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This paper studies the implications of price flexibility on output volatility under menu costs and finds price flexibility to be output-destabilizing under supply shocks, but not necessarily so under demand shocks. We illustrate that such a result hinges on the extent to which firms can adjust along both the intensive and the extensive margins, the latter of which is often absent in the literature.
In this address, I distinguish and explore three conceptions of wages. A wage is a reward, given in recognition of the performance of a valued task. It is also an incentive: a way to entice workers to take and keep jobs, and to motivate them to work hard. Finally, a wage is a price of labor, and like all prices, conveys valuable information about relative scarcity. I show that each conception of wages has its own normative logic, or appropriate justification, and these logics can come apart. This explains some of the debate about wages and makes the project of justifying a wage simpliciter difficult. I identify which logic we should choose, since we must choose, and say what this means for how we should think about the justification of pay.
In the present work we study the evolution of the prices of the most representative goods of the Buenos Aires market in the decades after independence from the Spanish empire. The paper analyses the evolution of import, export and local prices in Buenos Aires for the first half of the 19th century and intends to contribute to a more accurate estimate of the intense process of price inflation and changes in relative prices that occurred in Buenos Aires during this period. We also aspire to be able to analyse the relationships between the increases in prices and the institutional effects of commercial blockades, the issuance of paper money and changes in the demand for goods that occurred in the commercial interaction of Buenos Aires. An attempt is also made to compare the dynamics of various baskets of goods, allowing us to evaluate the differentiated effects in local, regional and overseas supply and demand. With this in mind we analyse both general price indexes, with their main changes, and also aim to integrate a variety of products in baskets that represent as accurately as possible the diverse demands of the commercial space offered by the Buenos Aires market. Finally, we reexamine the effects of the price variations of the baskets of prices on various social sectors and regions linked to the significant interregional plaza represented by the Buenos Aires market.
In the globalised economy, the value chains of production have crossed national boundaries. As a result, the demand has intensified for land acquisition in order to set up production facilities and infrastructure. This industrialisation proceeded rapidly, and, therefore, a vast area of land had to be acquired, both in the Global South and in the North. This development has led to many conflicts. These conflicts are the result of the inability to understand the plural values of land in the realisation of property rights in social citizenship. This article has considered two land expropriation case study areas in India, Salbani and Singur in West Bengal, as a source of empirical data. The empirical evidence suggests that the straitjacket of monorational property rights discourse, which heavily relies on the absolute ownership and control (via exclusion of others) ignores the different ways in which plural land values shape ideas of social citizenship. There is a need to rediscover the ‘social’ in citizenship to ensure the subordination of market price to the ideals of social justice.
To understand price incentives to upsize combination meals at fast-food restaurants by comparing the calories (i.e. kilocalories; 1 kcal = 4·184 kJ) per dollar of default combination meals (as advertised on the menu) with a higher-calorie version (created using realistic consumer additions and portion-size changes).
Combination meals (lunch/dinner: n 258, breakfast: n 68, children’s: n 34) and their prices were identified from online menus; corresponding nutrition information for each menu item was obtained from a restaurant nutrition database (MenuStat). Linear models were used to examine the difference in total calories per dollar between default and higher-calorie combination meals, overall and by restaurant.
Ten large fast-food chain restaurants located in the fifteen most populous US cities in 2017–2018.
There were significantly more calories per dollar in higher-calorie v. default combination meals for lunch/dinner (default: 577 kJ (138 kcal)/dollar, higher-calorie: 707 kJ (169 kcal)/dollar, difference: 130 kJ (31 kcal)/dollar, P < 0·001) and breakfast (default: 536 kJ (128 kcal)/dollar, higher-calorie: 607 kJ (145 kcal)/dollar, difference: 71 kJ (17 kcal)/dollar, P = 0·009). Results for children’s meals were in the same direction but were not statistically significant (default: 536 kJ (128 kcal)/dollar, higher-calorie: 741 kJ (177 kcal)/dollar, difference: 205 kJ (49 kcal)/dollar, P = 0·053). Across restaurants, the percentage change in calories per dollar for higher-calorie v. default combination meals ranged from 0·1 % (Dunkin’ Donuts) to 55·0 % (Subway).
