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Showing papers on "Factor price published in 2019"


Journal ArticleDOI
TL;DR: In this paper, the authors estimate from the micro data of the German ifo Business Climate Survey the impact of idiosyncratic volatility on the extensive margin of firm-level price setting behavior, suggesting that, for price setting, the volatility effect dominates the "wait-and-see" effect.

36 citations


Journal ArticleDOI
TL;DR: The authors found that if quality response to price is ignored, estimated price elasticities of quantity demand conflate responses on quantity and quality margins, and over 80% of published studies using budget shares from household survey data have this error.

24 citations


Journal ArticleDOI
TL;DR: In this paper, the authors used the input-output tables for adopting the translog cost function to construct a Kalman filter-based econometric model to estimate the share equation of energy, non-energy, capital and labor in the 33 China's sectors and conduct empirical research on the impact on China's energy intensity caused by input price changes and biased technological progress.

13 citations


Dissertation
12 Sep 2019
TL;DR: In this article, the authors examined the functional distribution of income and global real interest rates, and examined city growth in Sweden over the last two hundred years, finding a signficant effect of stock price booms on the capital share.
Abstract: This dissertation is a study in empirical macroeconomic history. The first two papers concern themselves with the functional distribution of income. The third paper is an examination of global real interest rates, and the final paper examines city growth in Sweden over the last two hundred years. While this thesis is not about secular stagnation per se, every articles is related in one way or the other to Larry Summers' theory.The Kappa discusses in greater length the theory of secular stagnation and the related macroeconomic phenomena that have ailed advanced economies in recent years, including low real interest rates, higher debt levels and equity prices, and rising inequality, including lower labor shares.The first paper of the thesis examines the downward trend in the US labor share since the postwar period. We establish that a significant part of the decline is related to rising imputations in the GDP caluclations. More specifically, economy-wide depreciation and imputed rents have increased substantially in recent years. The second paper uses long-run panel data for 17 advanced economies and establishes a relationship between rising asset prices and the increasing capital share of GDP. We find a signficant effect of stock price booms on the capital share. The relationship for housing booms is weaker. The third paper of the thesis exmines global real interest rates for the same set of advanced economies from 1870 to today. Using a time series factor model, we establish that a substantial part of the variation in real interest rate is determined by global factors. In contrast to neo-keynesian models, this finding implies that Central Banks have less monteary autonomy than what is commonly assumed.Finally, the last paper examines Swedish city growth from the pre-industrial period to today. We estimate Zipf's law for each decade from 1810 to 2010. Using the rank-size rule as a bechmark, we also show that, with the exception of Stockholm, most large Swedish cities are considerably smaller than what the power law would suggest. Given the positive relationship between city size and productivity, this finding might even have macroeconomic implications. (Less)

8 citations


Report SeriesDOI
TL;DR: The authors showed that price points, embodied in nine-ending prices, account for approximately two-thirds of prices and post-sale prices return to their pre-sale levels more than three-fourths of the time.
Abstract: Macroeconomic models often generate nominal price rigidity via menu costs. This paper provides empirical evidence that treating menu costs as a structural explanation for sticky prices may be spurious. Using scanner data, I note two empirical facts: (1) price points, embodied in nine-ending prices, account for approximately two-thirds of prices; and (2) at the conclusion of sales, post-sale prices return to their pre-sale levels more than three-fourths of the time. I construct a model that nests roles for menu costs and price points and estimate model variants. Excluding the two facts yields a statistically and economically significant role for menu costs in generating price rigidity. Incorporating the two facts yields an incentive to set nine-ending prices two orders of magnitude larger than the menu costs. In this setting, the price point model can match the two stylized facts, but menu costs are effectively irrelevant as a source of price rigidity. The choice of a mechanism for price rigidity matters for aggregate dynamics.

