested Citation

  • Benjamin Eden & Maya Eden & Jonah Yuen, 2019. "Temporary sales in response to aggregate shocks," Vanderbilt University Department of Economics Working Papers 19-00003, Vanderbilt University Department of Economics.
    • Handle: RePEc:van:wpaper:vuecon-sub-19-00003
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    References listed on IDEAS

    as
    1. Bernardo Guimaraes & Kevin D. Sheedy, 2011. "Sales and Monetary Policy," American Economic Review, American Economic Association, vol. 101(2), pages 844-876, April.
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    More about this item

    Keywords

    Temporary Sales; Unwanted Inventories; Sequential Trade;
    All these keywords.

    JEL classification:

    • E0 - Macroeconomics and Monetary Economics - - General
    • D4 - Microeconomics - - Market Structure, Pricing, and Design

    NEP fields

    This paper has been announced in the following NEP Reports:

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