Working Paper: NBER ID: w27051
Authors: Christopher Hansman; Harrison Hong; Ureo de Paula; Vishal Singh
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.
Keywords: Hoarding; Sticky Prices; Rice Crisis; Consumer Behavior
JEL Codes: D1
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| sticky prices (D41) | household hoarding (D10) |
| anticipated retail price adjustments (D49) | household hoarding (D10) |
| sticky prices (D41) | implicit promotion effect (J62) |
| implicit promotion effect (J62) | household hoarding (D10) |
| price stickiness (L11) | consumer behavior influenced by expectations (D12) |
| price adjustments (L11) | stockpiling behaviors (D14) |