Pricing Under Distress

S. Boragan Aruoba, Andrés Fernández Martin, Daniel Guzmán Girón (), Ernesto Pasten and Felipe Saffie

No 32538, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We study price adjustment during Chile’s October 2019 Social Uprising using VAT invoice data linking supermarket and supplier prices. Price-change frequency fell, adjustment size increased, and markups rose conditional on adjustment. Supplier pricing was unchanged, and supermarket responses did not vary with local riot intensity, weighing against upstream cost shocks and localized disruptions. We show that frequency and size alone cannot distinguish anticipated demand dispersion from higher menu costs. Combining the micro data with a calibrated Kimball menu-cost model, we find that both channels are needed to match the data and that both amplify monetary non-neutrality.

JEL-codes: E31 (search for similar items in EconPapers)
Date: 2024-06
New Economics Papers: this item is included in nep-cba and nep-mon
Note: ME
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