explaining the border effect the role of exchange rate variability shipping costs and geography this paper exploits a three dimensional panel data set of prices on 27 traded goods over 88 quarters across 96 cities in the us and japan we show that a simple average of good level real exchange rates tracks the nominal exchange rate well suggesting strong evidence of sticky prices focusing on dispersion in prices between city pairs we find that crossing the us japan border is equivalent to adding as much as 43 000 trillion miles to the cross country volatility of relative prices we turn next to economic explanations for this so called border effect and to its dynamics distance unit shipping costs and exchange rate variability collectively explain a substantial portion of the observed international market segmentation relative wage variability on the other hand has little independent impact on segmentation 2001 elsevier science b v all rights reserved

decentralizing an economy the role of bureaucratic corruption in china s economic reforms government interventions in markets through price quality and quantity controls impose disequilibria on that process by disallowing cash price fluctuations to clear markets contracting parties are thus forced to create alternative exchange channels to achieve consumption and production equilibria the process of solving government induced market disequilibria using alternative and particularly sub rosa methods of decentralized transacting is popularly termed corruption in the case of centrally controlled economies the most prominent practitioners of corruption are the officials of the government their simultaneous actions of enforcing and breaking the system s rules substantially influence the level and distribution of income in an economy for these reasons its study is important in this note i discuss the role of corruption within one economy in particular that of the people s republic of china since 1949 the people s republic of china has been organised and administered at least on paper and depending on the year to a greater or lesser degree as a centrally controlled economy beginning in 1978 however deng xiaoping and his co leaders set out to re establish some private incentives in china s economy their intentions were to assert individuals right to transact with each other and therefore ease problems encountered in the central coordination of agricultural and industrial production to do this they re established some private property rights and allowed decentralized markets a larger role in allocating scarce goods within these markets they allowed prices to fluctuate they by no means however relinquished all control still today the government maintains economic plans and quantity targets and closely monitors price fluctuations these reforms begun in 1978 and on going today have provoked a barrage of articles decrying the extensive amount of corruption they supposedly have incited within the chinese system journalistic criticism comes not only from international but domestic sources as well mainland newspapers for example document corruption s various forms in a single month december of 1985

the impact of climate on the law of one price a test using north american food prices from the 1920s using grocery price data for over 100 urban locations across the us and canada from the 1920s we show that deviations from the law of one price lop were strongly related to climate differences the effect of climate has a large impact on the elasticity of deviations from lop with respect to distance while having no impact on the border effect we then test a counterfactual to show that the relationship between deviations from lop and temperature does not hold when historical temperature data are replaced with contemporary this is evidence that climate impacts production l impact du climat sur la loi du prix unique un test utilisant les prix de la nourriture en amerique du nord dans les annees 1920 a l aide de donnees sur les prix de la nourriture dans les epiceries dans plus d une centaine de villes aux etats unis et au canada dans les annees 1920 on montre que les deviations par rapport a la loi du prix unique lpu sont fortement reliees aux differences dans le climat l effet du climat a un grand impact sur l elasticite des deviations par rapport a la lpu par rapport a la distance mais aucun impact sur l effet de frontiere on utilise alors un test contrefactuel pour montrer que la relation entre les deviations par rapport a la lpu et la temperature ne tient pas quand on remplace les temperatures historiques par les temperatures contemporaines ceci montre que le climat a un impact sur la production

price setting during low and high inflation evidence from mexico this paper provides new insight into the relationship between inflation and the setting of individual prices by examining a large data set of mexican consumer prices covering episodes of both low and high inflation when the annual rate of inflation is low below 10 15 the frequency of price changes comoves weakly with inflation because movements in the frequency of price decreases and increases partly offset each other in contrast the average magnitude of price changes correlates strongly with inflation because it is sensitive to movements in the relative shares of price increases and decreases when inflation rises beyond 10 15 few price decreases are observed and both the frequency and average magnitude are important determinants of inflation i show that a menu cost model with idiosyncratic technology shocks predicts the average frequency and magnitude of price changes well over a range of inflation similar to that experienced by mexico

describing the separability properties of empirical demand systems in empirical demand analysis separability restrictions are usually imposed as maintained hypotheses the separability inflexibility of most functional forms makes parametric tests of these restrictions appear problematic we follow pudney 1981 in stressing the usefulness of a description of the separable structure of preferences underlying an estimated model and propose a non iterative method for the production of such a description an illustration with different models estimated for nine categories of goods on french aggregate time series data is presented

