quality disclosure under consumer loss aversion consumers experience a sense of loss when a product s quality does not match their expectations to alleviate consumer loss aversion cla firms can disclose information to reduce consumers uncer

macroeconomic effects of precautionary demand for oil summary we evaluate the macroeconomic effects of shocks specific to the oil market which mainly reflect fluctuations in precautionary demand for oil driven by uncertainty about future supplies a two stage identification procedure is used first daily changes in the futures spot price spread proxy for precautionary demand shocks and the path of oil prices is estimated this information is then exploited to restrict the oil price response in a vector autoregression impulse responses suggest that such shocks reduce output and raise prices historical decomposition shows that they contributed significantly to the us recessions in the 1990s and in the early 2000s but not to the most recent slump copyright 2014 john wiley sons ltd

buyer initiated vs seller initiated information revelation sales presentations are the core of the selling process where salespeople provide information to prospects one challenge is that the amount of information available to be potentially communicated may exceed salespeople s ability to communicate or customers ability to process there is limited bandwidth between the firm and customers one important decision then is which information should customers see what the firm chooses to tell customers may be informative in itself when constrained to a seller initiated information revelation format where the firm chooses which feature to show the firm never finds it optimal to offer more features than it is able to inform customers about consequently customers never find credible a claim that the product has all features the important implication is that price alone cannot serve as a signal of quality in this setting in contrast a buyer initiated information revelation format where customers decide which information to receive increases the probability of a sale and also results in the production of higher quality products in a competitive setting by adopting buyer initiated information revelation firms are able to attain positive profits this is due to the fact that customers infer the product s quality from the price along with the information revelation format customers know that at some prices firms find it profitable to produce high quality products and at other lower prices this is not the case thus customer empowerment leads to higher profits

information provision in a vertically differentiated competitive marketplace this paper examines the interaction of information provision product quality and pricing decisions by competitive firms to explore the following question in a competitive market where consumers face uncertainty about product quality and or their preference for quality which firms those that sell higher or lower quality products have the higher incentive to provide what type of information we find that while the higher quality firm should always provide information resolving consumer uncertainty on product quality the lower quality firm under certain conditions will have the higher incentive to and will be the one to provide information resolving consumer uncertainty about their quality preferences in the analysis we trace the latter result to competition and to free riding on the information provision specifically in a monopoly market or when consumer free riding is restricted by the costliness of store visits the lower quality firm would have a lower incentive to provide information resolving consumer preference uncertainty than otherwise the model is also adapted to examine product returns as a possible strategy of information provision

forward looking information in var models and the price puzzle abstract with a view to addressing the major disadvantage of the var model namely the inadequate description of the central bank reaction function we propose a var specification that proves successful in solving the price puzzle featuring in monetary vars for the us this specification consists in augmenting a standard var with two forward looking variables the federal funds futures rate or alternatively a money market forward rate reflecting monetary policy expectations and a composite leading indicator of economic activity these two variables appear to effectively control for the information set that the federal reserve may use in monetary policy decision making with this modification theory consistent responses to monetary policy shocks are obtained

strategic information disclosure the case of multi attribute products with heterogeneous consumers we examine the incentives for firms to voluntarily disclose otherwise private information about quality attributes of differentiated products in particular we focus on the case of differentiated products with multiple attributes and consumers that are heterogeneous in their preferences over these attributes we show that there exist certain configurations of consumer preferences under which a firm producing a high quality product even with zero costs of disclosure may choose not to reveal the quality of its product this failure of firms to voluntarily disclose the quality of their products will arise when providing consumers with more information results in more elastic demands for these products which in turn triggers more intensive price competition and leads to lower prices and profits for all firms as a result the equilibrium in which disclosure is voluntary may diverge from that in which disclosure is mandatory

single period multiproduct inventory models with substitution we study a single period multiproduct inventory problem with substitution and proportional costs and revenues we consider n products and n demand classes with full downward substitution i e excess demand for class i can be satisfied using product j for i j we first discuss a two stage profit maximization formulation for the multiproduct substitution problem we show that a greedy allocation policy is optimal we use this to write the expected profits and its first partials explicitly this in turn enables us to prove additional properties of the profit function and several interesting properties of the optimal solution in a limited computational study using two products we illustrate the benefits of solving for the optimal quantities when substitution is considered at the ordering stage over similar computations without considering substitution while ordering specifically we show that the benefits are higher with high demand variability low substitution cost low profit margins or low price to cost ratio high salvage values and similarity of products in terms of prices and costs

