crisis or opportunity economic degrowth for social equity and ecological sustainability introduction to this special issue abstract this article reviews the burgeoning emerging literature on sustainable degrowth this is defined as an equitable downscaling of production and consumption that increases human well being and enhances ecological conditions at the local and global level in the short and long term the paradigmatic propositions of degrowth are that economic growth is not sustainable and that human progress without economic growth is possible degrowth proponents come from diverse origins some are critics of market globalization new technologies or the imposition of western models of development in the rest of the world all criticize gdp accounting though they propose often different social and ecological indicators degrowth theorists and practitioners support an extension of human relations instead of market relations demand a deepening of democracy defend ecosystems and propose a more equal distribution of wealth we distinguish between depression i e unplanned degrowth within a growth regime and sustainable degrowth a voluntary smooth and equitable transition to a regime of lower production and consumption the question we ask is how positive would degrowth be if instead of being imposed by an economic crisis it would actually be a democratic collective decision a project with the ambition of getting closer to ecological sustainability and socio environmental justice worldwide most articles in this issue were originally presented at the april 2008 conference in paris on economic degrowth for ecological sustainability and social equity this conference brought the word degrowth and the concepts around it into an international academic setting articles of this special issue are summarized in this introductory article hueting d alessandro and colleagues van den bergh kerschner spangenberg and alcott discuss whether current growth patterns are un sustainable and offer different perspectives on what degrowth might mean and whether and under what conditions it might be desirable matthey and hamilton focus on social dynamics and the obstacles and opportunities for voluntary social action towards degrowth lietaert and cattaneo with gavalda offer a down to earth empirical discussion of two practical living experiments cohousing and squats highlighting the obstacles for scaling up such alternatives finally van griethuysen explains why growth is an imperative in modern market economies raising also the question whether degrowth is possible without radical institutional changes

country of origin effects on product evaluations this article reviews the literature regarding the effect of country of origin on buyer evaluations of products the issue is important for countries especially resource poor developing countries that need to increase manufactured exports and for firms that source products in countries different from where sold marketing inferences are drawn and implications for future research are developed

national animosity and cross border alliances we extend the cross border strategic alliance knowledge base by introducing dyad specific antagonism animosity between nation pairs and hold that the formation and the type of firm level cross border alliances are nontrivially impacted by conflicting relations and animosity between their home nations we examine the formation of alliances between firms among nation dyads with and without a history of conflicts the frequency and magnitude of conflicts increase the perception of likelihood of opportunism and dyad specific risks materially affect the context in which firms make alliance decisions as animosity between two nations increases the number and the probability of forming alliances within the dyad the nations form decreases conditional on the expected number of alliances increased antagonistic actions of nations outside the dyad and dissimilarity in the historical conflicts that each nation has engaged in outside the dyad i increase the number of equity alliances and ii decrease the number of nonequity alliances as a proportion of total alliances we find positive main effects of learning to contract through prior experience only for equity vs nonequity alliances the reputation effects of antagonism based on relationships with nations outside of the dyad negatively moderate the positive learning effects of prior equity alliance experience abstract from author

i hate where it comes from but i still buy it countervailing influences of animosity and nostalgia drawing from negativity bias fading affect bias and ambivalence literature we provide evidence that consumer nostalgia acts as a countervailing force to consumer animosity in historically connected markets hcms that is trading countries that previously were part of the same country but are now independent for both soviet era and new russian brands our findings show that nostalgia can compensate for the negative effects of animosity on product judgment and product ownership in hcms characterized by intense negative past events lithuania in contrast in hcms experiencing current recent negative events ukraine animosity is a stronger predictor of product judgment and ownership than nostalgia importantly in both hcm settings consumer ethnocentrism only plays a minor role when both nostalgia and animosity are simultaneously considered as predictors in the model theoretical and managerial implications of the findings are considered and future research directions are identified

how robust are popular models of nominal frictions this paper analyzes three popular models of nominal price and wage frictions to determine which best ts post war u s data we construct a dynamic stochastic general equilibrium dsge model and use maximum likelihood to estimate each model s parameters because previous research nds that the conduct of monetary policy and the behavior of in ation changed in the early 1980s we examine two distinct sample periods using a bayesian pseudo odds measure as a means for comparison a sticky price and wage model with dynamic indexation best ts the data in the early sample period whereas either a sticky price and wage model with static indexation or a sticky information model best ts the data in the late sample period our results suggest that price and wage setting behavior may be sensitive to changes in the monetary policy regime if true the evaluation of alternative monetary policy rules may be even more complicated than previously believed

assessing the impact of country of origin on product evaluations a new methodological perspective a new methodological approach for examining the impact of country of origin on product evaluations is proposed it takes the form of a multiattribute attitudinal model analyzed by means of a system

long run welfare under externalities in consumption leisure and production a case for happy degrowth vs unhappy growth in this paper we contribute to the debate on the relationship between growth and well being by examining an endogenous growth model where we allow for externalities in consumption leisure and production we analyze three regimes a decentralized economy where each household makes isolated choices without considering their external effects a planned economy where a myopic planner fails to recognize both leisure and consumption externalities but recognizes production externalities and a planned economy with a fully informed planner we first compare the balanced growth paths under the three regimes and then we numerically investigate the transition to the optimal balanced growth path we provide a number of findings first in a decentralized economy growth or labor or both are greater than in the regime with a fully informed planner and hence are sub optimal from a welfare standpoint second a myopic intervention which overlooks consumption and leisure externalities leads to more growth and labor than in both the decentralized and the fully informed regime third we provide a case for happy degrowth a transition to the optimal balanced growth path that is associated with downscaling of production a reduction in private consumption and an ongoing increase in leisure and well being