price changes in the euro area and the united states some facts from individual consumer price data prices of goods and services do not adjust immediately in response to changing demand and supply conditions this paper characterizes the average frequency and size of price changes in the euro area and its member countries investigates the determinants of the probability of price changes and compares the evidence for the euro area with available u s results the facts documented in this paper are based on evidence from individual price data recorded at the store level in all euro area countries except ireland and greece that is in datasets covering austria belgium finland france germany italy luxembourg the netherlands portugal and spain which together account for around 97 percent of euro area gdp the data used are the monthly price records underlying the computation of national consumer price indices and harmonized consumer price indices these data cover a large number of products selected on the basis of extensive household budget surveys

the bias in centrally planned prices the historical verdict must be surely in on the great central planning experiment soviet block economies are fleeing central planning philosophy in droves nonetheless the brute fact constraining movement from central planning to market economy is the necessity of vastly increasing prices kurtzman 1988 the point of this note is to look back on the central planning debate of the 1930s and 40s with the perfect wisdom of hindsight and ask why none of the participants predicted this answer by an easy process of elimination we focus on the anti central planning side of the debate after all if disinterested members of the pro central planning side of the debate after all if disinterested members of the pro central planning side had reached the correct answer surely they would have switched sides the brunt of the anti central planning position was carried by two alone von mises and hayek so we reconsider their arguments using a bit of statistical notation to sharpen the points at issue the argument is that von mises and hayek focused on the complex technical issues in involved in central planning and ignored the simple incentives facing planners a concluding speculation is offered as to why neither von mises nor hayek got it right

menu costs and markov inflation a theoretical revision with new evidence abstract we revisit a foundational theoretical paper in the menu cost literature sheshinski and weiss 1983 optimum pricing policy under stochastic inflation review of economic studies 50 3 513 529 one of the few to treat stochastic inflation with persistent deviations from trend in contrast to the original finding we show that optimal pricing in this environment entails using different s s bands in high inflation and low inflation states of the world the low inflation band is strictly contained within the high inflation band this revised solution has very different implications from the original one firms are generally risk loving not risk averse with respect to inflation an increase in the variance of inflation increases price dispersion when inflation is high and decreases price dispersion when inflation is low on an aggregate level this optimal pricing would lead to bunching of prices and non neutrality of money in the setting of caplin and spulber 1987 menu costs and the neutrality of money quarterly journal of economics 102 4 703 725 to test the main finding we construct an establishment level dataset from the months surrounding mexico s tequila crisis in 1995 in the high inflation state price increases are larger and establishments allow their prices to vary more widely around their respective long run mean relative prices cross establishment price dispersion is lower but this result seems due to decreased establishment heterogeneity rather than narrower s s bands overall the evidence suggests that establishments employ wider s s bands in the high inflation state

conditional exchange rate volatility and the volume of foreign trade evidence from seven industrialized countries there has long been a concern over the volatility of exchange rates and their impact on the volume of foreign trade however very little attention has been paid to the choice of an appropriate volatility variable as well as the proper specification of the trade equation the sample standard deviation of the exchange rate has been used as a proxy for exchangerate uncertainty in empirical studies that examine the effects of exchange rate uncertainty on the volume of foreign trade see for example akhtar and hilton 1 and gotur 27 these studies have provided conflicting evidence on this issue it has been argued that use of the sample standard deviation is inappropriate because the empirical distribution of exchange rates is not normal 22 10 in this regard subsequent empirical research 12 36 40 41 11 has employed a moving standard deviation of the rate of change of the exchange rate as a proxy for exchange rate uncertainty chowdhury 11 obtained a clear pattern of results that support the hypothesis that the higher volatility of exchange rates led to a reduction in international trade transactions after the breakdown of the bretton woods system in march 1973 other studies have reported ambiguous results 2 the moving standard deviation used in these studies has been criticized in the literature for a ignoring relevant information on the random process generating exchange rates 18 b underestimating the effect of volatility on decisions 52 c distorting the measurement of the volatility variable by smoothing the series 9 and d injecting an element of arbitrariness into the calculation through decisions about the order m of the moving average 43 3

