"Cyclical Price Volatility: Role of Shopping Behavior and Customer Capital".
(Job market paper)
Dispersion in price growth rates rises during recessions. I explain this empirical phenomenon from the perspective of consumer shopping behavior and seller’s customer accumulation. I document the facts that (1) consumers switch more across sellers during recessions, and (2) sellers set higher price after a growth in the customer base. Motivated by these facts, I propose a novel mechanism that a change in shopping behavior results in a change of the customer base of sellers, which then shifts the distribution of price growth. I build a general equilibrium model in which firms accumulate customer capital and households endogenously decide search effort. Calibrated to match the moments from shopping behavior and cross-sectional distribution of price and customer base, the model explains 30% of rise in price growth dispersion in the data during the Great Recession.
"Shopping and Price Dispersion".
This paper studies the consumer price search behavior and how it shapes price distribution using micro-level transaction data. I document the cross-sectional distributions of two types of prices: the posted price across retailers, and purchase price across households. I find that (1) distribution of purchase price is more concentrated with lower mean, and (2) the difference between the two distribution is positive related to the measured shopping effort. Using a standard price search model, I show that the gap between the two price distributions suggests strongly that consumer price search is directed sequential search, not random search.
"Consumption Growth and Wealth Effect in the Great Recession".
In this paper, I document the fact that higher income groups suffer higher consumption drop in the US during the last recession. I show empirically that this is a result of combined response to both transitory and permanent income changes. The consumption of lower income groups is more sensitive to transitory income shocks while the high-income groups are more responsive to wealth change caused by the fluctuations in asset prices, especially housing price. I incorporate these findings into a life-cycle general equilibrium model with housing. The model generates the same pattern in consumption growth of households in different income groups as in the data after a decline in housing price.
(Job market paper)
Dispersion in price growth rates rises during recessions. I explain this empirical phenomenon from the perspective of consumer shopping behavior and seller’s customer accumulation. I document the facts that (1) consumers switch more across sellers during recessions, and (2) sellers set higher price after a growth in the customer base. Motivated by these facts, I propose a novel mechanism that a change in shopping behavior results in a change of the customer base of sellers, which then shifts the distribution of price growth. I build a general equilibrium model in which firms accumulate customer capital and households endogenously decide search effort. Calibrated to match the moments from shopping behavior and cross-sectional distribution of price and customer base, the model explains 30% of rise in price growth dispersion in the data during the Great Recession.
"Shopping and Price Dispersion".
This paper studies the consumer price search behavior and how it shapes price distribution using micro-level transaction data. I document the cross-sectional distributions of two types of prices: the posted price across retailers, and purchase price across households. I find that (1) distribution of purchase price is more concentrated with lower mean, and (2) the difference between the two distribution is positive related to the measured shopping effort. Using a standard price search model, I show that the gap between the two price distributions suggests strongly that consumer price search is directed sequential search, not random search.
"Consumption Growth and Wealth Effect in the Great Recession".
In this paper, I document the fact that higher income groups suffer higher consumption drop in the US during the last recession. I show empirically that this is a result of combined response to both transitory and permanent income changes. The consumption of lower income groups is more sensitive to transitory income shocks while the high-income groups are more responsive to wealth change caused by the fluctuations in asset prices, especially housing price. I incorporate these findings into a life-cycle general equilibrium model with housing. The model generates the same pattern in consumption growth of households in different income groups as in the data after a decline in housing price.