vacancies unemployment and the phillips curve abstract the canonical new keynesian phillips curve has become a standard component of models designed for monetary policy analysis however in the basic new keynesian model there is no unemployment all variation in labor input occurs along the intensive hours margin and the driving variable for inflation depends on workers marginal rates of substitution between leisure and consumption in this paper we incorporate a theory of unemployment into the new keynesian theory of inflation and empirically test its implications for inflation dynamics we show how a traditional phillips curve linking inflation and unemployment can be derived and how the elasticity of inflation with respect to unemployment depends on structural characteristics of the labor market such as the matching technology that pairs vacancies with unemployed workers we estimate on us data the phillips curve generated by the model while we can reject the baseline new keynesian phillips curve in favor of the search frictions specification we show it is still too stylized to fully describe the dynamics of firms marginal costs

inflation dynamics and real marginal costs new evidence from u s manufacturing industries this paper deals with the analysis of price setting in u s manufacturing industries recent studies have heavily criticized the ability of the new keynesian phillips curve nkpc to t aggregate in ation see e g rudd and whelan 2006 can rational expectations sticky price models explain in ation dynamics american economic review vol 96 1 pp 303 320 we challenge this evidence showing that forward looking behavior as implied by the new keynesian model of price setting is widely supported at the sectoral level in fact current and expected future values of the income share of intermediate goods emerge as

escaping the iron cage liabilities of origin and csr reporting of emerging market multinational enterprises this article examines the link between the condition of institutional voids in emerging markets and the use of the practice of corporate social responsibility csr reporting by emerging market multinational enterprises em mnes based on neo institutional theory and in light of the specificity of emerging markets we propose a positive relationship between institutional voids and csr reporting home country institutional voids push companies to internationalize as a way to escape the institutional constraints and inefficiencies in their own markets but at the same time create legitimacy challenges for these companies abroad in particular em mnes from less institutionally developed countries are likely to face liabilities of origin negative perceptions in host countries about these firms willingness and ability to conduct legitimate business csr reporting is an effective strategy to overcome such liabilities and barriers to legitimation as it conveys to host countries and global stakeholders alignment with global meta norms and expectations internationalization listing on developed country stock exchanges and time further magnify em mnes legitimacy challenges and thus the use of csr reporting to mitigate them our hypotheses are supported in a longitudinal study of 157 of the largest em mnes ranked by the united nations conference on trade and development unctad between 2004 and 2011

inflation modeling a policymaker s perspective an occasion like this one is a natural opportunity to reflect on how policymakers understanding of the inflation process has progressed over time clearly we have come a long way since the early 1970s most important we have absorbed the central lesson of milton friedman s 1968 address to the american economic association that any trade off between inflation and unemployment is only temporary because of the dynamic nature of expectations we have also taken on board the practical application of this lesson that monetary policy must be vigilant about anchoring inflation expectations operationally maintaining price stability requires abiding by the taylor principle of raising nominal interest rates more than one for one in response to movements in inflation especially those movements perceived as persistent it also requires that policy tighten or ease systematically to bring aggregate demand in line with the economy s productive potential not only because output stabilization is a policy objective in its own right but also because such actions help to head off undesirable changes in inflation down the road these basic precepts embraced by central bankers everywhere have almost certainly contributed to the improved performance of inflation over the past decade or two and this better price performance probably has helped to damp business cycles of course economists and policymakers still have a great deal to learn about the interactions of monetary policy the real economy and inflation but as the conference papers illustrate we are making progress

societal metabolism working hours and degrowth a comment on sorman and giampietro can we choose whether to degrow sorman and giampetro in this special issue argue that degrowth can only be forced upon us it will never be the outcome of voluntary or collective choice in this commentary i argue instead that although sooner or later we will have to degrow because of bio physical limitations we still have a choice of how to do it constructing a positive vision of degrowth as an inspirational political project that mobilizes citizens increases the likelihood of a prosperous way down i agree with the authors that in an energy scarce world we will have to work more to maintain the same level of material affluence but i contend that under conceivable conditions we might be equally happy with less work less energy and less material affluence a multi scalar analysis of societal metabolism is essential for the evaluation of degrowth policies and trajectories however unlike what sorman and giampietro suggest there is nothing in existing metabolic analyses that suggests that a prosperous degrowth trajectory is a priori impossible

the aggregation of climate change damages a welfare theoretic approach the economic value of environmental goods is commonly determined using the concepts of willingness to pay wtp or willingness to accept wta however the wtp wta observed in different countries or between individuals will differ according to socio economic characteristics in particular income this notion of differentiated values for otherwise identical goods say a given reduction in mortality risk has been criticized as unethical most recently in the context of the social cost chapter of the ipcc second assessment report these critics argue that being a function of income wtp wta estimates reflect the unfairness in the current income distribution and for equity reasons uniform per unit values should therefore be applied across individuals and countries this paper analyses the role of equity in the aggregation of climate change damage estimates using basic tools of welfare economics it shows one way of how wtp wta estimates can be corrected in aggregation if the underlying income distribution is considered unfair it proposes that in the aggregation process individual estimates be weighted with an equity factor derived from the social welfare and utility functions equity weighting can significantly increase aggregate global damage figures although some specifications of weighting functions also imply reduced estimates the paper also shows that while the postulate of uniform per unit values is compatible with a wide range of reasonable utility and welfare specifications there are also cases where the common value notion is not compatible with defensible welfare concepts

