Individual Price Adjustment along the Extensive Margin

Gagnon, Etienne; López‐Salido, J. David; Vincent, Nicolas

doi:10.3386/w18213

Cited by 12 publications

(6 citation statements)

References 37 publications

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“…5. Gagnon et al (2012) use disaggregated firm-level data and analyze how exchange rate devaluations impact on the timing of price adjustments, a feature that is consistent with state-dependent models. Their findings are consistent with the presence of state-dependent pricing rules.…”

Section: Endnotesmentioning

confidence: 83%

“…We aim to identify the implications of the different frictions for the propagation of aggregate shocks, and provide original analytic results that are useful for a systematic comparison of the two approaches. Our empirical exploration shares the objective of Gagnon, Lopez-Salido, and Vincent (2012) of identifying the extent to which pricing behavior displays state-dependent features. 5 Our first result extends the theoretical analysis of Caballero and Engel (2007) about the aggregate flexibility of an economy, which focuses on the impact effect of a monetary shock.…”

Section: A Novelty and Relation To Literaturementioning

confidence: 99%

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Are State- and Time-Dependent Models Really Different?

Álvarez

Lippi

Passadore

2017

NBER Macroeconomics Annual

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Section: Endnotesmentioning

confidence: 83%

Section: A Novelty and Relation To Literaturementioning

confidence: 99%

Are State- and Time-Dependent Models Really Different?

Álvarez

Lippi

Passadore

2017

NBER Macroeconomics Annual

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“…For all other years, we set weights equal to the most recently available year's weights (e.g., assign 1995 weights to 1997). We follow Bils andKlenow (2004), Bils et al (2012) and Gagnon et al (2013) in using weights based on the Consumer Expenditure Survey. These weights are also used as regression weights.…”

Section: Indistinguishablementioning

confidence: 99%

What Are the Price Effects of Trade? Evidence From the U.S. and Implications for Quantitative Trade Models

Jaravel

Sager

2018

SSRN Journal

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This paper finds that U.S. consumer prices fell substantially due to increased trade with China. With comprehensive price micro-data and two complementary identification strategies, we estimate that a 1pp increase in import penetration from China causes a 1.91% decline in consumer prices. This price response is driven by declining markups for domestically-produced goods, and is one order of magnitude larger than in standard trade models that abstract from strategic price-setting. The estimates imply that trade with China increased U.S. consumer surplus by about $400,000 per displaced job, and that product categories catering to low-income consumers experienced larger price declines. potential omitted variable biases and reverse causality. For example, China has a comparative advantage in specific product categories that may be on different inflation trends, such as consumer electronics or apparel. To overcome this challenge we use two complementary research designs borrowed from recent work by Pierce and Schott (2016a) and Autor et al. (2014), who study the consequences of trade with China on employment across U.S. industries. 2 Pierce and Schott (2016a) leverage a change in U.S. trade policy passed by Congress in October 2000, which eliminated potential tariff increases on Chinese imports. This research design uses transparent policy variation and lends itself to sharp tests for pretrends, but the effects of changes in policy uncertainty may differ from those of more common permanent changes in tariffs (e.g., Handley and Limão (2017)). To gauge the stability and generalizability of our main estimates, we also use the empirical strategy of Autor et al. (2014), who instrument for changes in import penetration from China across U.S. industries with contemporaneous changes observed in eight comparable economies. 3To assess the plausibility of a causal interpretation of our estimates, we implement several falsification and robustness tests. The results all support the validity of the exclusion restrictions. First, for each of the two instruments, we implement pre-trend tests and consider alternative specification choices, with different sets of fixed effects, time-varying controls and sample restrictions. There are no pre-trends and the estimated price effect is stable across specifications. Second, we study the sensitivity of our baseline estimate to aggregation choices by aggregating our data to the level of broader industries (as defined by the BEA's input-output table), and we use alternative measures of changes in import penetration from China (including or excluding retail margins, and accounting for changes in trade with trading partners of the U.S. other than China). We find that the estimated price response remains stable. Third, with the instrument from Pierce and Schott (2016a), we implement a stringent triple-difference test using price data from France. We find that there is no similar reaction of prices in France, where there was no policy change. Finally, using both instruments jointly, we run the tes...

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“…Many storms were also granted an "emergency"or a "disaster relief"status by FEMA because they were of "such severity and magnitude that e¤ective response [was] beyond the capabilities of the State and the local governments and that Federal assistance [was] necessary." 18 We validate our list of snow episodes against daily snowfall measurements reported by local weather stations to avoid situations in which a disruptive storm at the regional level results in little snow accumulation or passes as rain in a particular market. We also use local daily snowfall measurements to include a number of storms that likely had large localized e¤ects but whose regional impact, as measured by the RSI, was small.…”

Section: Identi…cationmentioning

confidence: 97%

Mass Population Displacement and Retail Activities in the Wake of Hurricane Katrina

Gagnon

López‐Salido

2015

FEDS Notes

Self Cite

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We study the pricing response of U.S. supermarkets to large demand shocks triggered by labor con ‡icts, mass population relocation, and shopping sprees around major snowstorms and hurricanes. Our focus on demand shocks is novel in the empirical literature that uses large datasets of individual data to bridge micro price behavior and aggregate price dynamics. We …nd that large swings in demand have, at best, modest e¤ects on the level of retail prices, consistent with ‡at short-to medium-term supply curves. This …nding holds even when shocks are highly persistent and even though stores adjust prices frequently. We also uncover evidence of tit-for-tat behavior by which retailers with radically di¤erent demand shocks nonetheless seek to match their local competitors'pricing movements and recourse to sales and promotions.JEL classi…cation: E30, L11.The views in this paper are solely the responsibility of the authors and should not be interpreted as re ‡ecting the views of the Board of Governors of the Federal Reserve System or any other person associated with the Federal Reserve System. We are grateful to Information Resources Inc. (IRI) for providing the scanner data. All estimates and analyses in this paper based on IRI data are by the authors and not by IRI. We thank Jason Sockin for providing superb research assistance, and Laura Ardila, Andrew B. Gi¢ n, and Teyanna Munyan for further assistance with the data. We also thank our colleague Charlie Gilbert for assisting us with the weekly seasonal …ltering procedure. Comments and suggestions can be directed to etienne.gagnon@frb.gov and david.lopez-salido@frb.gov.

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Individual Price Adjustment along the Extensive Margin

Cited by 12 publications

References 37 publications

Are State- and Time-Dependent Models Really Different?

Are State- and Time-Dependent Models Really Different?

What Are the Price Effects of Trade? Evidence From the U.S. and Implications for Quantitative Trade Models

Mass Population Displacement and Retail Activities in the Wake of Hurricane Katrina

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