Temporary sales in response to aggregate shocks

Benjamin Eden (), Maya Eden () and Jonah Yuen ()
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Jonah Yuen: Vanderbilt University

No 19-00003, Vanderbilt University Department of Economics Working Papers from Vanderbilt University Department of Economics

Abstract: This paper studies the role of temporary sales in the reaction to aggregate shocks. Using scanner data from supermarkets, we establish the following stylized facts: (a) The fraction of stores that offer sale prices fluctuate over weeks; (b) Goods with more fluctuations in regular prices have also more sales; (c) Temporary sales contribute substantially to the weekly variation of the average cross-sectional price of the typical good; (d) High prices appear to be more rigid than low prices. These findings can be rationalized by a model in which prices are completely flexible and temporary sales are reactions to unwanted inventories which accrue in response to aggregate demand shocks.

Keywords: Temporary Sales; Unwanted Inventories; Sequential Trade (search for similar items in EconPapers)
JEL-codes: D4 E0 (search for similar items in EconPapers)
Date: 2019-03-25
New Economics Papers: this item is included in nep-com and nep-mac
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