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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
Kota Watanabe: Meiji University
Tsutomu Watanabe: University of Tokyo

No 29, UTokyo Price Project Working Paper Series from University of Tokyo, Graduate School of Economics

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 pa- per, we provide evidence using Japanese scanner data covering the last two decades that the frequency of sales was closely related with macroeconomic developments. Specifically, we find that the frequency of sales and hours worked move in opposite directions in response to technology shocks, producing a negative correlation be- tween 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 find that the real effect of monetary policy shocks weakens by around 40% due to the presence of temporary sales, but monetary policy still matters.

Keywords: sales; monetary policy; lost decades; time use (search for similar items in EconPapers)
JEL-codes: E3 E5 (search for similar items in EconPapers)
Pages: 80 pages
Date: 2014-09
New Economics Papers: this item is included in nep-dge, nep-lab and nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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