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Working Less and Bargain Hunting More: Macroimplications of Sales during Japan's Lost Decades
Author(s) -
SUDO NAO,
UEDA KOZO,
WATANABE KOTA,
WATANABE TSUTOMU
Publication year - 2018
Publication title -
journal of money, credit and banking
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.763
H-Index - 108
eISSN - 1538-4616
pISSN - 0022-2879
DOI - 10.1111/jmcb.12467
Subject(s) - economics , construct (python library) , ask price , monetary policy , work (physics) , monetary economics , economy , engineering , mechanical engineering , computer science , programming language
Standard New Keynesian models have often neglected temporary sales. In this study, we ask whether this treatment is appropriate. We use Japanese scanner data covering the last two decades and find a negative correlation between the frequency of sales and hours worked. We then construct a model that takes households' decisions regarding their allocation of time for work, leisure, and bargain hunting into account. We show that the decline in hours worked explains the rise in the frequency of sales. The real effect of monetary policy shocks weakens by around 40% due to temporary sales, but monetary policy still matters.