Pricing Under Distress
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.
-
-
Copy CitationS. Borağan Aruoba, Andrés Fernández, Daniel Guzmán, Ernesto Pastén, and Felipe Saffie, "Pricing Under Distress," NBER Working Paper 32538 (2024), https://doi.org/10.3386/w32538.Download Citation
-
Related
Topics
Programs
More from the NBER
In addition to working papers, the NBER disseminates affiliates’ latest findings through a range of free periodicals—the NBER Reporter, the NBER Digest, the Bulletin on Health, the Bulletin on the Economics of Alzheimer's, and the Bulletin on Entrepreneurship—as well as research spotlights, lectures, and panel videos.
