Topic
Relative price
About: Relative price is a research topic. Over the lifetime, 8491 publications have been published within this topic receiving 227856 citations.
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TL;DR: In this paper, the effects of inflation on economic performance were analyzed for around 100 countries from 1960 to 1990 and it was shown that the long-term effects on standards of living are substantial.
Abstract: Data for around 100 countries from 1960 to 1990 are used to assess the effects of inflation on economic performance. If a number of country characteristics are held constant, then regression results indicate that the impact effects from an increase in average inflation by 10 percentage points per year are a reduction of the growth rate of real per capita GDP by 0.2-0.3 percentage points per year and a decrease in the ratio of investment to GDP by 0.4-0.6 percentage points. Since the statistical procedures use plausible instruments for inflation, there is some reason to believe that these relations reflect causal influences from inflation to growth and investment. However, statistically significant results emerge only when high- inflation experiences are included in the sample. Although the adverse influence of inflation on growth looks small, the long-term effects on standards of living are substantial. For example, a shift in monetary policy that raises the long-term average inflation rate by 10 percentage points per year is estimated to lower the level of real GDP after 30 years by 4-7%, more than enough to justify a strong interest in price stability.
1,883 citations
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TL;DR: In this paper, the unconditional expectation of average household utility is expressed in terms of the unconditional variances of the output gap, price inflation, and wage inflation, where the model exhibits a tradeoff in stabilizing output gap and price inflation.
1,813 citations
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1,600 citations
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TL;DR: The authors showed that the global labor share has signicantly declined since the early 1980s, with the decline occurring within the large majority of countries and industries, and that the decrease in the relative price of investment goods, often attributed to advances in information technology and the computer age, induced rms.
Abstract: The stability of the labor share of income is a key foundation in macroeconomic models. We document, however, that the global labor share has signicantly declined since the early 1980s, with the decline occurring within the large majority of countries and industries. We show that the decrease in the relative price of investment goods, often attributed to advances in information technology and the computer age, induced rms
1,578 citations
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TL;DR: In this paper, the authors analyze institutional investors' preferences for stocks and the implications that these preferences have for stock-market prices and returns and find that large institutions, when compared with other investors, prefer stocks that have greater market capitalizations, are more liquid, and have higher book-to-market ratios and lower returns.
Abstract: We analyze institutional investors' preferences for stocks and the implications that these preferences have for stock-market prices and returns. We find that -- a category including all managers with greater than $100 million under discretionary control -- have nearly doubled their share of the common-stock market from 1980 to 1996 most of this increase driven by the growth in holdings of the largest one-hundred institutions. Large institutions, when compared with other investors, prefer stocks that have greater market capitalizations, are more liquid, and have higher book-to-market ratios and lower returns for the previous year. We discuss how institutional preferences, when combined with the rising share of the market held by institutions, induce changes in the relative prices and returns of large stocks and small stocks. We provide evidence to support the in-sample implications for prices and realized returns and we derive out-of-sample predictions for expected returns.
1,559 citations