Higher-calorie combination meals in fast-food restaurants offer significantly more calories per dollar compared with default combination meals, suggesting there is a strong financial incentive for consumers to ‘upsize’ their orders. Future research should test price incentives for lower-calorie options to promote healthier restaurant choices.
We use linear time series and wavelets approach to study the relationships between U.S. and international prices for corn, soybeans, and cotton. We then compare results obtained with each approach and verify that structural breaks discovered with wavelet analysis match those produced with subsequent partial-period cointegration analysis. We find little evidence that short-term fluctuations between domestic and international prices are stable, while long-term relationships for many price pairs experience distinct structural breaks. We further find that even though China is among the largest importers of U.S. agricultural products, its commodity prices share little or no relationship with those prevailing in U.S. markets.
Food environments may be contributing to the rapid increase in obesity occurring in most Latin American (LA) countries. The present study reviews literature from LA that (i) describes the food environment and policies targeting the food environment (FEP); and (ii) analytic studies that investigate associations between the FEP and dietary behaviours, overweight/obesity and obesity related chronic diseases. We focus on six dimensions of the FEP: food retail, provision, labelling, marketing, price and composition.
Systematic literature review. Three databases (Web of Science, SciELO, LILACS) were searched, from 1 January 1999 up to July 2017. Two authors independently selected the studies. A narrative synthesis was used to summarize, integrate and interpret findings.
Studies conducted in LA countries.
The search yielded 2695 articles of which eighty-four met inclusion criteria.
Most studies were descriptive and came from Brazil (61 %), followed by Mexico (18 %) and Guatemala (6 %). Studies were focused primarily on retail/provision (n 27), marketing (n 16) and labelling (n 15). Consistent associations between availability of fruit and vegetable markets and higher consumption of fruits and vegetables were found in cross-sectional studies. Health claims in food packaging were prevalent and mostly misleading. There was widespread use of marketing strategies for unhealthy foods aimed at children. Food prices were lower for processed relative to fresh foods. Some studies documented high sodium in industrially processed foods.
Gaps in knowledge remain regarding policy evaluations, longitudinal food retail studies, impacts of food price on diet and effects of digital marketing on diet/health.
Mendoza is the main wine-producing province of Argentina, and the government is currently implementing a range of policies that seek to improve grape grower profitability, including a vineyard replanting program. This study uses a dataset of all grape sales recorded in Mendoza from 2007 to 2018, totaling 90,910 observations, to investigate the determinants of grape prices. Key findings include: smaller volume transactions receive lower-average prices per kilogram sold; the discount for cash payments is higher in less-profitable regions; and the effect of wine stock levels on prices is substantial for all varieties. Long-run predicted prices are also estimated for each variety, and region; and these results suggest that policymakers should review some of the varieties currently used in the vineyard replanting program. (JEL Classifications: Q12, Q13, Q18)
The Law and Economics literature details how information can be generated from legal rules drawn from both private and public spheres; designing legal rules to become more effective in creating useful information to improve both private and public decision making. We examined the market-based tool known as marketable emission permits or as tradable permits. The ability to sell permits does provide incentives if holders of permits can find greener solutions at prices attractive enough to sell off their permits. Pigou advocated for placing taxes on activities that led to negative externalities; that by carefully adding tax costs to the activity so that the marginal costs could become accurate, fully reflective of the externalities. Coase’s analysis of transaction costs complicates the question of against whom should the taxes be levied. Taxing activities that could give rise to environmental injuries must carefully understand the relative elasticities of demand to ensure that the tax will actually fall on the correct party and thus create the correct incentives. In conclusion, we found that market-based instruments worked best alongside more traditional forms of public regulation, that market-based instruments are not robustly implemented as a stand-alone alternative to traditional forms of public regulation.