the fed and the stock market an identification based on intraday futures data this article develops a new identification procedure to estimate the contemporaneous relation between monetary policy and the stock market within a vector autoregression var framework the approach combines high frequency data from the futures market with the var methodology to circumvent exclusion restrictions and achieve identification our analysis casts doubt on var models imposing a recursive structure between innovations in policy rates and stock returns we find that a tightening in policy rates has a negative impact on stock prices and that the federal reserve fed has responded significantly to movements in the stock market estimates are robust to various model specifications

are interest rate options important for the assessment of interest rate risk abstract fixed income options contain substantial information on the price of interest rate volatility risk in this paper we ask if those options will also provide information related to other moments of the objective distribution of interest rates based on dynamic term structure models within the class of affine models we find that interest rate options are useful for the identification of interest rate quantiles two three factor models are adopted and their adequacy to estimate value at risk of zero coupon bonds is tested we find significant difference on the quantitative assessment of risk when options are or not included in the estimation process of each of these dynamic models statistical backtests indicate that bond estimated risk is clearly more adequate when options are adopted although not yet completely satisfactory

how do u s stock returns respond differently to oil price shocks pre crisis within the financial crisis and post crisis abstract we use a long time series of daily data for 682 firms over a period from january 1990 to december 2012 each firm includes 5 772 daily observations our sample involves a total of 3 936 504 observations to investigate how u s stock returns respond differently to oil price shocks prior to during and after a financial crisis we provide evidence that u s stock returns in turn respond positively to the changes in oil prices during and after such a crisis we use firm level data to find that positive and negative oil price shocks have asymmetric effects on stock returns during the crisis and after the crisis then we examine whether the effect of an oil price shock on stock returns varies across oil intensive industries within the crisis and post crisis our results indicate that stock returns in response to oil price shocks across industries are heterogeneous and the stock returns of some energy intensive manufacturing industries respond more positively to oil price shocks compared with less energy intensive manufacturing industries we use total assets total revenue and the number of employees as proxy variables to measure each firm s size and then examine whether oil price shocks affect stock returns differently across firm sizes we find that big firms are the most strongly and negatively influenced by an oil price shock prior to the crisis on the other hand our results indicate that an oil price shock in the post financial crisis period is positively amplified in the case of medium sized firms

reconciling narrative monetary policy disturbances with structural var model shocks structural var studies disagree with narrative accounts about the history of monetary policy disturbances we investigate whether employing the narrative monetary shocks as a proxy variable in a var model aligns both shock series we find that it does not

the impact of fomc statements on the volatility of asset prices this article examines the impact of federal open market committee fomc statements on asset prices statements are found to have a much more pronounced impact on the volatility of asset prices than interest rate surprises they influence primarily stock returns intermediate and long term yields whereas short term rates are driven both by statements and by interest rate surprises we also find that the regime shift of may 1999 has improved the effectiveness of monetary policy as reflected in an overall reduction in market volatility during the most recent regime in addition markets are equally well prepared for the upcoming rate decision in both regimes but the process of adjustment depends on whether a statement was issued in the old regime or not when a statement is issued price adjustments are very similar across both periods whereas if no statement is issued then the rate of adjustment towards the new value is more gradual and occurs throughout the entire intermeeting period

daily monetary policy shocks and new home sales abstract the conventional notion of a monetary policy shock as a surprise change in the fed funds rate is misspecified the primary news for market participants is not what the fed just did but is instead new information about the fed s future intentions revisions in these anticipations show up instantaneously in long term mortgage rates home sales do not respond until much later this paper attributes this delay and hence much of the hump shaped response of economic activity to monetary policy to cross sectional heterogeneity in search times this framework allows one in principle to measure policy impacts at the daily frequency

the expectations hypothesis of the term structure of interest rates and monetary policy some evidence from asian countries abstractthis article outlines a panel data approach to modelling the term structure of interest rates in the short and in the long run we find robust evidence supporting the expectations hypothesis of the term structure ehts for a small sample of asian emerging markets furthermore we detect some relevant differences in the transmission mechanism of monetary policy and the existence of a mccallum 2005 rule no exogeneity of monetary policy to the yield curve in some countries finally we document the influence of an international global factor i e a time varying global risk premium on the yield curve while local country specific factors are not statistically significant

