does tax increment financing raise urban industrial property values the paper examines the impact of tax increment financing tif on the value of industrial properties in chicago because tif designation may be self selected a two stage procedure is used to estimate the influence of tif the authors find that the value of industrial parcels located in mixed use tif districts i e those that also contain commercial or residential properties is higher than that of similar parcels that are not located in a tif district however the value of industrial parcels that are located in homogeneous industrial use tif districts is no higher and in some specifications is lower than that of similar parcels not located in a tif district these divergent results may be best explained by industrial parcel owners desire to convert their properties to non industrial uses

capacity allocation ordering and pricing decisions in a supply chain with demand and supply uncertainties abstract this paper studies coordinated decisions in a decentralized supply chain that consists of one original equipment manufacturer oem one manufacturer and one distributor and possesses uncertainties at both demand and supply sides these uncertainties emerge respectively from random demand the distributor faces and randomness of capacity with which the oem processes the manufacturer s outsourced quantity sharing supply and demand uncertainty information along the supply chain enables us to develop three models with different coordination efforts the oem and manufacturer coordination the manufacturer and distributor coordination and the oem manufacturer and distributor coordination and quantify the coordinated decisions in these three models our analysis of these coordination models suggests that coordinating with the oem improves the manufacturer s probability of meeting downstream demand and his expected profit yet coordinating with the manufacturer is not necessarily beneficial to the oem when downstream coordination is lacking

inflation nominal interest rates and the variability of output abstract this paper examines the distribution of output around capacity when money demand is a nonlinear function of the nominal interest rate such that nominal interest rates cannot become negative when fluctuations in output result primarily from disturbances to the money market the variance of output is shown to be an increasing function of the trend inflation rate when they result from disturbances to the goods market the variance of output is a decreasing function of the trend inflation rate when both disturbances are significant there exists in general a critical non zero trend inflation rate that minimizes the variance of output

activist monetary policy and exchange rate overshooting the deutsche mark dollar rate abstract after a decade of generalized floating it is clear that bilateral exchange rates exhibit more variability than the economic aggregates relative prices incomes and money supplies which generally comprise the fundamentals of theories of exchange rate determination dornbusch s overshooting hypothesis is the best known explanation of this phenomenon this paper shows that accommodative monetary policy with respect to prices has the potential to cause the economy to switch from exchange rate overshooting to undershooting using constrained maximum likelihood methods the model is estimated for germany and the united states the results provide strong evidence in support of the overshooting hypothesis for the deutsche mark dollar exchange rate

a periodic review production planning model with uncertain capacity and uncertain demand optimality of extended myopic policies increasing product complexity manufacturing environment complexity and an increased emphasis on product quality are all factors leading to uncertainties in production processes these uncertainties are in the form of unplanned machine maintenance varying production yields and rework among others in planning for production an adequate model must incorporate these uncertainties into the representation of the production process this paper treats the aggregate planning problem for a single product with random demand and random capacity in the single period problem random capacity does not affect the optimal policy but results in a unimodal nonconvex cost function in the multiple period and infinite horizon settings order up to policies that are dependent on the distribution of capacity are shown to be optimal in spite of a nonconvex cost in the infinite horizon setting an intuitive description of the situation leads to the notion of a class of extended myopic policies requiring the consideration o

the structure of periodic review policies in the presence of random yield this work provides a comprehensive analysis of a general periodic review production inventory model with random variable yield existence of an order point whose value does not depend on yield being random is proved in the single period case without specifying the yield model and using a very general cost structure when yield is a random multiple of lot size the nonorder up to optimal policy is characterized for a finite horizon model the finite horizon value functions are shown to converge to the solution of an infinite horizon functional equation and the infinite horizon order point is shown to be no smaller than when yield is certain

food processor price behavior firm level evidence of sticky prices firms in imperfectly competitive markets face direct and indirect costs when changing product prices the latter costs reflect uncertain changes in revenue and market share resulting from the actions of rival firms rosett s friction model is applied to firm level data to provide estimates of the indirect costs of changing prices for a major processor of frozen concentrated orange juice results indicate that indirect costs cause significant price rigidity additionally the hypothesis that prices are equally rigid for upward and downward changes could not be rejected

optimal inventory policy with supply uncertainty and demand cancellation we consider a periodic review model where the firm manages its inventory under supply uncertainty and demand cancellation we show that because of supply uncertainty the optimal inventory policy has the structure of re order point type that is we order if the initial inventory falls below this re order point otherwise we do not order this is in contrast to the work of yuan and cheung 2003 who prove the optimality of an order up to policy in the absence of supply uncertainty we also investigate the impact of supply uncertainty and demand cancellation on the performance of the supply chain using our model we are able to quantify the importance of reducing the variance of either the distribution of yield or the distribution of demand cancellation the single multiple periods and the infinite horizon models are studied

