Prices over the business cycle: micro-level evidence from scanner data

A controversy has recently developed surrounding the extent to which prices are influenced by the business cycle. We provide some micro-level evidence on this issue using a large US scanner data set. Our model identifies the business cycle effect by looking at variation in unemployment and house price growth across US regions and compares this with individual price movements based upon a general hedonic formulation. We find little support for goods prices moving in response to fluctuations in the unemployment rate or house prices.