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The responses of internet retail prices to aggregate shocks: A high-frequency approach

Author

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  • Gorodnichenko, Yuriy
  • Sheremirov, Viacheslav
  • Talavera, Oleksandr

Abstract

Using a unique dataset of daily price listings and the associated number of clicks for precisely defined goods from a major shopping platform, we examine whether internet prices respond to aggregate shocks at a high frequency. We find little evidence that online prices respond promptly to unanticipated announcements about macroeconomic activity. Shopping activity also appears unresponsive to aggregate shocks, suggesting that internet retailers may follow individual demand for their products more closely than aggregate demand.

Suggested Citation

  • Gorodnichenko, Yuriy & Sheremirov, Viacheslav & Talavera, Oleksandr, 2018. "The responses of internet retail prices to aggregate shocks: A high-frequency approach," Economics Letters, Elsevier, vol. 164(C), pages 124-127.
    • Handle: RePEc:eee:ecolet:v:164:y:2018:i:c:p:124-127
    DOI: 10.1016/j.econlet.2018.01.014
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    References listed on IDEAS

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    1. Bilotkach, Volodymyr & Gorodnichenko, Yuriy & Talavera, Oleksandr, 2010. "Are airlines' price-setting strategies different?," Journal of Air Transport Management, Elsevier, vol. 16(1), pages 1-6.
    2. Bartosz Mackowiak & Mirko Wiederholt, 2009. "Optimal Sticky Prices under Rational Inattention," American Economic Review, American Economic Association, vol. 99(3), pages 769-803, June.
    3. Yuriy Gorodnichenko & Oleksandr Talavera, 2017. "Price Setting in Online Markets: Basic Facts, International Comparisons, and Cross-Border Integration," American Economic Review, American Economic Association, vol. 107(1), pages 249-282, January.
    4. Alberto Cavallo, 2018. "Scraped Data and Sticky Prices," The Review of Economics and Statistics, MIT Press, vol. 100(1), pages 105-119, March.
    5. Torben G. Andersen & Tim Bollerslev & Francis X. Diebold & Clara Vega, 2003. "Micro Effects of Macro Announcements: Real-Time Price Discovery in Foreign Exchange," American Economic Review, American Economic Association, vol. 93(1), pages 38-62, March.
    6. Mark Bils & Peter J. Klenow, 2004. "Some Evidence on the Importance of Sticky Prices," Journal of Political Economy, University of Chicago Press, vol. 112(5), pages 947-985, October.
    7. Jean Boivin & Marc P. Giannoni & Ilian Mihov, 2009. "Sticky Prices and Monetary Policy: Evidence from Disaggregated US Data," American Economic Review, American Economic Association, vol. 99(1), pages 350-384, March.
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    More about this item

    Keywords

    Online markets; Price stickiness; Aggregate shocks; High-frequency approach;

    JEL classification:

    • E3 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles

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