mnc strategy and social adaptation in emerging markets emerging markets experience institutional and social changes over time that present different stakeholder expectations for multinational corporations mncs mncs are often accused of social misdeeds and experience public crises during the changes leaving questions on how they adapt to the local social transition to sustain operations conventional adaptation strategies put too much emphasis on maximizing economic returns by arbitraging national differences and catering to local market and consumer characteristics the economic orientation may fail to address evolving and diverse stakeholder expectations easily leading to public crises this study conceptualizes economic adaptation and social adaptation as two sets of knowledge and capabilities that would have equally important impacts on mncs sustainable operations in emerging markets the empirical testing examines consumer rights related public crises experienced by 180 mncs in china the results suggest that mncs social adaptation activities have significantly positive effects in mitigating public crises while certain aspects of economic adaption such as early entry into china reliance on local leadership and speedy expansion of local employees lead to public crises the significant interaction effects confirm that mncs need to follow a balanced approach paying attention to both economic and social components to avoid public crises and sustain growth in emerging markets

nominal price rigidity money supply endogeneity and business cycles abstract this paper investigates the ability of nominal price rigidity to explain the co movement of inflation with the cyclical component of output observed in the post war u s data a dynamic general equilibrium model is constructed with the introduction of monopolistic competition and nominal price rigidity in a standard real business cycle model allowing for an endogenous money supply rule it is then demonstrated that sticky price models can explain the observed associations between movements in inflation and output much better than flexible price models this result depends little on whether money supply is assumed to be endogenous or not

comparing new keynesian models of the business cycle a bayesian approach abstract the baseline new keynesian model cannot replicate the observed persistence in inflation output and real wages for sensible parameter values as a result several extensions have been suggested to improve its fit to the data we use a bayesian approach to estimate and compare the baseline sticky price model of calvo s 1983 staggered prices in a utility maximizing framework journal of monetary economics 12 383 398 and three extensions our empirical results are as follows first we find that adding price indexation improves the fit of calvo s 1983 staggered prices in a utility maximizing framework journal of monetary economics 12 383 398 model second models with both staggered price and wage setting dominate models with only price rigidities third introducing wage indexation does not significantly improve the fit fourth all model estimates suggest a high degree of price stickiness fifth the estimates of labor supply elasticity are higher in models with both staggered price and wage contracts finally the estimated inflation parameters of the taylor rule are stable across models

does labor s share drive inflation a number of researchers have recently argued that the new keynesian phillips curve matches the empirical behavior of inflation well when the labor income share is used as a driving variable but fits poorly when deterministically detrended output is used the theoretical motivation for these results rests on the idea that the output gap the deviation between actual and potential output is better captured by the labor income share in turn implying that central banks should raise interest rates in response to increases in this variable we show that the empirical evidence generally suggests that the labor share version of the new keynesian phillips curve is a very poor model of price inflation we conclude that there is little reason to view the labor income share as a good measure of the output gap or as an appropriate variable for incorporation in a monetary policy rule

a quantitative comparison of sticky price and sticky information models of price setting i estimate sticky price and sticky information models of price setting for the united states via maximum likelihood techniques reaching several conclusions first the sticky price model fits best and captures inflation dynamics as well as reduced form equations once hybrid behavior is allowed second the importance of hybrid behavior in sticky price models is potentially consistent with a role for some information imperfections such as sticky information as a complement to nominal price rigidities finally the favorable results herein for the hybrid sticky price model when evaluated by statistics that summarize the relative fit of different models is consistent with the existing literature that is both supportive and dismissive of such models as this literature has largely ignored fit in evaluating such models many previous studies have focused on ancillary issues such as the standard errors associated with certain parameters or granger causality tests that may not provide much information about sticky price models

international evidence on the efficacy of new keynesian models of inflation persistence in this paper we take an agnostic view of the phillips curve debate and carry out an empirical investigation of the relative and absolute efficacy of calvo sticky price sp sticky information si and sticky price with indexation models spi with emphasis on their ability to mimic inflationary dynamics in particular we look at evidence for a group of 13 oecd countries and we consider three alternative measures of inflationary pressure including the output gap labor share and unemployment we find that the calvo sp and the si models essentially perform no better than a strawman constant inflation model when used to explain inflation persistence indeed virtually all inflationary dynamics end up being captured by the residuals of the estimated versions of these models we find that spi model is preferable because it captures the type of strong inflationary persistence that has in the past characterized the economies of the countries in our sample however two caveats to this conclusion are that improvement in performance is driven mostly by the time series part of the model i e lagged inflation and that the spi model overemphasizes inflationary persistence thus there appears to be room for improvement via either modified versions of the above models or via development of new models that better track inflation persistence

behavioral heterogeneity in u s inflation dynamics in this article we develop and estimate a behavioral model of inflation dynamics with heterogeneous firms in our stylized framework there are two groups of price setters fundamentalists and rando