real and nominal shocks in a two country price setting world abstract this paper develops a two country model in which the law of one price does not hold in the short run and which is consistent with the stylized fact that exchange rates respond more quickly to news than prices this is done by assuming that firms face lumpy information costs in determining what price to charge both domestic and imported goods prices are therefore sticky with respect to news and deviations from the law of one price ppp are due to exchange rate surprises the model is used to analyze the domestic and international impact of real and nominal disturbances

demand uncertainty and supplier s returns policies for a multi store style good retailer abstract as demand uncertainty grows in the marketplace a critical issue today in most purchase contract negotiations between an independent retailer of a style good and its supplier is the provision of a returns policy i e a commitment by the supplier to buy back unsold inventory of the good at the end of its selling season management science research on the strategic role and optimal design of returns policies has grown in recent years but so far offers little treatment of how exactly the retailer s optimal order quantity decisions are affected by demand uncertainty and how a supplier s returns policy can influence these decisions employing the traditional newsboy problem modeling framework the authors investigate these issues considering a supplier who faces a retailer with two or more store outlets with normally distributed and possibly correlated demands to facilitate their analyses the authors employ a methodology based on special error function representations of the highly nonlinear objective functions of the retailer and supplier utilizing this approach the authors are able to provide explicit insights into how a the buyer s total order quantity decision is affected by the variability in demand b buyback prices in combination with wholesale prices can influence the buyer s order quantity response to demand uncertainty c demand uncertainty moderates the effects of the buyback and wholesale prices d supplier s optimal combination of actions are affected by demand variability e retailer s and supplier s expected profits behave in response to changes in the supplier s actions under different levels of demand variability

exchange rate hysteresis large versus small policy misalignments abstract using a monetary model in the spirit of dornbusch 1976 and a sunk cost model of trade hysteresis we show that a sufficiently large policy misalignment can induce hysteresis in the trade balance and thereby alter the steady state real exchange rate hence exchange rate dynamics are path dependent since hysteresis in our model can entail industrial dislocation and the scrapping of sunk assets we suggest that these factors constitute a welfare cost of large policy misalignments that have not been considered formally additionally since the long run exchange rate is path dependent standard empirical tests of exchange rate models may involve a misspecification

the near optimality of mark up pricing mark up pricing policies result in a loss of profits compared to marginal pricing behavior these losses however are often very small even for large changes in the money supply but by adopting a simple pricing rule the firm does not have to forecast the future and avoids the informational and computational costs required to determine the profit maximizing price each period thus even if these costs are small mark up pricing policies may be optimal or approximately so at least for some firms in a macro model this is likely to imply large monetary non neutralities

exchange rate determination and inflation in southeast asian countries abstract we estimate structural open economy models consistent with rational re and theories consistent tce expectations which incorporate cointegration to examine exchange rate determination and inflation in three southeast asian countries the re model is rejected in favor of the tce model our results show that while inflation in all three countries is affected by different external factors malaysia and singapore avoided high inflation despite high levels of economic growth through tight monetary policy in contrast the philippines had high inflation even with a stagnant economy due to loose monetary policy and the monetization of government debt

diversification under supply uncertainty supply chain management is becoming an increasingly important issue especially when in most industries the cost of materials purchased comprises 40 60 of the total sales revenue despite the benefits cited for single sourcing in the popular literature there is enough evidence of industries having two three sources for most parts in this paper we address the operational issue of quantity allocation between two uncertain suppliers and its effects on the inventory policies of the buyer based on the type of delivery contract a buyer has with the suppliers we suggest three models for the supply process model i is a one delivery contract with all of the order quantity delivered either in the current period with probability or in the next period with probability 1 model ii is also a one delivery contract with a random fraction of the order quantity delivered in the current period the portion of the order quantity not delivered is cancelled model iii is similar to model ii with the remaining quantity delivered in the next period we derive the optimal ordering policies that minimize the total ordering holding and penalty costs with backlogging we show that the optimal ordering policy in period n for each of these models is as follows for x a n order nothing for vi n x a n use only one supplier and for x vi n order from both suppliers for the limiting case in the single period version of model i we derive conditions under which one would continue ordering from one or the other or both suppliers for model ii we give sufficient conditions for not using the second more expensive supplier when the demand and yield distributions have some special form for the single period version of models ii and iii with equal marginal ordering costs we show that the optimal order quantities follow a ratio rule when demand is exponential and yields are either normal or gamma distributed

risk shaping in production planning problem with pricing under random yield abstract in this paper we address a basic production planning problem with price dependent demand and stochastic yield of production we use price and target quantity as decision variables to control the risk of low production yield the value of risk control becomes more important especially for products with short life cycle where high losses are unbearable in the short run in this cases optimization of a solely scalar function of profit is not sufficient to control the risk we apply conditional value at risk cvar measure to model the risk preferences of the producer the producer is interested in shaping the risk by bounding from below the means of tail distributions of profit for different values of the resulting model is nonconvex we propose an efficient solution algorithm and present a sufficient optimality condition