weak separability and the estimation of elasticities in multistage demand systems the necessary conditions for multistage budgeting to be at least approximately justified are reviewed and the plausibility of these assumptions i e weak separability and low variability of price indices with utility level are discussed using no further assumptions simple relationships between expenditure and price elasticities in different budgeting levels are derived these results are applied to a three stage model for swedish food consumption and it is shown that the assumptions are not inappropriate restricting the analysis to the last stage of a multistage budgeting process is also shown to lead to considerable errors which could well have policy consequences

nominal rigidities and retail price dispersion in canada over the twentieth century we introduce a new data set on over 230 000 monthly prices for 10 goods in 50 canadian cities over the 40 year period from 1910 to 1950 this information coupled with previously published price information from the late twentieth century allows us to present one of the first comprehensive views of nominal rigidities and retail price dispersion over the past 100 years we find that nominal rigidities have been conditioned upon prevailing rates of inflation with a greater frequency of price changes occurring in the 1920s and the 1970s additionally the process of retail market integration has followed a u shaped trajectory with many domestic markets being better integrated as measured by the average dispersion of retail prices at mid century than in the 1990s we also consider the linkages between nominal rigidities and price dispersion finding results consistent with present day data on utilise des donnees inedites de 230 000 prix mensuels pour 10 produits dans 50 villes canadiennes au cours de la periode de quarante ans qui va de 1910 a 1950 ces donnees ajoutees aux renseignements deja publies anterieurement sur les prix dans la derniere portion du vingtieme siecle permettent de presenter l un des premiers portraits comprehensifs des rigidites nominales et de la dispersion des prix de detail au cours des derniers 100 ans on decouvre que les rigidites nominales ont ete influencees par les taux d inflation qui ont prevalu avec pour consequence une plus grande frequence de changements de prix dans les annees 1920s et 1970s de plus chose surprenante le processus d integration du marche de detail a suivi une trajectoire en u plusieurs marches domestiques etant davantage integres en prenant comme mesure la dispersion moyenne des prix de detail au milieu du siecle que dans les annees 1990s on examine aussi les liens entre rigidites nominales et dispersion des prix et les resultats concordent avec ce que revelent les donnees recentes

price index convergence among united states cities we study the dynamics of price indices for major u s cities using panel econometric methods and find that relative price levels among cities mean revert at an exceptionally slow rate in a panel of 19 cities from 1918 to 1995 we estimate the half life of convergence to be approximately nine years the surprisingly slow rate of convergence can be explained by a combination of the presence of transportation costs differential speeds of adjustment to small and large shocks and the inclusion of nontraded goods prices in the overall price index do price indices in major u s cities share a common trend and if so how quickly do they revert to that trend following a local shock to the price index to answer this question we study the dynamics of consumer price indices for 19 major u s cities over the period from 1918 to 1995 the panel time series methods we employ are now commonly used for studying real output growth rates and levels of real exchange rates across countries we estimate that price index divergences across u s cities are temporary but surprisingly persistent with a half life of nearly nine years our research has two primary motivations first we hope to gain a better understanding of the sources of persistence in the deviations from purchasing power parity ppp found in studies of national price indices and exchange rate data second and more importantly we see the european monetary union as having many similarities to the united states and believe that studying the behavior of prices across u s cities will help us in understanding the likely nature of inflation convergence in the euro area the european central bank s stated inflation objective is a year on year change in the harmonized index of consumer prices hicp of not more than 2 but how large might we expect regional deviations from this euro area wide average to be and how long are they likely to persist the lack of data prevents us from answering this question directly using european prices under monetary union instead we look to the united states a mature common currency area of similar regional diversity size and industrial development

the effect of expenditure aggregation on hypothesis tests in consumer demand systems in this paper cluster analysis is used to identify stochastic hicksian aggregates sha such aggregates comprise goods for which relative prices are constant up to a random element the need to identify such aggregates arises since inappropriate aggregation could influence subsequent estimation and tests results evidence is found that inappropriate aggregation of expenditures influences the outcome of hypothesis tests furthermore cluster analysis appears to identify goods which can be treated as sha it would thus appear that these methods should be used to identify the appropriate goods to aggregate prior to the estimation or testing of demand models

consumption and capital market imperfections an international comparison the excess sensitivity of consumption to current income fluctuations is higher in countries where consumers borrow less low levels of consumer debt can result either from capital market imperfections or from a low demand for loans the evidence suggests that the former view is more appropriate than the latter and thus supports the hypothesis that excess sensitivity may be attributed to liquidity constraints rather than to other factors copyright 1989 by american economic association

