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The Impact of Negative Income Shocks on the Relative Prices of Private Label Products: The Covid-19 Episode

Author

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  • Serdar Yurek

Abstract

In this study, we show the relationship between households’ income and the relative prices of private label products (relative to the prices of national brand products), known as lower quality and cheaper alternatives to national brands. By employing retail-product level micro price data from nine different supermarket chains in Türkiye, we exploit the sudden and unexpected income losses caused by Covid-19 measures within a difference in differences setting. Our results show that when households experience income shocks, the relative prices of private label products increase significantly. Therefore, our results indicate that the relative prices of lower quality products are significantly affected by households’ income.

Suggested Citation

  • Serdar Yurek, 2023. "The Impact of Negative Income Shocks on the Relative Prices of Private Label Products: The Covid-19 Episode," Working Papers 2309, Research and Monetary Policy Department, Central Bank of the Republic of Turkey.
    • Handle: RePEc:tcb:wpaper:2309
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    File URL: https://www.tcmb.gov.tr/wps/wcm/connect/EN/TCMB+EN/Main+Menu/Publications/Research/Working+Paperss/2023/23-09
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    More about this item

    Keywords

    Difference-in-Differences; Private label products; Supermarket prices; Covid-19; Lower quality products;
    All these keywords.

    JEL classification:

    • C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models
    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation

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