Publications
In this chapter, we characterize the dispersion of grocery prices in France based on a large original data set of prices in more than 1500 supermarkets across the country. On average across products, the 90 th percentile of relative prices is 17 percentage points higher than the 10 th . The mean absolute deviation from quarterly average product prices is 5% on average in the French retail sector, and the standard deviation of relative prices is 7%.We show that temporary sales and promotions offer a limited explanation of the observed price dispersion, while the permanent component of price dispersion largely dominates. We find that in France price dispersion across stores essentially results from persistent heterogeneity in retail chains’ national pricing. Indeed, consumer prices are largely determined at a national level by retail groups’ bargaining power with producers and by retail chains’ positioning. We also show, however, that local conditions regarding demand and local competition between supermarkets do explain prices observed in local markets, though to a much lower extent.
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We analyze a version of the Benhabib and Farmer (1996) two-sector model with sector-specific externalities in which we consider a class of utility functions inspired from the one considered in Jaimovich and Rebelo (2009) which is flexible enough to encompass varying degrees of income effect. First, we show that local indeterminacy and sunspot fluctuations occur in 2-sector models under plausible configurations regarding all structural parameters—in particular regarding the intensity of income effects. Second, we prove that there even exist some configurations for which local indeterminacy arises under any degree of income effect. More precisely, for any given size of income effect, we show that there is a non-empty range of values for the Frisch elasticity of labor and the elasticity of intertemporal substitution in consumption such that indeterminacy occurs. This contrasts with the results obtained in one-sector models in both Nishimura et al. (2009), in which it is shown that indeterminacy cannot occur under either GHH and KPR preferences, and in Jaimovich (2008) in which local indeterminacy only arises for intermediary income effects.
We explore the stabilizing role of monetary policy on the existence of endogenous fluctuations when the economy experiences a rational bubble. Considering an overlapping generations model, expectation-driven fluctuations are explained by a portfolio choice between three assets (capital, bonds and money), credit market imperfections and a collateral effect. They occur under a positive bubble on bonds. The key mechanism relies on the existence of gaps between the returns on assets due to financial distortions. Then, we study the stabilizing role of the monetary policy. Such a policy managed by a (standard) Taylor rule has no clear stabilizing virtues.
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This chapter presents a brief overview of the career and main contributions of Professor Jean-Michel Grandmont. It also provides a summarized description of the 16 papers written in his honor by his friends and colleagues.
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