As part of the series of the „Finance Research Seminar“, VGSF welcomes András Danis from Central European University (CEU) to present his research paper.
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Paper
Shadow Inflation
We examine the relationship between customer wait times and future price inflation. We focus on the near universe of restaurants in the U.S. over the years 2019–2021. We document a stark increase in abnormal wait times starting in mid-2020. At the MSA level, we find that increases in abnormal wait times at restaurants predict greater future food away from home prices with a one standard deviation increase in abnormal wait times associated with an 81bps (or 4.9pps annualized) increase in food away from home prices over the following two months. Back-of-the-envelope calculations suggest that the increase in wait times during 2021 creates an aggregate opportunity cost of up to $5 billion per month for American consumers. Our results show that wide-spread increases in wait times within specific industries can reflect shadow costs of excess demand, and highlight the informativeness of cell phone data about changes in the macroeconomy.
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