technology shocks in the new keynesian model in the new keynesian model preference cost push and monetary shocks all compete with the real business cycle model s technology shock in driving aggregate fluctuations a version of this model estimated via maximum likelihood points to these other shocks as being more important for explaining the behavior of output inflation and interest rates in the postwar u s data these results weaken the links between the current generation of new keynesian models and the real business cycle models from which they were originally derived they also suggest that federal reserve officials have often faced difficult trade offs in conducting monetary policy

intrinsic inflation persistence empirical evidence suggests that inflation determination is not purely forward looking but models of price setting have struggled to rationalize this finding without directly assuming backward looking pricing rules for firms this paper shows that intrinsic inflation persistence can be explained with no deviation from optimizing forward looking behaviour if prices that have remained fixed for longer are more likely to be changed than those set recently a relationship between the probability of price adjustment and the duration of a price spell is shown to imply a simple hybrid phillips curve including lagged and expected inflation which is estimated using macroeconomic data

in defence of degrowth abstract this article defends the proposal of sustainable degrowth a starting premise is that resource and co2 limits render further growth of the economy unsustainable if degrowth is inevitable the question is how it can become socially sustainable i e a prosperous and stable rather than a catastrophic descent pricing mechanisms alone are unlikely to secure smooth adaptation a full ensemble of environmental and redistributive policies is required including among others policies for a basic income reduction of working hours environmental and consumption taxes and controls on advertising policies like these that threaten to harm the economy are less and less likely to be implemented within existing market economies whose basic institutions financial property political and redistributive depend on and mandate continuous economic growth an intertwined cultural and political change is needed that will embrace degrowth as a positive social development and reform those institutions that make growth an imperative sustainable degrowth is therefore not just a structuring concept it is a radical political project that offers a new story and a rallying slogan for a social coalition built around the aspiration to construct a society that lives better with less

an integrated anti opportunism system in international exchange building on economic and social exchange theories this study develops an integrated model in which curtailing opportunism in international joint ventures ijvs requires four interrelated sets of suppressing forces 1 contractual ordering contractual inclusiveness and contractual obligatoriness 2 structural ordering managerial governance and equity captiveness 3 relational ordering interparty attachment and boundary spanner ties and 4 justice ordering procedural justice and distributive justice using a sample of 192 ijvs in an emerging market this study finds general support for our theoretical model our research validates that countering opportunism involves a system wide effort that integrates economic and social mandates unifies ex ante and ex post mechanisms controls both egoistic and non egoistic motivations and combines organizational level and individual level forces for partners from individualist cultures economic ordering forces contractual and structural are stronger than social ordering forces relational and justice in relation to opportunism resistance whereas for partners from a collectivistic culture social ordering forces are relatively stronger than economic ordering forces for this end

partial adjustment and staggered price setting this paper compares taylor style staggered price setting to partial adjustment of prices or calvo staggering in a small optimizing is lm model in contrast to the overwhelming perception in the literature the models are not similar for most parameterizations in particular the dynamic response of the economy to shocks is quite different in the two models and the welfare cost of price rigidity is eight or more times larger in the calvo model than in the taylor model for typical calibrations suggestions for calibrations under which the models are more similar are also presented

a longitudinal study comparing perceptions of u s and japanese consumer products in a third neutral country finland 1975 to 1985 while substantial research has been done on the competitive struggle between u s and japanese consumer products few studies have examined the u s japan rivalry from a neutral third country perspective this study covering a ten year period 1975 1985 of data collection examines changes in finnish perceptions of u s and japanese consumer products and marketing efforts results indicate that while finnish consumer perceptions of u s products and marketing efforts have improved over time the corresponding perceptions of the japanese alternative have improved substantially more similarly in areas where u s competitors had initial advantages the study results indicate that by 1985 japanese firms were able to overcome such advantages and were perceived as superior in all categories

country of origin effects in developed and emerging markets exploring the contrasting roles of materialism and value consciousness despite growing evidence about differences in the attitudes and behaviors of consumers in emerging and developed markets there is little research on the differences in country of origin coo effects on their evaluation behavioral intentions bis and actual purchase of imported products this paper introduces a new conceptual framework incorporating consumer ethnocentrism cet materialism mat and value consciousness vc to hypothesize several differences in the influence of coo effects on consumers from developed and emerging markets a web based study with 1752 consumers in four countries representing two developed markets the uk and the usa and two emerging markets china and india shows significant differences in the moderating influence of cet mat and vc on the effects of coo on the evaluations and bis for a fictitious passenger car brand and on the actual choice of car brands owned by them the findings highlight the importance of looking beyond cet at other relevant psychographic variables to understand the differences in motivations underlying consumer perceptions and behavior towards imported products

modeling inflation dynamics a critical review of recent research in recent years a broad academic consensus has arisen around the use of rational expectations sticky price models to capture inflation dynamics these models are seen as providing an empirically reasonable characterization of observed inflation behavior once suitable measures of the output gap are chosen and moreover are perceived to be robust to the lucas critique in a way that earlier econometric models of inflation are not we review the principal conclusions of this literature concerning 1 the ability of these models to fit the data 2 the importance of rational forward looking expectations in price setting and 3 the appropriate measure of inflationary pressures we argue that existing rational expectations sticky price models fail to provide a useful empirical description of the inflation process especially relative to traditional econometric phillips curves of the sort commonly employed for policy analysis

