The author systematically examines one of the important issues of information — establishing the market price. He introduces the concept of «search» — where a buyer wanting to get a better price, is forced to question sellers. The article deals with various aspects of finding the necessary information.

Economics of Information

Economics and Information Theory

The World is Flat: A Brief History of the Twenty-First Century Thomas L. Friedman Farrar, Straus and Giroux, 2005 Thomas Friedman is a widely-acclaimed journalist, foreign affairs columnist for the New York Times, and author of four best-selling books that include From Beirut to Jerusalem (1989). His eminence as a journalist is clearly demonstrated in the way he prepared for The World is Flat. He traveled throughout the world, interviewing in depth the political and business leaders who have the most direct, hands-on knowledge of the truly incredible developments occurring in the business structures and technology of globalization. Only a journalist who moves freely at the highest levels could interview the likes of Sir John Rose, the chief executive of Rolls-Royce; Nobuyuki Idei, the chairman of Sony; Richard Koo, the chief economist for the Nomura Research Institute; Bill Gates of Microsoft; Wee Theng Tan, the president of Intel China; David Baltimore, president of Caltech; Howard Schultz, founder and chairman of Starbucks; Nandan Nilekani, CEO of Infosys in Bangalore - and many others, each of whom gave him the inside story of how, specifically, the barriers of time and space separating economies, workforces, sources of capital, and technical abilities are crumbling. The result of this unfolding story, already far along but with much farther to go, according to Friedman, is that "the world is flat." With some notable exceptions in sub-Saharan Africa and the Islamic swathe, everything is connected with everything else on a horizontal basis, with distance and erstwhile time-lags no longer mattering. Friedman describes in detail the galloping globalization that has unfolded in even so limited a time as the past five years. Under the impetus of a worldwide network of interconnectivity, the world economy is much-changed from what it was at the turn of the century a mere half-decade ago. Friedman quotes the CEO of India's Infosys: "What happened over the last [few] years is that there was a massive investment in technology, especially in the bubble era, when hundreds of millions of dollars were invested in putting broadband connectivity around the world, undersea cables," while (Friedman paraphrases him) "computers became cheaper and dispersed all over the world, and there was an explosion of software - e-mail, search engines like Google, and proprietary software that can chop up any piece of work and send one part to Boston, one part to Bangalore, and one part to Beijing...." Microprocessors today have 410 million transistors compared to the 2800 they had in 1971. And now, "wireless is what will allow you to take everything that has been digitized, made virtual and personal, and do it from anywhere." The effect on productivity is revolutionary: "It now takes Boeing eleven days to build a 737, down from twenty-eight days just a few years ago. Boeing will build the next generation of planes in three days, because all the parts are computer-designed for assembly." The most strikingly informative aspect of this book, however, is not about technology. Most especially, Friedman explores the rapidly evolving global business systems, each constantly regenerating itself to keep ahead of the others. These are systems that span the continents seeking the lowest-cost providers of everything from expert scientific and engineering work to the lowliest grunt work. Friedman points out that India produces 70,000 accounting graduates each year - and that they are willing to start at $100 a month. It is no wonder that Boeing employs 800 Russian scientists and engineers for passenger-plane design when "a U.S. aeronautical engineer costs $120 per design hour, a Russian costs about one-third of that." Friedman describes a call center in India where outbound callers sell "everything from credit cards to phone minutes," while operators taking inbound calls do "everything from tracing lost luggage for U.S. and European airline passengers to solving computer problems for confused American consumers. …

The World Is Flat: A Brief History of the Twenty-First Century

Africa has had slow growth and a massive exodus of capital. In many respects it has been the most capital-hostile region. We review and interpret the aggregate-level and microeconomic literatures to identify the key explanations for this performance. There is a reasonable correspondence of the two sets of evidence, pointing to four factors as being important. These are a lack of openness to international trade; a high-risk environment; a low level of social capital; and poor infrastructure. These problems are to a substantial extent attributable to government behavior, and the paper includes a review of the political economy literature addressing that behavior.

Explaining African Economic Performance

Africa has had slow growth and a massive exodus of capital In many respects it has been the most capital-hostile region We review and interpret the aggregate-level and microeconomic literatures to identify the key explanations for this performance There is a reasonable correspondence of the two sets of evidence, pointing to four factors as being important These are a lack of openness to international trade; a high-risk environment; a low level of social capital; and poor infrastructure These problems are to a substantial extent attributable to government behaviour and the paper includes a review of the political economy literature which addresses that behaviour

/pdf/explaining-african-economic-performance-w6vw7mzskn.pdf

The real exchange rate and macroeconomic performance in Sub-Saharan Africa

Public debt has surged during the current global economic crisis and is expected to increase further. This development has raised concerns whether public debt is starting to hit levels where it might negatively affect economic growth. Does such a tipping point in public debt exist? How severe would the impact of public debt be on growth beyond this threshold? What happens if debt stays above this threshold for an extended period of time? The present study addresses these questions with the help of threshold estimations based on a yearly dataset of 99 developing and developed economies spanning a time period from 1980 to 2008. The estimations establish a threshold of 77 percent public debt‐to‐GDP ratio. If debt is above this threshold, each additional percentage point of debt costs 0.017 percentage points of annual real growth. The effect is even more pronounced in emerging markets where the threshold is 64 percent debt‐to‐GDP ratio. In these countries, the loss in annual real growth with each additional percentage point in public debt amounts to 0.02 percentage points. The cumulative effect on real GDP could be substantial. Importantly, the estimations control for other variables that might impact growth, such as the initial level of per‐capita‐GDP.

/pdf/finding-the-tipping-point-when-sovereign-debt-turns-bad-1w17vpi4z9.pdf

"Finding the Tipping Point -- When Sovereign Debt Turns Bad"

Real interest rate equalization and the integration of international financial markets

The law of one price (LOP) is an important ingredient in theories of international trade. Typical analyses of the LOP assume that parity should hold contemporaneously. This assumption overlooks temporal elements of trade. Recognizing this fact, we expect parity to hold for expected prices. Two empirical procedures are utilized to consider the LOP in international markets for U.S. agricultural commodities. The first utilizes econometric procedures to test an expectations augmented version of the LOP. A second approach uses nonparametric procedures to provide an alternative consideration of expectations. In each case, results provide support for a rational expectations view of the LOP.

A Revised Test of the Law of One Price Using Rational Price Expectations

https://isiarticles.com/bundles/Article/pre/pdf/18197.pdf

Thomas Grennes

Papers

The real exchange rate and macroeconomic performance in Sub-Saharan Africa

"Finding the Tipping Point -- When Sovereign Debt Turns Bad"

Real interest rate equalization and the integration of international financial markets

A Revised Test of the Law of One Price Using Rational Price Expectations

Mechanical Refrigeration and the Integration of Perishable Commodity Markets