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A Reassesment of Flexible Price Evidence Using Scanner Data: Evidence from an Emerging Economy

Author

Listed:
  • Gastón Chaumont
  • Miguel Fuentes
  • Felipe Labbé
  • Alberto Naudón

Abstract

In this paper we use a new database of scanner-level prices for the Chilean economy to characterize the microeconomic behavior of prices during a period of high inflation. We are able to characterize the price-setting behavior by supermarket chain. The evidence indicates that there is significant heterogeneity in the pricing behavior of individual retailers. Analyzing the source of shocks, results show that even though chain-specific shocks account for a sizable fraction of the observed variation, common (i.e. countrywide) shocks to individual goods and product categories are the most important factors to explain the behavior of prices. In other words, the pricing strategy of retailers seems less important in developing countries to explain microeconomic price dynamics.

Suggested Citation

  • 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 632, Central Bank of Chile.
  • Handle: RePEc:chb:bcchwp:632
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    References listed on IDEAS

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    1. Jaime Ruiz-Tagle & Francis Vella, 2010. "Borrowing Constraints and Credit Demand," Working Papers Central Bank of Chile 578, Central Bank of Chile.
    2. Fernando Borraz & Leandro Zipitría & Enrique López Enciso, 2013. "Price Setting in Retailing: the Case of Uruguay," Investigación Conjunta-Joint Research,in: Laura Inés D'Amato & Enrique López Enciso & María Teresa Ramírez Giraldo (ed.), Inflationary Dynamics, Persistence, and Prices and Wages Formation, edition 1, chapter 9, pages 193-220 Centro de Estudios Monetarios Latinoamericanos, CEMLA.
    3. Ivan Faiella & Romina Gambacorta, 2007. "The Weighting Process in the SHIW," Temi di discussione (Economic working papers) 636, Bank of Italy, Economic Research and International Relations Area.
    4. Fisher, Timothy C. G. & Konieczny, Jerzy D., 2000. "Synchronization of price changes by multiproduct firms: evidence from Canadian newspaper prices," Economics Letters, Elsevier, vol. 68(3), pages 271-277, September.
    5. Emi Nakamura, 2008. "Pass-Through in Retail and Wholesale," American Economic Review, American Economic Association, vol. 98(2), pages 430-437, May.
    6. Juan Pablo Medina G. & David Rappoport W. & Claudio Soto G., 2007. "Dynamics of Price Adjustments: Evidence From Micro Level Data For Chile," Journal Economía Chilena (The Chilean Economy), Central Bank of Chile, vol. 10(2), pages 5-26, August.
    7. Alberto Cavallo, 2015. "Scraped Data and Sticky Prices," NBER Working Papers 21490, National Bureau of Economic Research, Inc.
    8. Rodrigo Alfaro & Natalia Gallardo & Roberto Stein, 2010. "The Determinants of Household Debt Defa," Working Papers Central Bank of Chile 574, Central Bank of Chile.
    9. David Bravo & Jere R. Behrman & Olivia s. Mitchell & Petra E. Todd. & Javiera Vásquez, 2008. "Encuesta de protección social 2006: Presentación general y principales resultados," Working Papers wp273, University of Chile, Department of Economics.
    10. repec:mpr:mprres:4780 is not listed on IDEAS
    11. Andrés Sagner, 2009. "Determinantes del Precio de Viviendas en Chile," Working Papers Central Bank of Chile 549, Central Bank of Chile.
    12. Jeffrey M. Wooldridge, 1999. "Asymptotic Properties of Weighted M-Estimators for Variable Probability Samples," Econometrica, Econometric Society, vol. 67(6), pages 1385-1406, November.
    13. Emi Nakamura & Jón Steinsson, 2008. "Five Facts about Prices: A Reevaluation of Menu Cost Models," The Quarterly Journal of Economics, Oxford University Press, vol. 123(4), pages 1415-1464.
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    Cited by:

    1. Fernando Borraz & Leandro Zipitría, 2012. "Retail Price Setting in Uruguay," ECONOMIA JOURNAL, THE LATIN AMERICAN AND CARIBBEAN ECONOMIC ASSOCIATION - LACEA, vol. 0(Spring 20), pages 77-109, January.
    2. repec:cml:incocp:2sp-9 is not listed on IDEAS
    3. Fernando Borraz & Leandro Zipitría & Enrique López Enciso, 2013. "Price Setting in Retailing: the Case of Uruguay," Investigación Conjunta-Joint Research,in: Laura Inés D'Amato & Enrique López Enciso & María Teresa Ramírez Giraldo (ed.), Inflationary Dynamics, Persistence, and Prices and Wages Formation, edition 1, chapter 9, pages 193-220 Centro de Estudios Monetarios Latinoamericanos, CEMLA.
    4. Gastón Chaumont & Miguel Fuentes & Felipe Labbé & Alberto Naudon, 2011. "Dinámica de Precios en Chile: Evidencia con datos de Supermercados," Working Papers Central Bank of Chile 642, Central Bank of Chile.
    5. Kochen Federico, 2016. "Price-Setting in Mexico and the Real Effects of Monetary Shocks," Working Papers 2016-21, Banco de México.
    6. Fernando Borraz & Joaquín Saldain, 2015. "Variance Decomposition of Prices in an Emerging Economy," Documentos de trabajo 2015001, Banco Central del Uruguay.

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