Repricing Avalanches in the Billion-Prices Data

Laura Leal, Haaris Mateen, Makoto Nirei and Jose Scheinkman

No 29236, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Nirei and Scheinkman (2021) proposed an equilibrium model of price adjustments with menu-costs with a finite number of firms and derived a “reproduction number” for repricing and a limit functional form for the distribution of the number of simultaneously price-adjusting firms. We show that the distribution of price-changes in data from the Billion Prices Project is well fitted by this functional form and exhibits a reproduction number that is close to unity, indicating that complementarity in price-changes plays a major role in repricings.

JEL-codes: E31 (search for similar items in EconPapers)
Date: 2021-09
New Economics Papers: this item is included in nep-isf, nep-mac, nep-mon and nep-ore
Note: ME
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