Price Dynamics, Retail Chains and Inflation Measurement
Coauthor(s): Alice Nakamura, Leonard I. Nakamura.
We use a large scanner price dataset to study grocery price dynamics. Previous analyses based on store scanner data emphasize differences in price dynamics across products. However, we also document large differences in price movements across different grocery store chains. A variance decomposition indicates that characteristics at the level of the chains (as opposed to individual stores) explain a large fraction of the total variation in price dynamics. Thus, retailer characteristics are found to be crucial determinants of heterogeneity in pricing dynamics, in addition to product characteristics. We empirically explore how the price dynamics we document affect price index measures.
Source: Journal of Econometrics
Nakamura, Alice, Emi Nakamura, and Leonard I. Nakamura. "Price Dynamics, Retail Chains and Inflation Measurement." Journal of Econometrics 161, no. 1 (March 2011): 47-55.