inflation target shocks and monetary policy inertia in the euro area the euro area as a whole has experienced a marked downward trend in inflation over the past decades and concomitantly a protracted period of depressed activity can permanent and gradual shifts in monetary policy be held responsible for these dynamics to answer this question we embed serially correlated changes in the inflation target into a dsge model with real and nominal frictions the formal bayesian estimation of the model suggests that gradual changes in the inflation target have played a major role in the euro area business cycle counter factual exercises show that had monetary policy implemented its new inflation objective at a faster rate the euro zone would have experienced more sustained growth than it actually did

beyond country image favorability how brand positioning via country personality stereotypes enhances brand evaluations across four lab experiments and a field study we find that brands are evaluated more favorably when the brand is positioned in a manner that is congruent with the brand s home country personality stereotype than when brand positioning is incongruent results demonstrate that cultural authenticity mediates this effect we also uncover a moderating effect whereby brands are viewed more favorably when brand positioning and country personality stereotypes are incongruent rather than congruent under conditions of consumer animosity toward the firm s home country this study is the first to demonstrate how international firms can leverage country of origin personality stereotypes as a brand building advantage

autoregression based estimation of the new keynesian phillips curve abstract we propose an estimation method of the new keynesian phillips curve nkpc based on a univariate noncausal autoregressive model for the inflation rate by construction our approach avoids a number of problems related to the gmm estimation of the nkpc we estimate the hybrid nkpc with quarterly u s data 1955 1 2010 3 and both expected future inflation and lagged inflation are found important in determining the inflation rate with the former clearly dominating moreover inflation persistence turns out to be intrinsic rather than inherited from a persistent driving process

sticky price models and the natural rate hypothesis abstract a major criticism of standard specifications of price adjustment in models for monetary policy analysis is that they violate the natural rate hypothesis by allowing output to differ from potential in steady state in this paper we estimate a dynamic optimizing business cycle model whose price setting behavior satisfies the natural rate hypothesis the price adjustment specifications we consider are the sticky information specification of mankiw and reis sticky information versus sticky prices a proposal to replace the new keynesian phillips curve quarterly journal of economics 117 1295 1328 and the indexed contracts of christiano et al nominal rigidities and the dynamic effects of a shock to monetary policy journal of political economy 113 1 45 our empirical estimates of the real side of the economy are similar whichever price adjustment specification is chosen consequently the alternative model specifications deliver similar estimates of the u s output gap series but the empirical behavior of the gap series differs substantially from standard gap estimates

intrinsic persistence of wage inflation in new keynesian models of the business cycles we derive and estimate a new keynesian wage phillips curve that accounts for intrinsic inertia in line with microevidence on wage setting we consider a wage setting model featuring an upward sloping hazard function based on the notion that the probability of resetting a wage depends on the time elapsed since the last reset our wage phillips curve embeds also backward terms we test the hazard function slope using generalized method of moment estimation then placing our equation in a small scale new keynesian model we investigate its dynamic properties using bayesian estimation model comparison shows that our model outperforms commonly used alternative methods to introduce persistence

money supply class power and inflation monetarism reassessed recent sociological work shows that pro market neoliberal policies across advanced capitalist countries are due to distributional struggle between classes in the 1970s and 1980s the orthodox monetarist view alternatively sees neoliberal reform as a nonpolitical attempt to end the stagflation crisis of the 1970s from this perspective monetary and fiscal expansions brought high inflation and central bank discipline and government austerity is the solution but the recent trend of low inflation despite accelerating money growth and government spending contradicts this view analyses of time series cross section data for 23 oecd countries from 1960 to 2009 support the thesis that the rise and fall of inflation is more about distribution of power between labor and capital than about monetary and fiscal discipline inflation in the 1970s originated from a strong working class and hurt capital more than it did workers while neoliberal repression of workers power has kept inflation low from the 1980s onwa

the taylor rule and optimal monetary policy where it denotes the fed s operating target for the federal funds rate pt is the inflation rate measured by the gdp deflator yt is the log of real gdp and y t is the log of potential output identified empirically with a linear trend the rule has since been subject to considerable attention both as an account of actual policy in the united states and elsewhere and as a prescription for desirable policy taylor argues for the rule s normative significance both on the basis of simulations and on the ground that it describes u s policy in a period in which monetary policy is widely judged to have been unusually successful taylor 1999 suggesting that the rule is worth adopting as a principle of behavior here i wish to consider to what extent this prescription resembles the sort of policy that economic theory would recommend i consider the question in the context of a simple but widely used optimizing model of the monetary transmission mechanism which allows one to reach clear conclusions about economic welfare the model is highly stylized but incorporates important features of more realistic models and allows me to make several points that are of more general validity out of concern for the robustness of the conclusions reached the analysis here addresses only broad qualitative features of the taylor rule and attempts to identify features of a desirable policy rule that are likely to hold under a variety of model specifications

estimating a new keynesian phillips curve with a corrected measure of real marginal cost evidence in japan we estimate a new keynesian phillips curve nkpc in japan focusing on the measurement of real marginal cost rmc especially we correct labor share by taking account of two kinds of labor market frictions i labor adjustment costs and ii real wage rigidity our results show that the consideration of these labor market frictions greatly improves the fit of japan s nkpc furthermore if we additionally incorporate materials prices in the calculation of rmc then the fit of the nkpc is further improved our most important finding is that the conventional backward looking component is no more needed to explain japan s inflation dynamics if we use a corrected measure of rmc

