Dynamic cost of living index for storable goods

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 (sale...

Full description

Saved in:
Bibliographic Details
Published in:Economics letters 2020-04, Vol.189, p.109013, Article 109013
Main Author: Ueda, Kozo
Format: Article
Language:English
Subjects:
Chain drift
Consumer inventory
Consumers
Cost of living
Cost-of-living index
Decision making
E coli
Inventory management
Price index
Prices
Sales
Citations: Items that this one cites
Items that cite this one
Online Access:Get full text
Tags: Add Tag
No Tags, Be the first to tag this record!
Description
Summary: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. •Consumers hold inventory, while most models assume perishable goods.•The properties of the cost-of-living index (COLI) are studied.•I construct a simple dynamic model of storable goods.•No plausible COLI satisfies both monotonicity and the time reversal test.
ISSN:0165-1765
1873-7374
DOI:10.1016/j.econlet.2020.109013