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A Sticky-Price View of Hoarding

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  • Christopher Hansman
  • Harrison Hong
  • Áureo de Paula
  • Vishal Singh

Abstract

We show that sticky prices exacerbate household hoarding of storable goods. When stores are slow to adjust prices following a cost shock, households have an incentive to stockpile just as in a typical retail sale. This incentive is present even in the absence of traditional panic or precautionary motives for hoarding. Using detailed US supermarket scanner data covering the 2008 global rice crisis—a shock triggered by an Indian rice export ban—we find that household hoarding anticipated retail price adjustments. We construct forecast tests relating the cross-section of product or store-level price adjustments to the expectations implied by consumer purchases. Bias and efficiency tests reject panic/precautionary motives in favor of a sticky-price view.

Suggested Citation

  • Christopher Hansman & Harrison Hong & Áureo de Paula & Vishal Singh, 2020. "A Sticky-Price View of Hoarding," NBER Working Papers 27051, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:27051
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    2. Ecaterina Coman & Claudiu Coman & Angela Repanovici & Mihaela Baritz & Attila Kovacs & Ana Maria Tomozeiu & Silviu Barbu & Ovidiu Toderici, 2022. "Does Sustainable Consumption Matter? The Influence of the COVID-19 Pandemic on Medication Use in Brasov, Romania," Sustainability, MDPI, vol. 14(13), pages 1-16, June.
    3. Tsutomu Watanabe & Tomoyoshi Yabu, 2018. "The Demand for Money at the Zero Interest Rate Bound," CARF F-Series CARF-F-444, Center for Advanced Research in Finance, Faculty of Economics, The University of Tokyo.
    4. Kozo Ueda & Kota Watanabe & Tsutomu Watanabe, 2021. "Household Inventory, Temporary Sales, and Price Indices," CARF F-Series CARF-F-520, Center for Advanced Research in Finance, Faculty of Economics, The University of Tokyo.
    5. Li, Dong & Dong, Chuanwen, 2022. "Government regulations to mitigate the shortage of life-saving goods in the face of a pandemic," European Journal of Operational Research, Elsevier, vol. 301(3), pages 942-955.
    6. Keane, Michael & Neal, Timothy, 2021. "Consumer panic in the COVID-19 pandemic," Journal of Econometrics, Elsevier, vol. 220(1), pages 86-105.
    7. Nelson Borges Amaral & Bin Chang & Rachel Burns, 2022. "Understanding consumer stockpiling: Insights provided during the COVID‐19 pandemic," Journal of Consumer Affairs, Wiley Blackwell, vol. 56(1), pages 211-236, March.
    8. Kozo Ueda & Kota Watanabe & Tsutomu Watanabe, 2020. "Consumer Inventory and the Cost of Living Index: Theory and Some Evidence from Japan," Working Papers on Central Bank Communication 025, University of Tokyo, Graduate School of Economics.
    9. OTA Rui & ITO Arata & SATO Masahiro & YANO Makoto, 2022. "Social Learning and Behavioral Change When Faced with the COVID-19 Pandemic: A big data analysis," Discussion papers 22065, Research Institute of Economy, Trade and Industry (RIETI).
    10. R. Chakraborti & G. Roberts, 2021. "Learning to Hoard: The Effects of Preexisting and Surprise Price-Gouging Regulation During the COVID-19 Pandemic," Journal of Consumer Policy, Springer, vol. 44(4), pages 507-529, December.

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    • D1 - Microeconomics - - Household Behavior

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