maintaining and testing separability in demand systems we derive a general elasticity representation of the necessary and sufficient conditions for direct weak separability of the utility function parametric restrictions required to implement the separability conditions are presented for three common demand systems the almost ideal translog and rotterdam our empirical application uses the rotterdam model to test a few separable structures within a complete u s demand system emphasizing food commodities results based on size corrected likelihood ratio tests provide support for commonly used separability assumptions about food and meat demand

menu costs and phillips curves this paper develops a model of a monetary economy in which individual firms are subject to idiosyncratic productivity shocks as well as general inflation sellers can change price only by incurring a real menu cost we calibrate this cost and the variance and autocorrelation of the idiosyncratic shock using a new u s data set of individual prices due to klenow and kryvtsov the prediction of the calibrated model for the effects of high inflation on the frequency of price changes accords well with international evidence from various studies the model is also used to conduct numerical experiments on the economy s response to various shocks in none of the simulations we conducted did monetary shocks induce large or persistent real responses

the law of one price intranational evidence for canada this study investigates the behaviour of intranational prices for 45 specific consumer goods across 25 canadian cities it finds positive roles for distance and provincial borders in intercity price disparities while sizable the provincial border effect is an order of magnitude smaller than the estimates for the canada u s border a majority of the intercity relative price series are stationary around small mean values indicating that long run price differences are close to zero the intercity prices converge at rates considerably faster than the consensus estimates for international prices in fact half lives for intercity price deviations average well under a year jel classification f15 f31 la loi d un seul prix resultats intra nationaux pour le canada ce memoire examine le comportement des prix intra nationaux de 45 biens de consommation specifiques dans 25 villes canadiennes il semble que la distance et les frontieres inter provinciales ont un impact sur les differentiels de prix entre villes meme si l impact des frontieres inter provinciales est important il est beaucoupplus petit que l impact de la frontiere canada u s une majorite des series de prix relatifs entre villes sont stationnaires autour de petites valeurs moyennes ce qui suggere que les differences de prix a long terme s approchent de zero il est clair que les prix entre villes convergent a des taux considerablement plus rapides que ce qu on observe au niveau international en fait les deviations de prix entre villes ont une esperance de vie qui en moyenne est de moins d un an

an investigation into the demand for alcoholic beverages in canada a choice between the almost ideal and the rotterdam models in this article i investigate the historical pattern of interactions in the demand for three categories of alcoholic beverages in canada using both the differential almost ideal and the differential rotterdam demand systems i evaluate these models based on several decision criteria including model encompassment based on the j test structural stability conformity with demand theory and the credibility of the estimated price and income responses in an attempt to determine which of these models is better suited for explaining the demand for alcoholic beverages the results reveal that both models satisfy the restrictions of demand theory and of structural stability but the rotterdam model is preferable on grounds of the remaining two criteria

number of sellers average prices and price dispersion abstract a variety of models provide differing predictions regarding the effect of an increase in the number of competitors in a market seller density on prices and price dispersion we review different approaches to generating equilibrium price dispersion and then empirically estimate the relationship between seller density average product price and price dispersion in the retail gasoline industry using four unique gasoline price data sets controlling for station level characteristics we find that an increase in station density consistently decreases both price levels and price dispersion across four geographical areas

existence and persistence of price dispersion an empirical analysis the hebrew university of jerusalem and nber using a unique data set on store level monthly prices of four homogenous products sold in israel i study the existence and characteristics of the dispersion of prices across stores as well as its persistence over time i find that price dispersion prevails even after controlling for observed and unobserved product heterogeneity moreover intra distribution mobility is significant stores move up and down the cross sectional price distribution thus consumers cannot learn about stores that consistently post low prices as a consequence price dispersion does not disappear and persists over time as predicted by varian s 1980 model of sales

the law of one price without the border the role of distance versus sticky prices we examine the role of nominal price rigidities in explaining the deviations from the law of one price lop across cities in japan focusing on intra national relative prices isolates the border eect and thus enables us to extract the pure eect of sticky prices a two city model with nominal rigidities and transportation costs predicts that the variation of lop deviations is lower for goods with less frequent price adjustment after controlling for the distance separating the cities using retail price data for individual goods and services collected in japanese cities we find strong evidence supporting this prediction adapting the engel and rogers 1996 regression framework to our theoretical setting we quantify the separate roles of nominal rigidities and trade costs proxied by distance in generating lop variability our estimates suggest that the distance equivalent of nominal rigidities can be as large as the width of the border typically found in the literature on international lop deviations the findings point to both the utility of the regression framework in identifying qualitative eects i e sign of a coecient and the challenges interpreting their quantitative implications

