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Consumers are very responsive to sales, yet statistical agency practice typically under-weights sale prices in the Consumer Price Index (CPI). Evidence is lacking on the impact on the representativeness of prices included in the CPI and on estimates of inflation. We use high-frequency scanner...
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discounting, or myopia: they discount variables far into the future at higher rates than typically implied in the benchmark model … minimal estimated degrees of myopia. The results indicate that the empirical evidence for cognitive discounting may be …
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interest rates becomes less effective in stimulating current economic activity. While the implication of such discounting for … optimal policy depends on its degree, we find that, under a wide range of plausible degrees of discounting, it is optimal for …
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