IDEAS home Printed from https://ideas.repec.org/p/red/sed012/853.html
   My bibliography  Save this paper

The Shopping Multiplier

Author

Listed:
  • Greg Kaplan

    (University of Pennsylvania)

Abstract

We develop a general equilibrium model in which employed and unemployed households devote a different amount of time to shopping. As in Mortensen and Pissarides (1994), unemployment is caused by the presence of search and matching frictions in the labor market. As in Burdett and Judd (1981), mark-ups in the retail market are endogenous and are determined by the extent of search frictions. The main novelty of our model is to allow for differences in the intensity at which employed and unemployed workers shop in the product market. Differences in the shopping behavior of employed and unemployed households amplify the effect of exogenous shocks on aggregate economic activity, thus generating a positive shopping multiplier. We show that, under some parametric conditions, the shopping multiplier can be strong enough to generate multiple equilibria and, hence, open the door to cyclical fluctuations driven entirely by changes in consumer confidence.

Suggested Citation

  • Greg Kaplan, 2012. "The Shopping Multiplier," 2012 Meeting Papers 853, Society for Economic Dynamics.
    • Handle: RePEc:red:sed012:853
    as

    Download full text from publisher

    File URL: https://red-files-public.s3.amazonaws.com/meetpapers/2012/paper_853.pdf
    Download Restriction: no
    ---><---

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:red:sed012:853. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Christian Zimmermann (email available below). General contact details of provider: https://edirc.repec.org/data/sedddea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.