pricing models a bayesian dsge approach for the u s economy this paper compares and estimates three pricing mechanisms in the context of a small dsge model of the u s economy we interpret our results as favoring the pricing mechanism presented in wolman 1999 wolman model over the new keynesian model with indexation gali and gertler 1999 smets and wouters 2004a and the sticky information model of mankiw and reis 2002 the key factor that explains the performance of the wolman model is that the data reject the key assumption of the new keynesian model that the firm s probability of price change is constant over time and independent of the contract s vintage our results also show that incorporating indexation in the new keynesian model represents a poor expedient in matching the autocorrelation function of the inflation process over the last 20 years

brand origin recognition accuracy its antecedents and consumers cognitive limitations an ever growing literature has reported consumer bias toward national origins of products and has explored factors that moderate such bias researchers have assumed if only tacitly that consumers are knowledgeable of brand origins and that this knowledge is a significant influence that drives judgments of product quality brand attitudes and choice behavior in the marketplace using categorization theory and attribute diagnosticity as the theoretical foundation our research reveals that consumers actually have only modest knowledge of the national origins of brands and that american consumers proficiency at recognizing foreign brand origins is predicted by variables such as socioeconomic status past international travel foreign language skills and gender in the second of two studies we determined that brand origin recognition is based largely on consumers associations of brand names with languages that suggest country origins these studies ultimately lead us to conclude that past research has inflated the influence that country of origin information has on consumers product judgments and behavior and its importance in managerial and public policy decisions

home country bias in product evaluation the complementary roles of economic and socio psychological motives consumers often are positively biased in their evaluations of domestic products vs foreign alternatives this study establishes economic and socio psychological motives for this home country bias building on social identity theory this paper shows that home country bias is in part driven by a need for self enhancement this influence is stronger for consumers who identify more strongly with their own country and is complementary to the effect of consumer ethnocentrism which provides an economic motivation for home country bias the framework is supported in empirical studies conducted in the netherlands and in the usa

de growth and welfare in an equilibrium model with heterogeneous consumers this paper studies equilibrium growth and voluntary degrowth allowing for heterogeneous and time varying preferences the approach is based on applying a dynamic equilibrium model with externalities in production consumption and leisure preference heterogeneity regarding status competition is modeled by asymmetric consumption externality parameters whereas heterogeneity regarding voluntary simplicity is incorporated by allowing for agent specific restrictions on maximum consumption equilibrium is studied in terms of a balanced growth path bgp numerical examples suggest that degrowth triggered by voluntary simplicity by a subset of consumers less affected by status competition has a positive effect on the aggregate welfare under externalities in consumption and leisure a reduction in status competition increases the aggregate welfare and reduces the equilibrium growth rate simulations suggest that a time varying equilibrium in the heterogeneous preference model with two consumer classes is well approximated by a constant bgp

impact of historical conflict on fdi location and performance japanese investment in china historical relations between countries bring important explanatory power for foreign direct investment fdi decisions yet little is known on whether a home host country relation exhibits heterogeneous effects on fdi across the country s subnational regions in this study we examine the long term impact of historical conflict on fdi location choices and performance using a sample of 8 646 japanese fdi in china we show that civilian casualties in different provinces of china during the second sino japanese war exert deterring effects on japanese fdi location choices furthermore we demonstrate that civilian casualties negatively affect japanese fdi performance and political capital accumulation strategies in the forms of excessive tax payment and local employment can reduce this negative effect this study contributes to the discussion on how within country differences of historical factors affect fdi location decisions and performance the findings on firms political capital accumulation strategies also provide important implications for fdi operation in an environment characterized by historical animosity

celebrity endorsements in emerging markets align endorsers with brands or with consumers this paper investigates country of origin co effects as they relate to celebrity endorsements across multiple studies in emerging markets the authors show that consumers evaluations depend on the match between 1 celebrity co and consumer co termed consumer co fit and 2 celebrity co and brand co termed brand co fit if there is a trade off between consumer co fit and brand co fit the authors identify contingencies e g ethnocentrism levels that determine which type of co fit leads to higher evaluations furthermore the authors develop prescriptions for segmentation in emerging markets and specify when these prescriptions differ from those prescribed by prior international business research

a comparison of forecast performance between federal reserve staff forecasts simple reduced form models and a dsge model this paper considers the forecast performance of the federal reserve staff five atheoretical reduced form models and an estimated dynamic stochastic general equilibrium dsge model focusing on the late 1990s through 2001 our analysis finds that the dsge model and atheoretical models forecast real gdp growth better than the federal reserve staff during this period by an economically significant margin we find smaller differences across each method in the quality of inflation forecasts over this period these results provide some support to the notion that richly specified dsge models such the one used in this paper belong in the forecasting toolbox of a central bank rochelle m edge rochelle m edge frb gov michael t kiley michael t kiley frb gov and jeanphilippe laforte jean philippe laforte frb gov are affiliated with the macroeconomic and quantitative studies section at the board of governors of the federal reserve system this paper represents ongoing work in the section on developing dge models that can be useful for policy analysis nevertheless any views expressed in this paper remain solely those of the authors and do not necessarily reflect those of the board of governors of the federal reserve system or it staff all errors are our own

