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Price setting in Chile: Micro evidence from consumer on-line prices during the social outbreak and Covid-19

Jennifer Peña () and Elvira Prades ()
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Jennifer Peña: Central Bank of Chile
Elvira Prades: Banco de España

No 2112, Working Papers from Banco de España

Abstract: In this paper we analyze the price setting behavior in Chile by using scraped data from public websites of the main retailers including supermarkets, a pharmacy retailer and car dealerships. The data collection started in July 2019 and the dataset covers two major recent events: (1) the social outbreak and (2) the state of emergency declaration due to Covid-19, both episodes led to disruptions in the economy. With information on product varieties that accounts for 22% of the CPI basket, we document several empirical findings as regards price setting behaviour in terms of stickiness, that is, frequency, implied duration and the size of price adjustments. We find that in spite of facing large shocks, prices adjusted very little, at a lower frequency and at a smaller size than prior to these two events. We also find that there was a reduction on product variety availability on-line, a typical feature that also has been found during natural disasters such as earthquakes. The reduction in product availability poses additional difficulties to construct CPI indexes and to properly capture price rigidities, which are relevant for monetary policy.

Keywords: on-line price data; CPI; prices stickiness; retail distribution (search for similar items in EconPapers)
JEL-codes: E01 E31 L81 (search for similar items in EconPapers)
Pages: 32 pages
Date: 2021-01
New Economics Papers: this item is included in nep-big and nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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