Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/80790
Authors: 
Coibion, Olivier
Gorodnichenko, Yuriy
Hong, Gee Hee
Year of Publication: 
2013
Series/Report no.: 
Bank of Canada Working Paper 2013-1
Abstract: 
We study the cyclical properties of sales, regular price changes and average prices paid by consumers (effective prices) using data on prices and quantities sold for numerous retailers across many U.S. metropolitan areas. Inflation in the effective prices paid by consumers declines significantly with higher unemployment while little change occurs in the inflation rate of prices posted by retailers. This difference reflects the reallocation of household expenditures across retailers, a feature of the data which we document and quantify, rather than sales. We propose a simple model with household store-switching and assess its implications for business cycles and policymakers.
Subjects: 
Inflation and prices
Transmission of monetary policy
Monetary policy framework
JEL: 
E3
E4
E5
Document Type: 
Working Paper

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