preference trees preference hierarchies and consumer behavior n a recent article coursey 1985 i considered consumer behavior in a model in which preferences are described by an activity hierarchy using this activity hierarchy description consumers were found to sequentially satisfy higher ranked activities in their preference ordering up to the point that their monetary and time resources were exhausted among the more interesting implications of this behavior were that 1 if a consumer s economic resources are subsequently increased then additional consumption will commence at the point where the consumer s resources were initially exhausted 2 a change in the price of a commodity used in an activity will have a pure substitution effect in the production of that activity and a spillover income effect at the point of resource exhaustion and 3 comparative statics effects of any change are unidirectional and will affect behavior only from the point where the effects enter the consumer s sphere forward to the point of exhaustion of economic resources the results were derived under the assumption that each commodity can be used in the production of only one activity in their follow up article brooks and earl 1987 relaxed this assumption and considered the implications of jointness in consumption in the context of the activity hierarchy model in their extension a commodity may be used as a perfect substitute at different places in the activity hierarchy they concluded that my general results become less clear when commodities can be used in this fashion i fully concur with their motive for this extension and welcome their remarks as a further contribution to the field of choice regarding priorities 2 in this brief article i wish to outline fully how their results should be interpreted one interpretation involves the theoretical relationship between the activity hierarchy model and the more traditional to economists utility maximization model the second interpretation involves the use of the activity hierarchy model and its extensions for empirical analysis

portfolio crowding out empirically estimated this paper tests hypotheses regarding the parameters in investors asset demand functions the hypothesis that federal bonds are closer substitutes for equity than for money implies portfolio crowding out by federal borrowing regression studies of asset demand functions have needed to impose prior beliefs to obtain precise and plausible estimates for the parameters this paper uses a mle technique that dominates regression in that it makes full use of the constraint that the parameters are not determined arbitrarily but rather are determined by mean variance optimization on the part of the investor the striking conclusion is that portfolio effects are close to zero

demand for beef and chicken products separability and structural change several studies have indicated that the recent shift from beef to poultry in consumption is not entirely caused by changes in rela tive prices or income braschler chavas dahlgran hudson and vertin moschini and meilke frank thurman most studies of structural change have focused on red meat consumption only thurman has looked closely at the poultry market and no one has considered poultry products yet the mix of chicken products marketed changed dramat ically during the last twenty years and should have influenced aggregate meat demand the share of broiler slaughter marketed as whole birds declined from 74 in 1965 to 28 in 1985 while cut up parts and processed chick en products increased from 26 to 72 whole birds are inferior goods and cut up parts and processed chicken are normal goods haidacher et al the shift in chicken prod uct mix away from whole birds should have increased the preference for total chicken in this article two related questions are ad dressed first do consumers allocate expendi tures among meats by animal origin or by product type second does disaggregation of meat into products in a meat demand model give insight into the causes of structural

personal taxation pension wealth and portfolio composition this paper emphasizes the roles played by personal taxation and pension wealth in portfolio choice and composition a theoretical discussion of the impacts of taxation and participation in social security and private pension systems on individual wealth allocation is followed by empirical evidence based on u s cross section data both effects prove to be significant anticipated social security and private pension benefits exert a measurable influence on household portfolio allocation their omission from an asset demand model may lead to a misinterpretation of the impact of taxation on portfolio composition

non marketable assets and households portfolio choices a case study of italy abstract this paper analyzes the determinants of aggregate households portfolio choices conditional on those components of wealth which can be regarded as highly or totally illiquid because of the existence of substantial transaction costs and or institutional constraints on agents behaviour the empirical analysis broadly confirms the importance of the above mentioned institutional aspects in the allocation of financial wealth and provides the means for addressing some interesting questions regarding the behavior of portfolio holders in financial markets in particular it is shown that the presence of non tradable assets changes the risk premia on marketable assets hence in cases such as the italian one where the state is both the issuer of government securities and the collector of social security funds the positive correlation due to a common default risk between returns on government securities and on non marketable assets could lead to a higher cost of public debt financing