7 citations


Journal ArticleDOI
TL;DR: The authors investigates how the interactions between product differentiation, transport costs, and urban costs determine the spatial inequality in a general-equilibrium model and sheds light on the interrelation between different definitions of home market effect (HME) in literature.
Abstract: This paper investigates how the interactions between product differentiation, transport costs, and urban costs determine the spatial inequality in a general‐equilibrium model. We shed light on the interrelation between different definitions of home market effect (HME) in literature. While the wages in the large region are always higher, the HME in industrial distribution occurs in a limited range of parameters, implying that the HME in factor price is more pervasive. Moreover, we show that the reverse HME is the more common outcome. It indicates that neglecting urban costs in theoretical methodologies tends to overestimate the existence of HME. We also disclose how a change in urban costs or transport costs affects regional inequalities and welfare.

6 citations


Journal ArticleDOI
TL;DR: This article found that a large fraction of price fluctuations in the Fama-French size and value factors are non-fundamental price pressures driven by correlated fund flows, and these large demand-driven price movements revert over time, explaining approximately 30% of overall factor price fluctuations.
Abstract: Since Fama and French (1992) and Lakonishok, Shleifer, and Vishny (1994), researchers have incessantly debated whether size and value factors capture economic risk. I find that a large fraction of price fluctuations in the Fama-French size and value factors are non-fundamental price pressures driven by correlated fund flows. These large demand-driven price movements revert over time, explaining approximately 30% of overall factor price fluctuations. Further corroborating the price pressure interpretation, these demand-driven price effects happen exclusively in periods when mutual funds place trades. Overall, my findings imply that a sizeable fraction of factor movements do not represent fundamental risk.

4 citations


Posted Content
TL;DR: The authors examines the trade effect of changes of factor endowments on prices, based on general equilibrium, and shows that a small increase of a factor endowment of any country rewards another factor and the commodity using the latter factor intensively.
Abstract: The Rybczynski theorem describes the trade effect within production analyses between factor endowments and outputs. The Stolper-Samuelson theorem focuses on cost analyses between factor reward and commodity price. This paper examines the trade effect of changes of factor endowments on prices, based on general equilibrium. The study shows that changes of factor endowments cause domestic output changes (the Rybczynski effect), which affect output prices and factor prices (the Stolper-Samuelson effect). It is like a chain of effects that the Rybczynski’s trade effect triggers the Stolper-Samuelson’s trade effect. The analysis of this paper shows that a small increase of a factor endowment of any country rewards another factor and the commodity using the latter factor intensively. It displays a tuneful circle. Trade brings a well-balanced development to the world.

2 citations


Journal ArticleDOI
28 Feb 2019
TL;DR: In this article, the authors compared the effect of variables in the asset pricing model and compared the five price model factors in terms of the ability to explain estimates of excess returns, and concluded that the best model that can be used in assessing the five factors is the five Price Model Factors, this is evidenced by the value of R2 or R Square of 89.4%, the value is greater than the values of R 2 or R square Capital Asset Pricing Model, Arbitration Price Theory, Three Price Factor Models, and Four Price Factor models, which were 34.7%, 55
Abstract: The purpose of this study is not only to compare the Capital Asset Price Model, Arbitration Price Theory, Three Factor Price Model, Three Factor Price Model, and Five Factor Price Model to study the Capital Asset Price Model, Price Arbitration Price Theory, Three Factor Price Model, Four Factors Pricing Model and Five Factors Pricing Model for excess returns and for determining the best asset pricing model in terms of the ability to explain estimates of excess returns. This research includes explanatory research (explanatory research), namely looking at the relationship between research variables and testing hypotheses that have been formulated previously. This study examines the effect of variables in the asset pricing model and compares the asset pricing models in explaining excess returns. Based on the results of the research that has been carried out the best model that can be used in assessing the asset pricing model is the five Price Model Factors, this is evidenced by the value of R2 or R Square of 89.4%, the value is greater than the value of R2 or R Square Capital Asset Pricing Model, Arbitration Price Theory, Three Price Factor Models, and Four Price Factor Models, which were 34.7%, 55.2%, 77.2% and 79% respectively.

