Factor price

About: Factor price is a research topic. Over the lifetime, 2764 publications have been published within this topic receiving 86176 citations.

The Burden of Unanticipated Inflation: Analysis of an Overlapping Generations Model with Progressive Income Taxation and Staggered Prices

Abstract: Inflation is often associated with a loss for the poor in the medium and long run. The cyclical effects are basically unknown. We study this question in a dynamic optimizing sticky price model. Agents are heterogeneous with regard to their age and their productivity. We emphasize three channels through which unanticipated inflation affects the income and wealth distribution: 1) factor prices, 2) the 'bracket creep', and 3) sticky pensions. In our model, unanticipated inflation decreases the inequality of factor income, while the redistributive effect of inflation on total income depends on whether the government is spending the additional revenues on transfers or public consumption.

Do price limits hurt the market

Abstract: Under an artificial stock market composed of bounded-rational and heterogeneous traders, this paper examines whether or not price limits generate the negative effects on the market. Through testing the volatility spillover hypothesis, the delayed price discovery hypothesis, and the trading interference hypothesis, we find that no evidence of volatility spillover is observed. However, the phenomena of delayed price discovery and trading interference indeed exist, and their significance depends on the level of the price limits.

Competitive Price Leadership--A Critique of Price Leadership Models

Abstract: THE literature on industry pricing practices and policies discloses that a distinguishing feature of oligopolistic structures is the emergence of a "price leader" who characteristically initiates price adjustments upward and downward for the industry. In recognizing the prevalence and significance of this practice and its implications for theoretical analysis and public policy, economists have endeavored to identify the particular types of price leadership which prevail in industrial markets and to determine the extent to which each type might circumvent the forces of competition.' The theoretical treatment of the subject has been limited to a few special cases, and in most instances emphasis has been placed on conditions which "make price leadership of some sort inevitable and at the same time identify the price leader." 2 For various reasons the dynamic aspects of the market conditions under which prices set by the "leader" might or might not be followed by others have not been worked into the theory of price leadership. The seriousness of this omission is evident from the confusions arising when attempts are made to integrate traditional price leadership models with the theory of the market equilibrium process. Moreover, the models appear to be based largely on highly institutionalized structures wherein interfirm price relationships are essentially "settled," under which circumstances price leadership emerges as a type of collusion with the ringleader clearly identifiable. Consequently, current models reveal little about the process of price formation and the development of price leadership patterns in unsettled or immature structures. When applied to price behavior in these "in-between" markets, the weaknesses of the contemporary models begin to appear. Yet, these are the areas with which public policy is intimately concerned. Thus, if the economic implications of price leadership as an effective weapon against price competition in oligopolistic markets be accepted, the specific conditions attending the development and stability of price leadership patterns need to be re-examined. This article will be addressed primarily to this task. We will proceed (i) by identifying a new type of price leadership which takes cognizance of various dynamic factors in price formation, and (2) by appraising the economic significance of this and the traditional price leadership models in the light of empirical evidence of interfirm behavior in an oligopolistic industry (the hardsurface floor covering industry).

The Vertical Multinational Enterprise and International Trade

Abstract: This paper analyzes an endogenous vertical multinational enterprise by explicitly modeling a distortion in the intermediate goods sector. Firms invest abroad to lower the cost of multistage production. The implications for international trade and investment differ markedly from the conventional wisdom of multinationals. Particularly, intrafirm trade in intermediates implies vertical investment complements rather than substitutes for trade. The decision to become a multinational depends on the level on foreign factor prices, the nature of the competition with foreign suppliers, transport, tariffs, and subsidiary plant costs. Marginal change in tariff may result in unintended welfare jumps as firm configuration shifts.

Disturbing the fiscal theory of the price level: can it fit the EU-15?

Abstract: With the fiscal theory of the price level (FTPL), Leeper -Sims-Woodford (LSW) argued that the government budget constraint plays a key role in determining the price level. Indeed, there could even be a dispute vis -a-vis the role of monetary policy in the formation of the price level. Apart from several theoretical criticisms, also addressed in the discussion given in this paper, the attempts to validate empirically the novel theory are, so far, rather sparse. Therefore, one of the purposes of this paper is to tentatively assess the possible empirical evidence, concerning the FTPL, for the EU -15 countries.