simple tests of distributional effects on macroeconomic equations the presence of distributional effects in macroeconomic equations is shown to coincide with nonlinearity in micro behavioral relationships parameters estimated with aggregate data as in representative agent models contain distributional biases that are not measurable using aggregate data alone tests for distributional effects and other measures of the extent of aggregation problems are derived using distributional data observed over time significant distributional effects are noted for a model of annual aggregate u s commodity expenditure data a static model that accommodates individual heterogeneity is found to be statistically equivalent to a simply dynamic model that accommodates first order autocorrelation

five facts about prices a reevaluation of menu cost models are price decreases 3 the frequency of price increases covaries strongly with inflation whereas the frequency of price decreases and the size of price increases and price decreases do not 4 the frequency of price change is highly seasonal it is highest in the first quarter and then declines 5 we find no evidence of upwardsloping hazard functions of price changes for individual products we show that the first second and third facts are consistent with a benchmark menu cost model whereas the fourth and fifth facts are not

tests of restrictions in large demand systems abstract this paper compares some asymptotic tests of linear restrictions using exact results and monte carlo methods in systems which contain the same regressors in each equation it is found that under a variety of conditions a statistic suggested by deaton provides a better approximation to the true distribution in small sample situations than the wald likelihood ratio or lagrange multiplier tests

distance language religion and the law of one price evidence from canada and nigeria we examine the impact of physical distance language and religion on law of one price lop deviations across interwar canadian and modern nigerian cities the data comprise monthly average retail prices for narrowly defined goods collected by national statistical agencies we find that differences in the fraction of the city population sharing a common language and religion have a significant impact on lop deviations the impact of language differences is consistent with a recently developed theory in which both trade costs and differences in signal noise ratios contribute to lop deviations

what can us city price data tell us about purchasing power parity abstract we study the dispersion of absolute price levels for us cities since 1918 by absolute price levels we mean price indices that measure the cost of a given consumption basket at each point in time we find strong evidence that city price levels converge over time and that the dispersion of price levels is lower for us cities than between oecd countries we argue that price level convergence for us cities will produce bilateral real exchange rate nonstationarity in this case however nonstationarity is not evidence against purchasing power parity ppp rather it is the consequence of improved market integration

firm networking and bribery in china assessing some potential negative consequences of firm openness economic openness both in terms of increased international trade exposure and enhanced inter firm networking has been a key element of china s economic emergence since the implementation of market reforms and the opening up policy over 30 years ago unfortunately these changes have also coincided with the increased incidence of bribery and corruption both in general and in the specific context of china research on the relationship between a firm s tendency toward openness and its propensity to engage in bribery is scarce this study seeks to fill this gap based on empirical evidence provided by a large sample of chinese firms the findings of the study reveal that firms increased networking and openness tend to occur contemporaneously with greater bribery and corruption we suggest that this may be due to the misuse of guanxi based networks that coincide with the presence of firms open network strategies heightened by the potential loss of resource and capability heterogeneity and hence reduced competitive advantages in the context of openness we further find that firms paying bribes do so as an attempt to overcome unnecessary bureaucratic processes and ineffective institutional support that might tend to hinder their development

advertising in demand systems testing a galbraithian hypothesis in this paper we argue that the influence of advertising upon the inter product distribution of demand is a system wide phenomenon which is investigated better through a demand equation system rather than through single equation methods attention is focused upon a dynamic version of deaton muellbauer s aids model modified to include advertising terms within this framework using data on consumer s non durable expenditure in the uk we carry out a preliminary test of galbraith hypothesis that advertising may affect the composition of aggregate consumer demand

the costs of doing hard time a penitentiary based regional price index for canada 1883 1923 we construct consumer price indices for canada based mainly on the expenditure records of canada s federal penitentiaries regional price variation was much greater in canada in the late nineteenth century than in the northern u s the new data suggest substantial price decline to 1900 regional price variation in canada decreased gradually to 1914 and quickly during the first world war for 1900 14 and 1922 3 new data are largely consistent with consumer price data compiled by the labour gazette the new data suggest more inflation during the first world war on construit des indices de prix a la consommation pour le canada a partir des archives de depenses des penitenciers federaux au canada la variation regionale des prix etait plus grande au canada que dans le nord des etats unis a la fin du 19e siecle ces nouvelles donnees suggerent qu il y a eu chute substantielle des prix jusqu en 1900 la variation regionale des prix decline graduellement au canada jusqu en 1914 et rapidement durant la premiere guerre mondiale pour les periodes de 1900 14 et 1922 3 les nouvelles donnees s arriment assez bien avec les donnees sur les prix a la consommation compilees par la gazette du canada ces donnees nouvelles suggerent qu il y a eu davantage d inflation au cours de la premiere guerre mondiale

