A Sticky-Price View of Hoarding

64 Pages Posted: 28 Apr 2020 Last revised: 18 Nov 2021

See all articles by Christopher Hansman

Christopher Hansman

Imperial College Business School

Harrison G. Hong

Columbia University, Graduate School of Arts and Sciences, Department of Economics; National Bureau of Economic Research (NBER)

Aureo de Paula

University College London - Department of Economics

Vishal Singh

New York University (NYU) - Department of Marketing

Multiple version iconThere are 4 versions of this paper

Date Written: April 2020

Abstract

We show that sticky prices exacerbate household hoarding of storable goods. When stores are slow to adjust prices following a cost shock, households have an incentive to stockpile just as in a typical retail sale. This incentive is present even in the absence of traditional panic or precautionary motives for hoarding. Using detailed US supermarket scanner data covering the 2008 global rice crisis—a shock triggered by an Indian rice export ban—we find that household hoarding anticipated retail price adjustments. We construct forecast tests relating the cross-section of product or store-level price adjustments to the expectations implied by consumer purchases. Bias and efficiency tests reject panic/precautionary motives in favor of a sticky-price view.

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Suggested Citation

Hansman, Christopher and Hong, Harrison G. and de Paula, Aureo and Singh, Vishal, A Sticky-Price View of Hoarding (April 2020). Available at SSRN: https://ssrn.com/abstract=3586183 or http://dx.doi.org/10.2139/ssrn.3586183

Christopher Hansman (Contact Author)

Imperial College Business School ( email )

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Harrison G. Hong

Columbia University, Graduate School of Arts and Sciences, Department of Economics ( email )

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National Bureau of Economic Research (NBER)

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Aureo De Paula

University College London - Department of Economics ( email )

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Vishal Singh

New York University (NYU) - Department of Marketing ( email )

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