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What can stockouts tell us about inflation? Evidence from online micro data

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  • Cavallo, Alberto
  • Kryvtsov, Oleksiy

Abstract

We use a detailed micro dataset on product availability and stockouts to construct a direct high-frequency measure of consumer product shortages during the 2020–2022 pandemic. We document a widespread multi-fold rise in stockouts in nearly all sectors early in the pandemic. Over time, the composition evolved from temporary to more permanently discontinued products, concentrated in fewer sectors. We show that unexpected shocks to stockout levels have significant inflationary effects within three months. These effects are larger and more persistent for imported goods and import-intensive sectors. We develop a model of inventories in a sector facing both demand and cost disturbances, and use the observed joint dynamics of stockouts and prices to show that these effects can be associated with elevated costs of replenishing inventories and higher exposure to trade.

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  • Cavallo, Alberto & Kryvtsov, Oleksiy, 2023. "What can stockouts tell us about inflation? Evidence from online micro data," Journal of International Economics, Elsevier, vol. 146(C).
    • Handle: RePEc:eee:inecon:v:146:y:2023:i:c:s0022199623000557
    DOI: 10.1016/j.jinteco.2023.103769
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    1. Meyer, Brent H. & Prescott, Brian C. & Sheng, Xuguang Simon, 2023. "The impact of supply chain disruptions on business expectations during the pandemic," Energy Economics, Elsevier, vol. 126(C).
    2. Youngna Choi, 2022. "Economic Stimulus and Financial Instability: Recent Case of the U.S. Household," JRFM, MDPI, vol. 15(6), pages 1-25, June.
    3. Hugh Montag & Daniel Villar, 2022. "Price-Setting During the Covid Era," Economic Working Papers 547, Bureau of Labor Statistics.
    4. Beck, Günter W. & Carstensen, Kai & Menz, Jan-Oliver & Schnorrenberger, Richard & Wieland, Elisabeth, 2023. "Nowcasting consumer price inflation using high-frequency scanner data: Evidence from Germany," Discussion Papers 34/2023, Deutsche Bundesbank.
    5. Alessandria, George & Khan, Shafaat Yar & Khederlarian, Armen & Mix, Carter & Ruhl, Kim J., 2023. "The aggregate effects of global and local supply chain disruptions: 2020–2022," Journal of International Economics, Elsevier, vol. 146(C).
    6. Brent Meyer & Nicholas B. Parker & Xuguang Sheng, 2021. "Unit Cost Expectations and Uncertainty: Firms' Perspectives on Inflation," FRB Atlanta Working Paper 2021-12a, Federal Reserve Bank of Atlanta.
    7. An, Zidong & Sheng, Xuguang Simon & Zheng, Xinye, 2023. "What is the role of perceived oil price shocks in inflation expectations?," Energy Economics, Elsevier, vol. 126(C).
    8. Khalil, Makram & Lewis, Vivien, 2024. "Product turnover and endogenous price flexibility in uncertain times," Discussion Papers 14/2024, Deutsche Bundesbank.
    9. Crump, Richard K. & Eusepi, Stefano & Giannoni, Marc & Şahin, Ayşegül, 2024. "The unemployment–inflation trade-off revisited: The Phillips curve in COVID times," Journal of Monetary Economics, Elsevier, vol. 145(S).
    10. Patrick W. McLaughlin & Alexander Stevens & Shawn Arita & Xiao Dong, 2023. "Stocking up and stocking out: Food retail stock‐outs, consumer demand, and prices during the COVID‐19 pandemic in 2020," Applied Economic Perspectives and Policy, John Wiley & Sons, vol. 45(3), pages 1618-1633, September.
    11. Uzma Khan & Alexander DePaoli, 2024. "Brand loyalty in the face of stockouts," Journal of the Academy of Marketing Science, Springer, vol. 52(1), pages 44-74, January.
    12. Higo, Masahiro & Shiratsuka, Shigenori, 2023. "Consumer price measurement under the first wave of the COVID-19 spread in Japan: Scanner data evidence for retailers in Tokyo," Japan and the World Economy, Elsevier, vol. 65(C).
    13. Rachel Soloveichik, 2022. "Theoretical Inflation for Unavailable Products," BEA Working Papers 0193, Bureau of Economic Analysis.
    14. Galina Hale & John Leer & Fernanda Nechio, 2022. "Inflationary Effects of Fiscal Support to Households and Firms," Working Paper Series 2023-02, Federal Reserve Bank of San Francisco.
    15. Sonan Memon, 2022. "Inflation in Pakistan: High-Frequency Estimation and Forecasting," PIDE-Working Papers 2022:12, Pakistan Institute of Development Economics.
    16. Hale, Galina & Leer, John & Nechio, Fernanda, 2022. "Inflationary Effects of Fiscal Support to Households and Firms," Santa Cruz Department of Economics, Working Paper Series qt8qt1t3t4, Department of Economics, UC Santa Cruz.
    17. Melissa Maas & Gumataw Kifle Abebe & Christopher M. Hartt & Emmanuel K. Yiridoe, 2022. "Consumer Perceptions about the Value of Short Food Supply Chains during COVID-19: Atlantic Canada Perspective," Sustainability, MDPI, vol. 14(13), pages 1-20, July.

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    More about this item

    Keywords

    Prices; Stockouts; Inventories; Supply disruptions; COVID-19 pandemic;
    All these keywords.

    JEL classification:

    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • E37 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Forecasting and Simulation: Models and Applications

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