[Food Demand] Secular rise and pro-cyclical variation in markups: Evidence from US grocery stores. Coauthored with Bulat Gafarov and Jens Hilscher.
To be presented at the SEA and AEA annual meetings. You may download the paper at SSRN.
This paper documents substantial time variations in price elasticities of demand and implied markups for the US food retail sector. First, we employ a Hausmantype IV to estimate store-level own-price elasticities at the market-good-year level, using scanner data of US grocery stores from 2001 to 2020. Then, we efficiently aggregate these data annually to estimate a common trend and cyclical variation in elasticities. Finally, we impute nationwide store-level price-cost markups from annual elasticities under a standard optimal pricing rule. We find (i) a long-run increase in US grocery store markups of 3.9% per year in the past two decades and (ii) a short-term decrease of 13.6% per year during aggregate demand contractions. We show the underlying elasticities are largely driven by economic and market factors, such as real GDP, housing prices, population, and product differentiation.
[Agricultural Production] The countervailing interaction between the investment and rental-supply effects of securing land ownership: Theory and evidence from Nicaragua.
Presented at the 2022 AAEA annual meeting and 2023 CES North America conference. You may download the paper here.
Securing land ownership has been hypothesized to bring about significant gains in both agricultural output and poverty reduction for a rural economy endowed with unequal land ownership distribution. However, these win-win economic gains largely hinge on the following premise: Security improvement can simultaneously boost land-attached investments and increase land rental supply to facilitate land access for the poor. This paper argues that in theory, non-security barriers to long-term land rental contracts could break this premise by causing a countervailing interaction between the investment and rental-supply effects of securing land ownership. I provide suggestive evidence from Nicaragua, one of the poorest countries in Latin America. Recent panel data of rural household surveys indicate that after an improvement in land ownership security, previously credit-unconstrained farmers are more likely to make land-attached investments but not rent out land, while previously credit-constrained farmers are more likely to do the opposite.