an equilibrium framework for the analysis of a degrowth society with asymmetric agents sharing and basic income abstract this paper presents a novel equilibrium framework allowing for asymmetries in the initial wealth allocations labour supplies as well as in the preferences of optimizing agents the framework is applied to study a degrowth society where a subset of agents voluntarily limit their material consumption thereby complying with voluntary simplicity vs at micro level the utility maximization problems of asymmetric agents are formulated and solved for optimal labour supplies new macro level equilibrium solutions accounting for wealth inequality are presented based on different labour supply models the equilibrium welfare is measured using a bernoully nash aggregate an increase in the share of the vs type agents implies a degrowth transition to a lower level of average consumption analysis of the equilibrium framework shows that degrowth whereby average market based consumption falls improves the equilibrium welfare assuming the vs type agents have sufficient resources enabling a reduction in labour supplies sharing collaborative consumption and basic income support welfare increasing degrowth any growing economy can eventually reach the size at which degrowth would improve the welfare simulations suggest that degrowth can also yield a pareto improvement in welfare

has euro area inflation persistence changed over time this paper analyzes the stability over time of the econometric process for euro area inflation since 1970 focusing in particular on the behavior of the so called persistence parameter the sum of the coefficients on the lagged dependent variables perhaps surprisingly in light of the lucas critique our principal finding is that there appears to be relatively little instability in the parameters of the euro area inflation process full sample estimates of the persistence parameter are generally close to 1 and we fail to reject the hypothesis that this parameter has been stable over time we discuss how these results provide some indirect evidence against rational expectations models with strong forward looking elements such as the new keynesian phillips curve

optimal price setting and inflation inertia in a rational expectations model abstract this paper presents and estimates a new keynesian monetary model for the us economy it proposes possible solutions to two problems in this model class the lack of inflation inertia and persistence in versions of these models that insist on rigorous microfoundations and rational expectations and the small contribution of technology shocks to business cycles price setting takes the form of optimal two part pricing policies formulated under conditions of upward sloping firm specific marginal cost curves furthermore this form of price setting applies not only to prices and wages but also to user costs of capital in this setting past inflation becomes a key determinant of current inflation even though price setting is entirely forward looking technology is modeled as a random walk with technology growth shocks that follow a highly persistent process the model is estimated by bayesian methods and performs significantly better than a bayesian var it generates inertial and persistent inflation and technology shocks account for a large share of business cycle variation

acting on anger cultural value moderators of the effects of consumer animosity the recent rise in protectionism and demonization of foreign countries has increased the risk of brands falling victim to the negative effects of consumer animosity or strong negative affect directed at a foreign country we investigate the role of cultural values as moderating the relationship between consumer animosity and willingness to buy the combined results of a meta analysis and six experiments in the us and china offer strong evidence that collectivism and long term orientation mitigate the negative effects of consumer animosity and support the contention that animosity s effect on willingness to buy is much stronger than on product judgments

us versus them or us versus everyone delineating consumer aversion to foreign goods this paper presents evidence that international animosity and consumer ethnocentrism are distinct constructs that play different roles depending on the set of products available to consumers results show that animosity toward a foreign nation is related to choices between foreign goods while consumer ethnocentrism is related to choices between domestic and foreign goods further the study finds animosity effects even though anger levels are generally low thus extending the boundaries of the animosity model of foreign purchase the study focuses on u s consumer views of japan and japanese products implications for decisions concerning global versus local branding strategies are discussed

integrating sticky prices and sticky information abstract understanding the relationship between nominal and real variables most notably inflation and cyclical output is one of the fundamental questions of economics toward this understanding we develop a model that integrates sticky prices and sticky information a dual stickiness model we find that both rigidities are present in u s data we also show that the dual stickiness model s closest competitor is the hybrid new keynesian model for both models current inflation depends in part on last period s inflation the former model achieves this dependence endogenously through the interaction of the two rigidities rather than through backward looking behavior u s data support the dual stickiness model over the hybrid model because lagged expectations terms appear in the former s inflation euler equation finally we show that it is quantitatively important to distinguish between the two by simulating a dynamic equilibrium model under each of the two inflation equations

sticky price and sticky information price setting models what is the difference using a partial equilibrium framework mankiw and reis 2002 show that a sticky information model can generate a lagged and gradual inflation response after a monetary policy shock whereas a sticky price model cannot our paper demonstrates that that finding is sensitive to their model s parameterization to determine a plausible parameterization we specify a general equilibrium model with sticky information in that model we find that inflation peaks only one period after a monetary disturbance a sensitivity analysis of our results reveals that the inflation peak is delayed by including real rigidities when the monetary policy instrument is money growth whereas inflation peaks immediately when the policy instrument is the nominal interest rate

growth degrowth and climate change a scenario analysis article i nfo article history the paper proceeds with a discussion of the interplay of scale and intensity in determining greenhouse gas emissions this is followed by the presentation of several macroeconomic scenarios using lowgrow a simulation model of the canadian economy the scenarios considered are business as usual which is a projection into the future of past trends selective growth in which differential growth rates are applied to parts of the economy according to their direct and indirect greenhouse gas emissions and degrowth where the average gdp capita of canadians is reduced towards a level more consistent with a world economy the size of which respects global environmental limits the paper ends with a comparison of the scenarios 2011 published by elsevier b v

