Working Less and Bargain Hunting More:Macro Implications of Sales during Japan's Lost Decades

Nao Sudo, Kozo Ueda, Kota Watanabe and Tsutomu Watanabe
Additional contact information
Nao Sudo: Bank of Japan
Kota Watanabe: Meiji University
Tsutomu Watanabe: The University of Tokyo

No CARF-F-351, CARF F-Series from Center for Advanced Research in Finance, Faculty of Economics, The University of Tokyo

Abstract: Standard New Keynesian models have often neglected temporary sales. In this paper, we ask whether this treatment is appropriate. In the empirical part of the paper, we provide evidence using Japanese scanner data covering the last two decades that the frequency of sales was closely related with macroeconomic developments. Specically, we find that the frequency of sales and hours worked move in opposite directions in response to technology shocks, producing a negative correlation between the two. We then construct a dynamic stochastic general equilibrium model that takes households' decisions regarding their allocation of time for work, leisure, and bargain hunting into account. Using this model, we show that the rise in the frequency of sales, which is observed in the data, can be accounted for by the decline in hours worked during Japan's lost decades. We also nd that the real eect of monetary policy shocks weakens by around 40% due to the presence of temporary sales, but monetary policy still matters.

Pages: 80 pages
Date: 2014-09
New Economics Papers: this item is included in nep-dge and nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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https://www.carf.e.u-tokyo.ac.jp/old/pdf/workingpaper/fseries/F351.pdf (application/pdf)

Related works:
Journal Article: Working Less and Bargain Hunting More: Macroimplications of Sales during Japan's Lost Decades (2018)
Working Paper: Working Less and Bargain Hunting More: Macro Implications of Sales during Japan's Lost Decades (2014)
Working Paper: Working less and bargain hunting more: macro implications of sales during Japan's lost decades (2014)
Working Paper: Working Less and Bargain Hunting More: Macro Implications of Sales during Japan's Lost Decades (2014)
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