Price setting on the two sides of the Atlantic: evidence from supermarket-scanner data

Peter Karadi, Juergen Amann, Javier Sánchez Bachiller, Pascal Seiler and Jesse Wursten

No 2853, Working Paper Series from European Central Bank

Abstract: We compare supermarket price setting in the US and the euro area and assess its impact on food inflation. We introduce a novel scanner dataset of Germany, the Netherlands, France, and Italy (EA4) and contrast it with an equivalent dataset from the US. We find that both higher frequency and stronger state dependence of price changes contribute to higher flexibility of supermarket inflation in the US relative to the euro area. We argue that the driving force behind both factors is higher cross-sectional volatility in the US. Larger product-level fluctuations both force retailers to adjust prices more frequently and increase price misalignments, which increase the selection of large price changes. [...] JEL Classification: E31, E32, E52, F44

Keywords: COVID-19; duration hazard; food inflation; generalized hazard; state-dependent price setting; US and euro-area comparison (search for similar items in EconPapers)
Date: 2023-10
New Economics Papers: this item is included in nep-eec, nep-mon and nep-opm
Note: 1871516
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (7)

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Related works:
Journal Article: Price setting on the two sides of the Atlantic - Evidence from supermarket scanner data (2023)
Working Paper: Price Setting on the Two Sides of the Atlantic: Evidence from Supermarket-Scanner Data (2023)
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Persistent link: https://EconPapers.repec.org/RePEc:ecb:ecbwps:20232853

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