2 citations


Journal ArticleDOI
TL;DR: In this article, the authors developed a four sector general equilibrium model of a small open economy with three formal sectors and one informal sector and examined the impact of less protectionist policy and bureaucratic reform on the output levels and factor prices.
Abstract: In this paper, we develop a four sector general equilibrium model of a small open economy with three formal sectors and one informal sector. One formal sector’s output is used as an intermediate input in all other sectors. This intermediate input is defined here as bureaucracy. We have also incorporated an additional cost specific to the informal sector in addition to factor cost of production which is defined as the cost of corruption. In this context, this paper examines the impact of less protectionist policy and bureaucratic reform on the output levels and factor prices. It has been shown that the informal sector and manufacturing sector have contracted due to tariff reduction while informal wage goes up. Further, we have examined the effect of a decrease in bureaucratic (in)efficiency. This reduces the informal wage rate but informal sector expands. It is further examined that the effect of a decrease in the cost of corruption leads to an increase in the informal wage rate.

2 citations


Journal ArticleDOI
TL;DR: In this paper, the authors build a general-equilibrium model with three sectors to study the effects of several modern agricultural factor price subsidy policies on the income inequality between skilled and unskilled workers.
Abstract: This paper builds a general-equilibrium model with three sectors to study the effects of several modern-agricultural factor price subsidy policies on the income inequality between skilled a...

Posted ContentDOI
TL;DR: The authors proposed an alternative to reference price theories, in which consumers instead use a general cue, specifically, a retailer's price image, or overall reputation for charging high or low prices, as a top-down inferential heuristic.
Abstract: Reference price theories have dominated research into how consumers evaluate prices and make price-based choices. Given the widespread acceptance of reference price theories, it is notable that so little consideration has been given to what happens when the central assumption of these theories is violated: how do consumers evaluate prices when they do not have stable, well-defined reference prices? The authors propose an alternative to reference price theories, in which consumers instead use a general cue, specifically, a retailer’s price image, or overall reputation for charging high or low prices, as a top-down inferential heuristic. This alternative account predicts a pattern of price perceptions, price estimates, and choices that cannot be accounted for using prevailing reference price theories. In each of the domains, reference price theories either predict no differences based on retailer price images or predict the opposite of the reported findings. These predictions are tested against those of prevailing reference price accounts in a series of nine empirical studies that offer converging evidence in support of the proposed theory.

Posted Content
TL;DR: In this article, the authors derived the solution of general trade equilibrium for the 2×2×2 Trefler Hicks-Neutral HOV Model (Trefler, 1993), which incorporates productivities different across countries.
Abstract: This study derived the solution of general trade equilibrium for the 2×2×2 Trefler Hicks-Neutral HOV Model (Trefler, 1993), which incorporates productivities different across countries. This is the first theoretical result of price-trade equilibrium under factor price non-equalization. The non-equalized factor price at the equilibrium is with two useful properties. The first one is that the equilibrium price (world commodity price and two sets of localized factor price) are the functions of world effective factor endowments so that it remains the same when the allocation of equivalent factor endowments changes. The second property is that the equilibrium factor prices ensure gains from trade for countries participating in trade. A new logic explored from this study is that the world effective factor endowments determine world commodity price and local factor rewards of all countries.

Posted Content
01 Jan 2019
TL;DR: In this paper, the authors present a model of growth and innovation under competitive conditions and show that the endogenous interaction between labor-saving innovations and changes in the relative price of labor is the source of both growth and cycles, and argue that existing models of the business cycles cannot replicate these facts.
Abstract: We review the empirical evidence about factor shares and show that, apart from a varying trend, they are characterized by a strong and persistent cyclical behavior. We argue that existing models of the business cycles cannot replicate these facts. Next we study a model of growth and innovation under competitive conditions. Firms choose how many workers to hire, how much to invest, and which production technique to use. New productive capacity, embodying labor saving techniques, is costly. Central to our theory are endogenous movements in relative factor prices creating incentives for replacing old technologies with new ones. The endogenous interaction between labor-saving innovations and changes in the relative price of labor is the source of both growth and cycles .