consumer animosity in the global value chain the effect of international production shifts on willingness to purchase hybrid products the escalation of international offshoring and outsourcing in recent years has resulted in a proliferation of hybrid products for the typical multinational enterprise with multiple country affiliations for branding design manufacture assembly and parts sourcing however little has been written regarding the impact of consumer animosity on such hybrid activities or the role of universal values in a hybrid production animosity model in this paper we extend the consumer animosity literature to a firm s global integration activities for hybrid products we posit that consumers willingness to purchase wtp a complex hybrid product is negatively affected by partial production shifts to an animosity evoking country and that self reported animosity toward the country predicts lower wtp above and beyond consumer ethnocentrism and perceived product quality in addition we hypothesize a negative relationship between conservation values and wtp hybrid foreign products and a positive relationship between openness values and wtp hybrid foreign products a study of 319 us consumers revealed consistent support for these hypotheses with the exception of the conservation values wtp relationship practical implications and future research directions are discussed

habit formation in consumption a meta analysis abstract we examine 597 estimates of habit formation reported in 81 published studies the mean reported strength of habit formation equals 0 4 but the estimates vary widely both within and across studies we use bayesian and frequentist model averaging to assign a pattern to this variance while taking into account model uncertainty studies employing macro data report consistently larger estimates than micro studies 0 6 vs 0 1 on average the difference remains 0 5 when we control for 30 factors that reflect the context in which researchers obtain their estimates such as data frequency geographical coverage variable definition estimation approach and publication characteristics we also find that evidence for habits strengthens when researchers use lower data frequencies employ log linear approximation of the euler equation and utilize open economy dsge models moreover estimates of habits differ systematically across countries

identifying the influences of nominal and real rigidities in aggregate price setting behavior we formulate a generalized price setting framework that incorporates staggered contracts of multiple durations and that enables us to directly identify the influences of nominal vs real rigidities we estimate this framework using macroeconomic data for germany 1975 1998 and for the u s 1983 2003 in each case we find that the data are well characterized by nominal contracts with an average duration of about two to three quarters we also find that new contracts exhibit very low sensitivity to marginal cost corresponding to a relatively high degree of real rigidity finally our results indicate that backward looking price setting behavior such as indexation to lagged inflation is not needed in explaining the aggregate data at least in an environment with a stable monetary policy regime and a transparent and credible inflation objective

a simple test of the new keynesian phillips curve we propose a way to test the new keynesian phillips curve nkpc without estimating the structural parameters governing the curve i e price stickiness and firms backwardness using this strategy we can test the nkpc avoiding the identification problems related to the gmm approach we find that it does not exist a combination of the structural parameters which is consistent with us data this result does not necessarily imply that the idea of a forward looking price setting behaviour should be entirely disregarded as the rejection might be due to the failure of the joint hypothesis of rational expectations thus further research should be aimed at providing alternative models for agents expectations

a study of degrowth paths based on the von neumann equilibrium model abstract this paper revisits the von neumann equilibrium model from a degrowth perspective degrowth can be either planned or autonomous based on voluntary simplicity vs characterized by voluntary constraints on the private consumptions any share of the working population is allowed to limit their private consumptions or ecological footprint degrowth means a lower economic growth rate as well as reductions in the usage of materials and fossil energy however when the economy cannot fit within the biophysical boundary despite such reductions degrowth can also mean a deliberate transition towards lesser and cleaner production of a smaller number of goods taking ecological boundaries into consideration may thus switch the direction of an economy from growth to degrowth degrowth is consistent with economic equilibrium in the dynamic input output model degrowth equilibrium results when a critical mass of the population prioritizes diminishing the ecological deficit over increasing the output levels green growth can take place during degrowth while the economy gradually shrinks the interest profit rate in macroeconomic equilibrium is negative due to the conservation target excessive consumption has negative value to vs type agents degrowing private consumptions implies less work more leisure and better quality of the environment improving social welfare degrowth can be advanced by adopting a more cooperative production system or by imposing high ecological taxes the equilibrium model yields an argument for basic income as a means of supporting welfare during degrowth and of compensating for unpaid work the open economy version of the model shows reduced scope for intra industry trade between similar countries

economic de growth vs steady state economy in recent years the concept of economic de growth decroissance based on the literature of nicolas georgescu roegen e g 1 3 has found a revival in france italy spain and other countries in the popular as well as in the academic literature therein authors took on board georgescu roegens categorical rejection of a steady state economy sse as proposed by herman daly 4 they argue that economic degrowth is the only viable alternative goal to the growing economy this position is challenged in this article and it is concluded that the two concepts are in fact complements economic de growth is not a goal in itself but the rich north s path towards a globally equitable sse moreover the de growth literature can benefit from the strong economic historic roots of the sse and from daly s macroeconomic concepts while in return being able to give lessons about bottom up approaches this would be particularly important for the population issue where daly proposes limited birth licences unfortunately statements on demography are inconsistent and underdeveloped in the de growth literature further it is concluded that most criticisms of the sse are due to a too narrow and technocratic interpretation of the concept instead the sse should be defined as a quasi steady state resting in a dynamic equilibrium and as an unattainable goal which can and probably should be approximated

understanding consumer animosity in an international crisis nature antecedents and consequences the nature antecedents and consequences of consumer animosity during the 1997 asian economic crisis are investigated based on a large scale survey of 2000 adult consumers representative of five affected nations indonesia malaysia singapore south korea and thailand an animosity model was developed and tested with the us and japan as target countries as predicted stable and situational animosity reduced willingness to buy products from a perceived hostile national entity affective evaluations and cognitive judgments were negatively influenced by situational animosity but not by stable animosity as expected situational animosity was increased by external attribution perceived external control and stable animosity implications of these findings are discussed and directions for future research suggested