Dynamic cost of living index for storable goods

Research output: Contribution to journalArticlepeer-review

Abstract

Consumers hold inventory for future uses. This study investigates how such intertemporal decisions influence the cost-of-living index (COLI). To this end, I construct a simple dynamic model, in which goods are storable and nonresalable, and prices take either high (regular price) or low values (sales), and then introduce two types of dynamic COLIs. I find that neither index satisfies both monotonicity and the time reversal test.

Original languageEnglish
Article number109013
JournalEconomics Letters
Volume189
DOIs
Publication statusPublished - 2020 Apr

Keywords

  • Chain drift
  • Consumer inventory
  • Cost-of-living index
  • Price index

ASJC Scopus subject areas

  • Finance
  • Economics and Econometrics

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