monetary disturbances inventory fluctations and the level of sales a theoretical and empirical analysis there has in the past several years been a revival of interest in the topic of inventory fluctuation and its relationship to the short run dynamics of output one important reason for this interest can be traced to the pioneering work on aggregate supply begun by lucas 11 12 and extended among many others by barro 3 4 in their models the behavior of output is driven by intertemporal considerations it is a natural extension of such models if output is storable to consider the implication of producers whose current output can either be sold immediately or held in stock for future sales current sales by the same token may be either current production or goods from inventory in a recent paper blinder and fischet 6 develop such a model using it they demonstrate that inventory dynamics can be an explanation for an empirical weakness of simple versions of the lucas type models real world business cycles are characterized by considerable persistence simple equilibrium business cycle models do not exhibit such persistence or in some cases it is present only through the ad hoc presence of a lagged output term in the aggregate supply function except for the influence of inventories producers in the blinder fischer analysis behave as do producers in most new classical macro models they are price takers and quantity setters in a model where inventories exert an influence on output decisions such neoclassical behavior cannot be ascribed to perfectly competitive conditions if firms are perfect competitors output decisions will not reflect the state of current inventories

the optimality of partial price adjustment policies this paper studies the optimal price adjustment policies of a monopolistically competitive firm whose profit maximizing price is subject to a serially correlated random disturbance the firm chooses its price by comparing the expected cost of present and future price changes with the expected losses occurring when price deviates from its instantaneous profit maximizing value partial price adjustment often is the best way to minimize the sum of these losses prices tend to be more flexible both in response to large shocks to the firm s profit maximizing price and when much uncertainty exists about the future

counterinflationary policy in a unionised economy with nonsynchronised wage setting a model of the determination of wages and employment in a unionised economy with nonsynchronised wage setting is presented in this paper it is shown that a monetary deflation can lead to prolonged unemployment even though the unions act rationally and with full information about the change in policy the model generates a statistical phillips curve in which the rate of change of money wages depends on the anticipated growth rate of the money supply and on disequilibrium unemployment conventional incomes policies are shown to have desirable social effects but run counter to the perceived self interest of the trade unions and are therefore likely to be resisted taxes on wage increases have desirable long run effects but do not appear able to reduce the transitional unemployment costs of monetary deflation

sub supply chain coordination in a three layer chain under demand uncertainty and random yield in production abstract one of the major objectives of modern supply chain management is to deal with the growing decentralization among the involved entities and hence minimizing the double marginalization effect inside the chain especially when the end customers demand is not deterministic to address this a three layer supply chain with one raw material supplier one manufacturer and one retailer is developed and studied in this paper effects of both supply chain coordination as well as sub supply chain coordination are examined optimal order and production quantities are obtained for the centralized system which depicts the scenario under coordination optimal order quantities and expected profits of the individual channel actors are maximized locally in the decentralized system under commonly used price only contract semi integrated models are also studied under price only contract the optimal strategies under different power structures are compared and the effects of the channel parameters on the optimal strategies are also examined numerical example is given to illustrate the developed model

price adjustment costs and the output inflation trade off when prices are costly to adjust there is a trade off between the rate of inflation and the firm s average level of output this trade off is the result of fully optimizing behaviour by the firm sufficient conditions are developed for inflation to have no effect on output however these conditions are unlikely to be met in practice this suggests that the superneutrality of money hypothesis is incompatible with the type of demand and cost curves normally encountered in economic theory if the discount rate is positive moderate rates of inflation will always lead to higher levels of output

optimal price setting with observation and menu costs we study the price setting problem of a firm in the presence of both observation and menu costs in this problem the firm optimally decides when to collect costly information on the adequacy of its price an activity which we refer to as a price review upon each review the firm chooses whether to adjust its price subject to a menu cost and when to conduct the next price review this behavior is consistent with recent survey evidence documenting that firms revise prices infrequently and that only a few price revisions yield a price adjustment the goal of the paper is to study how the firm s choices map into several observable statistics depending on the level and relative magnitude of the observation vs the menu cost the observable statistics are the frequency of price reviews the frequency of price adjustments the size distribution of price adjustments and the shape of the hazard rate of price adjustments we provide an analytical characterization of the firm s decisions and a mapping from the structural parameters to the observable statistics we compare these statistics with the ones obtained for the models with only one type of cost the predictions of the model can with suitable data be used to quantify the importance of the menu cost vs the information cost we also consider a version of the model where several price adjustment are allowed between observations a form of price plans or indexation we find that no indexation is optimal for small inflation rates

