Working Less and Bargain Hunting More:
Macro Implications of Sales during Japan’s Lost Decades
N. Sudo, K. Ueda, K. Watanabe, T. Watanabe
BOJ, Waseda U, CIGS, Tokyo U

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Macro Implications of Temporary Sales

Are temporary sales important for the macroeconomy, or the realeffect of monetary policy?
Despite flexible prices?
Maybe yes, if sales depend on macroeconomy.

Facts
Does retailers’ decision on sales depend on the macroeconomy?
How did sales pricing change during Japan’s lost decades and why?

DSGE model with sales
Do frequent changes in sales prices dampen the effect of monetary
policy shock?

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Today’s talkEmpirical Facts from Two Datasets
Survey on Time Use and Leisure Activities (Household side)
showing that time spent shopping is negatively correlated with timespent working.

POS scanner data (Retailer side)
showing that sales become increasingly important.
showing that the frequency of sales is negatively correlated with timespent working.

Implying endogenous consumer search (bargain hunting)

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Literature

Interaction between hours worked and bargain hunting.
Nevo and Wong (2015) document the increase in shopping intensity
and the decline in households’ opportunity cost of time during theGreat Recession.
Aguiar and Hurst (2007) use scanner data and time diaries to
examine households’ substitution between shopping and home
production. They find that older households shop the most frequently
and pay the lowest price.
Lach (2007) analyzes store-level price data following the unexpectedarrival of a large number of immigrants from the former Soviet union
to Israel. He finds that the immigrants have a higher price elasticity
and a lower search cost for goods than the native population.

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FactsSUWW

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Survey on Time Use and Leisure Activities
Every five years
200,000 members in 83,000 households
Daily patterns of time allocation: time use spent working and shopping

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Working time is negatively correlated with shopping time.

Table: Time Use (minutes per day)19861991
1996
2001
2006
2011

(who work)
Shopping
6911131415Men(who work)
Working
493
481
469
456
470
466

(who do not work)
Shopping
91215182022(who work)
Shopping
273030
3131
32

Women
(who work)
Working
371
358
345
324
335
326

(who do not work)
Shopping
3738
39
39
39
40

Note: Working time includes commuting time. Source: Statistics Bureau, Survey on
Time Use and Leisure Activities.

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Table: Regression Results for Time Spent Shopping (minutes per day)Allworking time
non-cityfemale
age control
Observations-0.059***(0.002)4.911***(0.619)12.034***(1.295)
Y
180,240

Persons who spend their time
mainly working-0.063***(0.003)
2.996***(0.388)11.646***(1.200)Y
91,188Men who spend their time
mainly working-0.058***(0.003)3.389***(0.460)Y62,878Notes: Figures in parentheses represent robust standard errors. ***, **, and * represent
significance at the 1, 5, and 10 percent levels, respectively.

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Daily scanner or Point of Sales (POS) data.
information about prices at a store, product levelfrom 1988 to 2013
covering over 6 billion records
gathered by Nikkei Digital Media from various retail shops throughoutJapan.

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Price Changes of a Cup Noodle at a Store

160
Posted price
Regular Price

Price140
120
100
80

Quantity

60
3000
2000
1000
000.1.1

01.1.102.1.103.1.104.1.1date

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Sales have become increasingly important in households’ expenditure
activity.
Magnitude ofsales discounts

Frequency of sales
0.4

0.2

0.30.15

0.2

0.1

0.1

0.05

01990

2000

2010

01990

Quantity ratio ofsales to regular
42000

2010

Revenue ratioof sales
0.4
0.3

30.2
21
1990

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0.1
2000

2010

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mode 42d
V−shaped 42d2000 mode
2010
7d

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0.25
0.2
0.15
0.1
1985
0.4
0.35
0.3
0.25
0.2
0.15
0.1
1985

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1990

1990

1995

1995

2000

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2005

2005

Unemployment rate

0.4
0.35
0.3

2010

65432
102015

2010

120115110
1051009590
2015

Hours worked

Frequency of sales

Frequency of sales

Relation between Sales Frequency and Macroeconomic Indicators in Trend

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Table: Correlation between the Frequency/Magnitude of Sales and theMacroeconomy

FilterWindow
Goods
Macro variables
Unemp
Hours
CPI

mode
42d
all

V-shaped
42d
allFrequency of salesmode
V-shaped
7d
7d
all
all

mode
42d
food

mode
42d
domestic

0.215-0.428**-0.2430.147-0.393**-0.2050.479**-0.480**-0.2510.239-0.471**-0.3300.017-0.0200.150

0.505**-0.444**-0.261

Note: ** and * represent significance at the 5 and 10 percent levels, respectively.

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Summary and Discussions
A negative correlation between the frequency of sales and hours
worked. Endogenous bargain hunting and sales holding.
Acyclical in Coibion, Gorodnichenko, and Hong (2012)
Two reasons
Japan is not the United States.
Every-day-low-price strategy is not common in Japan.
In the US, every-day-low-price strategy is adopted mainly bylower-priced stores like Wal-Mart, while temporary sales are conducted
mainly by higher-price stores. When unemployment rises, higher-pricedstores give up price-sensitive customers.
As Sudo, Ueda, and Watanabe (2014) point out, prices in Japan arerevised ten times more frequently, due to frequent temporary sales.
On a consumer side, Japanese households are said to go shopping more
frequently. The average shopping frequency is three to four times aweek.

Our POS data have long sample periods, from 1988 to 2013, while
Dominick’s data in the US range from 1989 to 1997.
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