Retail Prices During a Change in Monetary Regimes: Evidence from Sears, Roebuck Catalogs, 1938-1951

Abstract:     
This paper presents microeconomic evidence on US pricing dynamics immediately pre- and post-establishment of the Bretton Woods monetary regime. We track prices of 49 goods (1172 observations) in the 1938 through 1951 Sears, Roebuck and Co. catalogs. Over the full time period the average length between (nominal) price changes was over 2 years. The average was higher (2.05 years) in the pre-Bretton Woods period than in the later period (2.01 years), but by less than half a month. Additionally, we find the prices of brand name goods were considerably more rigid than generics, and we identify 3 goods that did not experience a single price change. On average price changes were larger during the 1945 through 1951 time period than pre-Bretton Woods by between 0.60 and 1.83 percent. We do not find evidence of decreased price inertia in the higher inflation (Bretton Woods) period. Instead, price changes displayed a higher correlation with inflation pre-Bretton Woods. This suggests a time-dependent pricing model that, at least initially, did not change significantly in response to the regime change.

Keywords: Sticky prices, price rigidity, Bretton Woods, inflation, economic history

JEL Classifications: D40, E12, E31, L10, L11, L16, M10, M31, N1, N8

Working Paper Series