on the anatomy of inflation the variability of relative commodity prices in argentina there is substantial evidence indicating that the inflationary process is not neutral with respect to the structure of relative prices a1though real variables also affect the distribution of commodity prices the variability of relative prices appears to be largely increased by monetary phenomena the general picture emerging from the empirical literature links the cross sectional variability of commodity prices to the variability of the aggregate rate of inflation over time to the rate of unexpected inflation and to the rate of monetary expansion 1 most studies however have dealt with low inflation countries for which it is more difficult to isolate real from monetary effects on relative price changes the purpose of this paper is to analyze in detail the characteristics of relative price behavior within the context of very rapid and variable inflation using disaggregated monthly data for argentina a number of specific aspects of that country s

expectations and exchange rate dynamics after a decade of floating abstract dornbusch s model of expectations and exchange rate dynamics has been a theoretical success and an empirical failure the premise underlying this paper is that the price and exchange rate dynamics inherent in his model cannot be captured by single equation methods to capture these dynamics we estimate dornbusch s model using constrained maximum likelihood methods which incorporate cross equation restrictions derived from the structural equations and assumption of rational expectations our central result is that the estimation of dornbusch s model is much more successful than single equation methods have led us to believe

supply chain coordination perspectives empirical studies and research directions supply chains sc are generally complex and are characterized by numerous activities spread over multiple functions and organizations which pose interesting challenges for effective sc coordination to meet these challenges sc members must work towards a unified system and coordinate with each other a systematic literature review is presented in this paper to throw light on the importance of sc coordination the objectives of this paper are to report and review various perspectives on sc coordination issues understand and appreciate various mechanisms available for coordination and identify the gaps existing in the literature a framework is suggested indicating scope for further research

optimal production inventory policy for an integrated multi stage supply chain with time varying demand abstract an integrated multi stage supply chain with time varying demand over a finite planning horizon is considered in this paper the objective is to devise the optimal production inventory policy to minimize the total operational cost the model is formulated as a mixed integer nonlinear programming problem the problem is represented as a weighted directed acyclic graph the global minimum total operational cost is computed in polynomial time by the developed algorithm two numerical examples of a seasonal product and a product over its life cycle are studied to illustrate the results a sensitivity analysis of the system parameters is conducted to assist the supply chain decision makers

three echelon supply chain coordination considering duopolistic retailers with perfect quality products abstract this paper explores channel coordination and profit division issues of a manufacturer distributer duopolistic retailers supply chain for a product where the manufacturer supplies lotsize of the product that contains a random portion of imperfect quality item in manufacturer stackelberg vertical game setting the duopolistic retailers three behaviours cournot collusion and stackelberg are discussed besides analyzing the effect of imperfect quality product on optimal decisions the paper depicts the hybrid contract mechanism so that all units quantity discount with franchise fee resolves channel conflict though unable to provide win win outcome for surplus profit division the paper proposes two sequential bargaining processes backward and forward where outcome of a nash bargaining is dependent on the previous it is found that for channel coordinated win win profit the manufacturer prefers collusion stackelberg and cournot while the retailer prefers the reverse and both prefer backward sequential bargaining but the distributers preference depends on the target profit that it sets during the bargaining process the proposed mechanisms are illustrated by a numerical example

entry and price dynamics in a perfect foresight model abstract this paper studies firms entry and price dynamics in a model that combines the assumptions of free entry and perfect foresight with the hypothesis of consumer s loyalty postulated by phelps and winter the analysis of the transition to long run equilibrium reveals that in such a model the entry of firms is related to the difference between current prices and costs in relation to the growth of the firms output it is shown that the model is consistent with gibrat s law finally it is shown that the size distribution of firms approaches asymptotically a pareto distribution

coordination of supply chains with a flexible ordering policy under yield and demand uncertainty this paper studies a flexible ordering policy among a manufacturer and a supplier with random yield and demand uncertainty where the order quantity lies between the minimum and the maximum quantity we first determine the optimal flexible ordering policy and the corresponding raw material production quantity that maximize expected profit of the centralized supply chain and find that our flexible ordering policy can significantly enhance the supply chain s expected profit compared to an invariable ordering policy then we analyze the decentralized scenario and propose a revenue sharing policy with an order penalty and rebate opr contract to fully coordinate the supply chain finally numerical examples are given to illustrate the results

price flexiblity and output volatility the case for flexible exchange rates abstract this paper uses descriptive statistics and regression analyses to examine the relationship between exchange rate variability and output volatility in developed countries based on 1961 to 1984 data the result indicate that a flexible exchange rate system is associated with less not more dispersion in output growth across industrialized countries despite a more turbulent global environment also countries which have more exchange rate volatility experience less output volatility the relationship appears not to be spurious the results are consistent with the idea that an increase in price flexibility does not destabilize output