Topic
Purchasing power
About: Purchasing power is a research topic. Over the lifetime, 2714 publications have been published within this topic receiving 36866 citations. The topic is also known as: adjusted for inflation.
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TL;DR: In this paper, the authors introduce a model of the economy as a social network, where two agents are linked to the extent that they transact with each other, and generate well-defined topological notions of location, neighborhood and closeness.
Abstract: We introduce a model of the economy as a social network. Two agents are linked to the extent that they transact with each other. This generates well-defined topological notions of location, neighborhood and closeness. We investigate the implications of our model for monetary economics. When a central bank increases the money supply, it must inject the money somewhere in the economy. We demonstrate that the agent closest to the location where money is injected is better off, and the one furthest is worse off. In common parlance, it means that any increase in the money supply redistributes purchasing power from Main Street to the government and to Wall Street. Symmetrically, any decrease in the money supply redistributes purchasing power in the other direction. We also outline the testable implications of our model, and offer anecdotal evidence that it may help explain certain aspects of the 2008 subprime crisis.
28 citations
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TL;DR: It is argued that existing legal, technical, and economic protections are already adequate and that H.R. 354 is at best unnecessary and that European-style database legislation is at worst unnecessary.
Abstract: In 1996, the European Union (EU) enacted broad, copyright-style protections for databases and demanded that the United States do the same. Congress is currently considering a bill (H.R. 354) that would bring U.S. law closer to that of the EU. Here, it is argued that existing legal, technical, and economic protections are already adequate and that H.R. 354 is at best unnecessary. On the cost side, European-style legislation would erode the traditional U.S. rule that "mere facts" should be available to all. Within the sciences, H.R. 354 is likely to reduce the viability of nonprofit databases and hamper free communication between scientists. Finally, database legislation could erode the purchasing power of government grants and encourage some database providers to seek monopoly profits.
28 citations
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28 citations
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TL;DR: In this paper, the authors recast Kocherlakota's model in a fully dynamic quasilinear model and characterized optimal interventions when type-contingent transfers are feasible and when they are not.
Abstract: Kocherlakota (2003) presents an example of a monetary economy where efficiency is enhanced with the introduction of a nominally risk-free bond that is specifically designed to be illiquid. In his environment, an asset market involving swaps of money for bonds effects a socially desirable redistribution of purchasing power that might otherwise be replicated by a policy of type-contingent money transfers. In this paper, I recast Kocherlakota’s model in a fully dynamic quasilinear model and characterize optimal interventions when type-contingent transfers are feasible and when they are not. When they are not, an illiquid bond is essential. However, I also find that an illiquid bond may remain essential even when type-contingent transfers are feasible.
27 citations
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TL;DR: In this paper, a series of simulations that limit subsidies to households reaching a minimum score on a multidimensional poverty index show that individual targeting of this kind potentially leads to a more progressive distribution of subsidies However, the greatest improvements in targeting performance would be achieved if efforts switched from subsidizing the use of infrastructure services to subsidizing connections to those services.
Abstract: Argentina was a pioneer of infrastructure reform in the early 1990s The social dimension of infrastructure services was typically overlooked in the reform process However, social sensitivities often resurfaced in the years that followed, leading to a series of ad hoc social policy measures that cumulatively amount to US$200 million a year Foster quantifies and prioritizes the social challenges faced by the Argentine infrastructure sectors, evaluates how well existing social policies are functioning, and provides illustrative simulations of how certain changes in the design of social policy could improve the performance of current social policies The author's findings are that current social policies do not prove to be very effective in targeting resources to the poor They have no real impact on the distribution of income across customers An important reason for this targeting failure is the tendency to allocate resources to all households resident in a particular geographical area, irrespective of socioeconomic status A series of simulations that limit subsidies to households reaching a minimum score on a multidimensional poverty index show that individual targeting of this kind potentially leads to a more progressive distribution of subsidies However, the greatest improvements in targeting performance would be achieved if efforts switched from subsidizing the use of infrastructure services to subsidizing connections to those services
27 citations