inflation and price setting in a natural experiment abstract we analyze the behavior of price setters in poland during the transition from a planned to a market economy using a large disaggregated data set the size and frequency of price changes as well as relative price variability all increase as inflation rises the effect of expected inflation on relative price variability is much stronger than the effect of unexpected inflation despite the unusual economic environment the results are qualitatively identical and quantitatively stronger than those in lach and tsiddon 1992 journal of political economy 100 349 389

state dependent or time dependent pricing does it matter for recent u s inflation in the 1988 2004 micro data collected by the u s bureau of labor statistics for the cpi price changes are frequent every 4 7 months depending on the treatment of sale prices and large in absolute value on the order of 10 the size and timing of price changes varies considerably for a given item but the size and probability of a price change are unrelated to the time since the last price change movements in aggregate inflation reflect movements in the size of price changes rather than the fraction of items changing price due to offsetting movements in the fraction of price increases and decreases neither leading time dependent models taylor or calvo nor 1 st generation state dependent models match all of these facts some 2 nd generation state dependent models however appear broadly consistent with the empirical patterns

cost of living real wages and real incomes in thirteen canadian cities 1900 1950 price indices for thirteen canadian cities for 1900 to 1950 demonstrate large regional differences in cost of living until 1914 after 1914 regional price levels converged before the war western canadian cities had the highest cost of living after 1920 cities in ontario had the highest cost of living accounting for these trends in regional costs of living reveals that regional real wage and real income structures have been present and stable since at least 1901 thus regional wage and income disparities are long standing and persistent features of the canadian economy cout de la vie salaires reels et revenus reels dans treize villes canadiennes les indices de prix pour treize villes canadiennes entre 1900 et 1950 montrent qu il y avait de fortes differences dans le cout de la vie jusqu en 1914 apres 1914 il y a convergence des niveaux de prix regionaux avant la guerre les villes de l ouest canadien avaient le cout de la vie le plus eleve apres 1920 des villes de l ontario vont avoir le plus haut cout de la vie si l on tient compte de ces tendances regionales dans les niveaux du cout de la vie il appert que des structures de salaires et de revenus reels ont ete en place et stables depuis 1901 donc les disparites regionales de salaires et de revenus sont des caracteristiques deja anciennes et persistantes de l economie canadienne

a monthly dynamic consumer expenditure system for germany with different kinds of households a dynamic monthly consumer expenditure system is estimated for an aggregate household and three household types using recent german data the results tend to support the long run restrictions of homogeneity and symmetry for the aggregate household but only when short run dynamics are modelled following the method of anderson and blundell the required lags are short however the results for the partiallydisaggregated data are markedly different in particular the integrability restrictions can be rejected for the sample of high income workers therefore contrary to the usual presumption the less aggregated data seem more at variance with the restrictions of utility maximization

rent seeking and the two track price system in china a simple general equilibrium model is specified to analyse the impact on the chinese economy of the introduction of a two track price system on to a centrally planned economy it is shown that national income will rise as a result together with a fall in the costs associated with rent seeking some estimates of welfare gains and costs of rent seeking are provided for seven commodities within a partial equilibrium framework they are shown to be dependent on the price elasticities of demand and supply the latter determine the ratio of plan to market prices and the share of plan in total output

the rigidity of prices this paper uses evidence on individual transaction prices to analyze price behavior the evidence shows that for many transactions pricesremain rigid for periods exceeding one year the rigidity of price ispositively correlated with industry concentration for several productsthe correlation of price changes across buyers is low the paper alsoinvestigates the relationship between price rigidity price change andthe length of time a buyer and seller have been doing business together the author interprets the evidence as emphasizing the importance of nonprice rationing and the inadequacy of models in whichprice movements alone clear markets copyright 1986 by american economic association

