Research areas

MIGGROPRICES supports research efforts analyzing granular price data to obtain macroeconomic-oriented insights. Given the nature and features of the available data, in particular work from one of the following areas is facilitated:

Functioning of Retail Markets and Welfare Costs of Market Segmentations
Micro Price Dynamics and Macroeconomic Dynamics
Pass-Through
Scanner Prices and Competitiveness Measures

International price determination

Work conducted in the research area “INTEGRATION” focusses on analyzing patterns in intra- and international (micro) price-setting and deriving implications for the structure of the concerned goods markets. Our intended contributions include a comprehensive assessment of the degree of integration/segmentation across major EU goods markets and an explicit welfare-theoretic assessment of the observed price differences across EU countries. Moreover, questions of the pass-through of exchange rates to prices, the effects of exchange rate movements on consumer behavior and issues related to cross-border shopping are examined.

Examples of work supported by MIGGROPRICES and AiMark include:

Beck, Guenter W., Hans-Helmut Kotz and Natalia Zabelina (2016). Prices and consumer purchasing preferences at the border: evidence from a multi-country household scanner data set. CFS Working Paper Series No. 536. Dowload.

MACRO

To evaluate macro-oriented policies, general equilibrium models have been widely employed. New Keynesian models are the most prominent representatives of this class, extensively used to study in particular the effects of - and interactions between - monetary and fiscal policies. A key ingredient of New Keynesian models is the existence of rigidities in (nominal) wage and price setting. The proper - theoretical and empirical - specification of the wage and price adjustment mechanism has crucial importance for the model’s qualitative and quantitative implications. Work in the project area “MACRO” aims at contributing to the literature on general equilibrium models by providing new insights into price setting at the micro level and drawing implications of these findings for macro modelling.

Examples of work supported by MIGGROPRICES and AiMark include:

Beck, Guenter W. and Sarah M. Lein (2016). Microeconometric evidence on demand-side real rigidity and implications for monetary non-neutrality. CFS Working Paper Series No. 534. Download.

Cost pass-through

Since price is the key instrument connecting the different levels of the vertical supply chain, an understanding of pass-through – the transmission of costs to prices – is critical to macroeconomics and can provide insights into how efficiently markets are working. Moreover, its comprehension provide implications for inflation and the real effects of monetary policy and shocks to individual cost components like wage and commodity prices. In order to examine the pass-through mechanism and come up with macroeconomic implications it is necessary to provide stylized facts from the microeconomics. The central aim of research conducted in the area “PASS-THROUGH” is to examine cost pass-through across major EU goods and provide policy implications.

Examples of work supported by MIGGROPRICES and AiMark include:

Beck, Guenter W. and Sebastian G. Kessing. Consumer characteristics and tax pass-through. Under revision. The authors can be contacted at: guenter.beck@miggroprices.eu, kessing@vwl.wiwi.uni-siegen.de.

Scanner prices and aggregate price measurement

Scanner data and new methodological approaches allow for improvements in price level statistics along several dimensions relative to the measures that are currently provided by national statistical offices. More specifically, thanks to very detailed scanner data it is possible to compute household-specific or region-specific prices indices, with accurate quality-adjustments. Moreover, price indices based on scanner data can be computed for countries where official price statistics are subject to suspicions of systematic misreporting. Additionally, scanner data allow to differentiate between ``effective'' and ``recorded'' price inflation, i.e. price changes actually paid by households, in contrast with price changes observed for products that stay on the shelves in supermarkets. Finally, the rich set of available variables and observations makes it possible to study the determinants of the observed price dynamics across households and locations.