What type of study is this?

Spending Allocation under Nominal Uncertainty: A Model of Effective Price Rigidity

View Full Paper

Ask AI

Bookmark

Authors

The model demonstrates how inflation affects shopping behavior in households, suggesting inflation alters price perceptions.

Surprise inflation can significantly boost output by changing household spending behavior.
Inflation measured over paid prices tends to move more slowly than over posted prices, indicating price rigidity effects.
This analysis uses retailer scanner data to validate key predictions of the model on household price searching behavior.
Households may overestimate the benefit of seeking lower prices due to perceived local price changes, influencing allocation decisions.

Gaballo et al. (2025) studied this question.

View Full Paper

Ask AI

Bookmark