testing restrictions in a flexible dynamic demand system an application to consumers expenditure in canada traditionally restrictions on systems of demand equations have been tested using static models whilst being estimated with time series data this paper develops a vector time series model of expenditure shares in the context of a singular dynamic demand system the model allows for non symmetric and non homogeneous short run behaviour the homogeneity and symmetry restrictions are only examined in the long run structure results based on canadian time series data are presented and reject the current practise of static modelling while restrictions suggested by economic theory are not rejected when imposed on the long run structure

yesterday s bad times are today s good old times retail price changes are more frequent today than in the 1890s this paper documents differences in the nominal rigidity of retail prices across two 28 month periods 1889 91 and 1997 99 the most striking finding is that prices changed much less frequently in 1889 91 in the late 1800s when price changes did occur they were smaller on average and more narrowly distributed with fewer small or large price changes further price changes were more permanent 100 plus years ago these differences are consistent with a high occurrence of temporary price shocks and a higher cost of changing prices in 1889 91 than in 1997 99

noisy information distance and law of one price dynamics across us cities abstract us micro price data at the city level suggests that both the volatility and the persistence of law of one price deviations are rising in the distance between us cities a standard two city equilibrium model with trade costs can predict the relationship between volatility and distance but not between persistence and distance we show that if there is imperfect information about the state of nominal aggregate demand with noisy signals that are asymmetric across cities then distance and persistence will be positively correlated our main results are shown to be robust to the introduction of sticky prices and multiple cities

budget share demographic translation and the aggregate almost ideal demand system abstract this paper introduces budget share demographic translation in the almost ideal demand system aids and explores its implications for aggregation over consuming units it os shown that under certain conditions the joint distribution of expenditure and demographic characteristics plays an explicit role in the aggregate aids empirical evidence based on italian data is provided and the implied expenditure pattern for a number of combinations of expenditures and household characteristics derived from the estimated aggregate aids the empirical results suggest that the usual rejection of the homogeneity restriction in aggregate demand systems might have to do with the improper treatment of the aggregation issue

is consumption too smooth the case of the united kingdom this study consider whether for the uk the restrictions of the rational expectations permanent income repi model of consumption are consistent with the data and whether consumption is too smooth given innovations in labour income some of the findings confirm those for the usa the repi restrictions are rejected however in marked contrast to the result of campbell and deaton 1989 little is found to support the view that consumption is too smooth indeed there is some support for the view that consumption is too volatile some insight is given as to how such results can arise

interrelated factor demands for manufacturing a dynamic translog cost function approach abstract in this paper we report the results of estimating a joint model for labour capital and energy using the transcendental logarithmic cost function of christensen jorgenson and lau 1973 this allows us to determine both the own price and cross elasticities of substitution between labour capital and energy we combine a model of factor shares with a dynamic adjustment process for each factor we also impose on the cross equation restrictions necessary to provide additivity homogeneity and symmetry since the covariance matrix in systems of share relationships is singular we follow the suggestions of anderson and blundell 1982 and employ a mullivariate error corrrection model the results suggest that additivity symmetry and homogeneity restrictions do hold and that there are short run increasing returns to scale

the disintegrating canadian labour market the extent of the market then and now analysis of real wages for three occupations in 13 canadian cities for 1901 50 suggests canada had a national labour market at least until 1950 however analysis of real wages for 10 canadian cities for 1971 2000 yields little evidence favouring integration of canada s regional labour markets the apparent lack of labour market integration reflects a weakness of an approach that assumes markets are in equilibrium unemployment rates after 1970 suggest that some regional markets may be characterized by excess labour supply analysis of relative provincial unemployment rates yields evidence consistent with local labour force adjustment to changing labour market conditions jel classification e24 j61 le marche du travail en desintegration au canada l etendue du marche alors et maintenant les auteurs analysent les salaires reels pour trois occupations dans 13 villes canadiennes au cours de la periode 1901 50 et suggerent que le canada a joui d un marche du travail qui etait national tout au moins jusqu a 1950 toutefois l analyse des salaires reels dans 10 villes canadiennes au cours de la periode 1971 2000 ne fournit pas de resultats supportant l idee d integration des marches regionaux du travail on suggere que le manque apparent d integration du marche du travail est l effet d echo d une approche qui presume que les marches sont en equilibre la periode de l apres 1970 en est une ou les taux de chomage suggerent plutot que certains marches regionaux peuvent etre raisonnablement caracterises comme definis par une offre excedentaire de travail une analyse des taux de chomage provinciaux relatifs revele que la force de travail locale s ajuste aux conditions changeantes du marche du travail