Journal ArticleDOI
TL;DR: In this article, the authors investigated the economic implications of environment in the 2 × 3 Heckscher-Ohlin model by expounding the multidimensional roles of the environment for the economy.
Abstract: This paper investigates the economic implications of environment in the 2 × 3 Heckscher–Ohlin model by expounding the multidimensional roles of the environment for the economy: as a public input used to produce goods and services; as a by‐product dependent on the composition of goods and services; and as a public good directly affecting social utility. It is shown that the sectoral environment‐output responses play a critical role for determining the economy's factor prices, outputs, employment, and welfare, and that, in a dynamically stable (unstable) environment, the optimal policy is free trade (a production tax‐cum‐subsidy scheme).

Journal ArticleDOI
TL;DR: In this paper, the optimal price ceiling when the regulator is uncertain about demand and supply conditions and maximizes expected consumer surplus is examined, and it is shown that if the regulatory uncertainty is great enough, the price ceiling is increasing in the degree of competition, so that greater competitive pressure justifies less restrictive regulatory intervention.
Abstract: We examine optimal price ceilings when the regulator is uncertain about demand and supply conditions and maximizes expected consumer surplus. We consider both a perfectly competitive benchmark and imperfectly competitive settings where symmetric firms compete in supply functions. Our analysis indicates that regulatory uncertainty does not eliminate the scope for intervention with a price ceiling. Instead, sufficient uncertainty calls for softer intervention, with the price ceiling set at a relatively high level. We formalize the relationship between competitive pressure and the optimal price ceiling and show that, if uncertainty is great enough, the optimal price ceiling is increasing in the degree of competition, so that greater competitive pressure justifies less restrictive regulatory intervention. For the perfectly competitive case, we also explore how the optimal price ceiling is related to the level of rationing efficiency, pinning down a cut-off level of efficiency below which a price ceiling should not be used.

08 Apr 2019
TL;DR: In this article, the authors investigated the impact of net zero-emission policy on New Zealand's macroeconomy, including carbon permit pricing and land use change under two scenarios, and derived an integrated model, forest-CGE, to derive an equilibrium carbon permit price subject to an endogenous forest rotation age.
Abstract: In this paper, we investigate the impact of net zero-emission policy on New Zealand’s macroeconomy, including carbon permit pricing and land use change under two scenarios. Both scenarios base on domestic forestry being the only source of permits and assume net zero emission. One scenario includes agriculture whereas another excludes this domestic largest emission contributor. We developed an integrated model, forest-CGE, to derive an equilibrium carbon permit price subject to an endogenous forest rotation age. Various mechanism of carbon permit allocation is also considered. Our results estimate an equilibrium carbon permit price of NZ$81 and NZ$74 per tonne carbon dioxide equivalent in each scenario respectively to meet the zero net emission target by 2050. Also, it shows that the New Zealand Emissions Trading Scheme with agriculture included contributes to a 14% reduction in the nation’s total emissions, approximately half of New Zealand’s 2030 goal. The forestry sector increases by 75% and 57% of land use coming from other sectors in each scenario. The GDP declines due to reduced production in most sectors with emerging emission cost, leading to decreased exports. Household income is negatively affected by decreased factor price but compensated by providing renewable resources. Whether including agriculture in the existing emissions trading scheme generates a different impact on the macro-economy. Key words: carbon price, land use, CGE, NZ ETS, and forestry. JEL classification: Q23; Q24; Q54; Q68

Book ChapterDOI
01 Jan 2019
TL;DR: In this paper, the authors developed a set of three degrees of price discrimination dependent on whether the seller targets individuals or groups, and whether buyers wish to use quantity rebates, and concluded that sometimes it can indeed be socially useful to price discriminate as the practice, under circumstances, enhances efficiency and social welfare.
Abstract: Economics developed a set of three degrees of price discrimination dependent on whether the seller targets individuals or groups, and whether buyers wish to use quantity rebates. The seller’s reason to price discriminate is to capture as much of the buyers utility surplus. Price discrimination is deemed unfair and immoral, and this is especially so in the market for pharmaceutical therapies. However, sometimes it can indeed be socially useful to price discriminate as the practice, under circumstances, enhances efficiency and social welfare.

Journal ArticleDOI
TL;DR: In this article, an international wedge continuously index a country's capital market integration with the rest of the world, and studies politicoeconomic determination of a domestic labor wedge that corrects market imperfections and/or redistributes welfare across differently wealthy voters.