The Cyclicality of Sales, Regular and Effective Prices: Business Cycle and Policy Implications: Reply
Olivier Coibion, Yuriy Gorodnichenko, Gee Hee Hong
American Economic Review · 2019 · Volume 109 · Issue 1
Abstract
We address how using different censoring thresholds and imputation procedures affects the baseline results of Coibion, Gorodnichenko, and Hong (2015). Higher censoring thresholds introduce measurement error and outliers that generate wide variability in results across weighting schemes, but methods that explicitly control for outliers confirm the results of Coibion et al. (2015) for all censoring thresholds. We also illustrate how the BLS's approach to imputing missing prices can introduce a cyclical bias into measures of posted price inflation when store-switching is present in the data.
Keywords
Consumer Economics: Empirical Analysis, Price Level, Inflation, Deflation, Business Fluctuations, Cycles, Firm Performance: Size, Diversification, and Scope, Retail and Wholesale Trade, e-Commerce
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