Adequate income is a social determinant of health. In the United States, only Social Security beneficiaries receive inflation-protected guaranteed income. Social Security needs another 1983 compromise in which stakeholders accepted “shared pain” to avoid insolvency. We propose indexing the benefit using the chained consumer price index (CPI) for all urban consumers and providing a one-time bonus of 8% to 10% for beneficiaries in their mid-80s, when needs become greater. The chained CPI has little impact when beneficiaries start receiving benefits, but older beneficiaries need protection. The estimated 75-year savings from this restructured benefit amount to 14.2% to 18% of Social Security deficits. Modest increases in payroll taxes and maximum earnings taxed should make up most of the shortfall. Including unearned income with wages and salaries subject to the 6.2% individual tax would produce much more revenue. The discussion explores the proposal’s political feasibility, grounding in current policy and political science literature, and the role of income as a social determinant of health.
Technological advances introduce the possibility that, in the future, firms will be able to use big-data analysis to discover and offer consumers their individual reservation price (i.e., the highest price each consumer would be willing to pay, given their preferences and available income). This can generate some interesting benefits, such as a better state of affairs in terms of equality of both welfare and resources, as well as increased social welfare. However, these benefits are countered by considerations of relational equality. This article takes up the market-failures approach as its basis to demonstrate what is wrong with using big data to personalize prices. The article offers an improvement to the market-failures approach and argues that what is wrong with using big data to personalize prices is that it unfairly undermines consumers’ ability to benefit from the market, which is the very point of having a market.
In this paper, I examine the role of government spending persistence on fiscal multipliers at the zero lower bound (ZLB) in a more realistic environment while keeping the model simple enough to identify mechanisms driving the result. In particular, I build on a standard dynamic New Keynesian (DNK) model with an occasionally binding ZLB and Rotemberg pricing with rebates, where the probability of hitting the ZLB and the government purchase shock are in line with US data. Moreover, I compute the multiplier in a state that mimics the Great Recession. The main findings of the paper are as follows: (1) the multiplier is non-monotonic in the persistence of government spending while the economy is at the ZLB; (2) given the persistence estimated from US data, the multiplier is 1.25; and (3) in the framework with perfect foresight or with aggregate resource cost for adjusting prices, the multiplier is around 1 or less.
We reassess the evidence for (or against) a key implication of the basic real business cycle model: that aggregate hours worked increase in response to a positive technology shock. Two novel aspects are the scope (14 OECD countries) and the inclusion of data on both labor supply margins to analyze the key margin of adjustment in aggregate hours. The short-run response of aggregate hours to a positive technology shock is remarkably similar across countries, with an impact fall in 13 out of 14 countries. In contrast, its decomposition into intensive and extensive labor supply margins reveals substantial heterogeneity in labor market dynamics across OECD countries. For instance, movements in the intensive margin are the dominant channel of adjustment in aggregate hours in 6 out of 14 countries of our sample, including France and Japan.
The mid-1950s saw the unmasking of two scientific forgeries: the well-known Piltdown skull was shown to be a fake by J. S. Weiner, and Derek Price, a researcher in the newly opened Whipple Museum, demonstrated that a number of ‘early’ scientific instruments were in fact no more than half a century old. When Price announced his findings, he invoked the Piltdown story, urging historians to be as careful as their scientific colleagues. In this paper I use the Piltdown case and Derek Price’s work identifying five forgeries in the Whipple Museum’s collection to argue that the detection of forgeries was as much a matter of the changing nature of collections as it was a result of new scientific techniques or a more discerning eye. I characterize the change in attitudes towards the Piltdown skull as a move from visibility to legibility, and show that the same holds for Price’s own research into antique scientific instruments, which moved from the collector’s cabinet to the museum card-catalogue and, again, from visibility to legibility.
