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Benjamin Eden, Maya Eden and Jonah Yuen
''Temporary sales in response to aggregate shocks''
This paper studies the role of temporary sales in the reaction to aggregate shocks. Using scanner data from supermarkets, we establish the following stylized facts: (a) The fraction of stores that offer sale prices fluctuate over weeks; (b) Goods with more fluctuations in regular prices have also more sales; (c) Temporary sales contribute substantially to the weekly variation of the average cross-sectional price of the typical good; (d) High prices appear to be more rigid than low prices. These findings can be rationalized by a model in which prices are completely flexible and temporary sales are reactions to unwanted inventories which accrue in response to aggregate demand shocks.
Keywords: Temporary Sales, Unwanted Inventories, Sequential Trade
JEL: E0 - Macroeconomics and Monetary Economics: General
D4 - Market Structure and Pricing: General
Manuscript Received : Feb 11 2019 Manuscript Accepted : Mar 25 2019

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