We investigate the dynamic evolution of the price discovery function in Chinese agricultural futures markets using a newly developed rolling window cointegration approach. The results show that, compared with wheat and rice, the futures-spot cointegration relationship in the soybean and corn markets tends to be more durable and frequent. Dynamic cointegration analysis indicates that the recent market-oriented reforms in China have boosted the price discovery function of soybean and corn futures markets, whereas price stabilization policies tend to weaken the price discovery function of futures markets. The difference in price discovery function is attributed to differences in market mechanisms and Chinese agricultural policies.
Mobile phones have been central to ICT innovation since the introduction of the smartphone and constant-quality prices are a barometer of their economic impact. Official consumer price indices (CPIs) indicate that impact differs wildly across countries: for the 2008–18 period, average annual rates of mobile phone inflation range from no change to a 25 per cent decline among 12 key countries examined in this paper. Although evidence indicates certain fundamental factors are at play, mis-measurement may lead the spread in rates to be overstated. Examination of methods employed in CPI calculation, including quality adjustment and index formulas, illuminates but does not resolve the mystery.
In this paper we estimate a New-Keynesian dynamic stochastic general equilibrium (NK DSGE) model with heterogeneity in price and wage setting behavior. In a recent study, Coibion and Gorodnichenko develop a DSGE model, in which firms follow four different types of price setting schemes: sticky prices, sticky information, rule-of-thumb, or flexible prices. We enrich Coibion and Gorodnichenko framework by incorporating heterogeneity in nominal wage setting behavior among households. We solve this DSGE model and estimate it using Bayesian techniques for the US economy from 1955 to 2008. The estimation results show the relevance of heterogeneity in wage setting among households. More importantly, we identify qualitative and quantitative business cycle features allowed by the heterogeneity in wage rigidity, such as the persistence in price and wage inflation, which a standard NK model with only Calvo-type wage rigidity fails to achieve. We also show that modeling wage-rigidity heterogeneity—as opposed to standard Calvo wages—amplifies the macroeconomic output fluctuations resulting from a technology shock while it mitigates the output fluctuations following a monetary tightening.
Producers often contemplate expanding or contracting production to take advantage of cyclical cattle price trends. This study quantifies profitability and risk implications of (1) constant herd size, (2) dollar cost averaging, and (3) price signal-based, anticipatory countercyclical expansion/contraction strategies. Weather simulation on forages with different calving season and land use intensity showed fall calving herds with added hay sales from greater fertilizer use and the countercyclical herd size management strategy to be most profitable regardless of weather or time period analyzed. Income risk was comparable to least fertilizer use. Overall, holding herd size constant led to little regret.
This chapter addresses two types of monetary remedies for patent infringement: (1) recovery of the patentee’s lost profits and (2) disgorgement of the infringer’s profits. Both remedies make a comparison between what actually happened and a hypothetical “but for” world in which no infringement occurred. But the two remedies have substantially different objectives: Lost profits are intended to compensate the patentee by restoring it to the position it would have occupied absent infringement, while disgorgement may serve other purposes, including deterrence, recapturing wrongful gains, and encouraging ex ante licensing of patented technology. Section 1 addresses several key issues regarding lost profits awards, including the availability and standard of proof, the role of noninfringing alternatives, potential recovery for the sale of related but unpatented goods, whether and how to apportion lost profits awards for complex products, and potential recovery for other infringement-related harms. Section 2 describes the justifications for, and availability of, the disgorgement (accounting) remedy in major patent systems and, additionally, analyzes a number of questions related to calculating such awards. In both sections, recommendations are made and areas for further research are identified.
This paper compares the conventional Calvo and Rotemberg price adjustments at the zero lower bound (ZLB) on nominal interest rates. Although the two pricing mechanisms are equivalent to a first-order approximation around the zero-inflation steady state, they produce very different results, based on a fully-nonlinear method. Specifically, the nominal interest rate hits the ZLB more frequently in the Calvo model than in the Rotemberg model. At the ZLB, deflation is larger and recessions are more severe in the Calvo model. The main reason for the difference in results is that price adjustment costs show up in the resource constraints in the Rotemberg. When they are rebated to the household, the two models behave similarly.