international interest rates and us monetary policy announcements evidence from hong kong and singapore this paper investigates the responses of market interest rates to us monetary policy announcements for the us and two emerging economies hong kong and singapore which are similar on many respects but have experienced opposite exchange rate regimes in the last twenty years our results based on market expectations extracted from federal fund futures rates document that fomc announcements significantly affect the term structure of interest rate in the us and both asian countries further international interest rate differentials around fomc meeting dates tend to be negative for short maturities with the impact gradually dissipating as bond maturity increases finally for the case of singapore we find that domestic interest rates react to both external and domestic monetary policy announcements with a magnitude that is larger over the full bond maturity spectrum for domestic announcements these results are robust to time varying futures risk premia and alternative measures of interest rates expectations

interest rates and equity extraction during the housing boom credit record panel data from 1999 2010 indicates that the likelihood of home equity extraction borrowing on average about 40 000 against one s home peaked in 2003 when mortgage rates reached historic lows we estimate a 27 percent rise in extraction in response to a 100 basis point rate decline and that house price growth amplifies this relationship differential responses to interest rates and home price appreciation by borrower age and credit score provide new evidence of financial frictions finally equity extractions are associated with higher default risk consistent with the use of borrowed funds for consumption or illiquid investment

household debt and monetary policy revealing the cash flow channel we study the effect of monetary policy on spending when households hold debt with variable interest rates when interest rates on outstanding loans vary with the short term market interest rate monetary policy has a direct and immediate effect on households expenses and disposable income if households are borrowing constrained they will respond to a shock to disposable income by adjusting their spending as a result a monetary policy induced interest rate change leads to a larger change in consumption than what is predicted by the elasticity of intertemporal substitution we examine this cash flow channel of monetary policy using administrative data on swedish households we estimate a strong and statistically significant response in spending to changes in interest expenses more specifically we estimate a marginal propensity to consume including durable consumption that is around unity or even higher in response to monetary policy induced changes in interest expenses for example highly indebted households with adjustable rate mortgages reduce consumption growth by several percentage points more in response to a one percentage point increase in the household interest rate than households with little debt or fixed rate mortgages our findings imply that monetary policy will have a stronger effect on real economic activity when households are highly indebted and have adjustable rate mortgages jel classification d14 e21 e52 g11

using private forecasts to estimate the effects of monetary policy i develop a methodology that uses the forecasts of market participants and of policy makers to estimate the effects of monetary policy on output and inflation my approach has advantages over the standard practice of fitting a vector autoregression to the data i apply my methodology to data on output interest rates and prices i find that even using the federal reserve board s greenbook forecasts to control for the policy maker s information set prices rise initially in response to a monetary contraction this finding undermines the standard justification for including an index of commodity prices in vars

us monetary policy and international bond markets this paper analyzes how u s monetary policy affects the pricing of dollar denominated sovereign debt we document that yields on dollar denominated sovereign bonds are highly responsive to u s monetary policy surprises during both the conventional and unconventional policy regimes and that the passthrough of unconventional policy to foreign bond yields is on balance comparable to that of conventional policy in addition a conventional u s monetary easing tightening leads to a significant narrowing widening of credit spreads on sovereign bonds issued by countries with a speculative grade credit rating but has no effect on the corresponding weighted average of bilateral exchange rates for a basket of currencies from the same set of risky countries this indicates that an unanticipated tightening of u s monetary policy widens credit spreads on risky sovereign debt directly through the financial channel as opposed to indirectly through the exchange rate channel during the unconventional policy regime yields on both investment and speculative grade sovereign bonds move one to one with policy induced fluctuations in yields on comparable u s treasuries we also examine whether the response of sovereign credit spreads to us monetary policy differs between policy easings and tightenings and find no evidence of such asymmetry

research note additional learning and implications on the role of informative advertising observers argue that evidence for the persuasive role of advertising comes from competitive categories where increases in advertising lead to higher average prices conversely others claim that advertising serves a purely informational role here higher levels of advertising lead to better informed consumers and this should increase competition and stimulate lower prices the objective of this study is to neither confirm nor refute either of these perspectives it is rather to show that increases in informative advertisingalone can lead to both higher or lower prices i further show that the direction of this relationship depends on the level of differentiation between competing firms similar to grossman and shapiro 1984 i examine conditions where the differences between competing products are small but i also examine conditions where the differences are significant the role of advertising is to inform consumers about individual products and higher advertising for a product means that more of the potential market knows about it higher levels of advertising increase the relative importance of fully informed consumers compared to partially informed consumers this dynamic is the basis for explaining why informative advertising can push prices either up or down in a uniformly distributed spatial market

a unified measure of fed monetary policy shocks abstract we develop a u s monetary policy shock series that stably bridges periods of conventional and unconventional policymaking is largely unpredictable and contains no significant central bank information effect we attribute differences between our measure and often used alternatives to our econometric procedure a partial least squares approach and our using the full maturity spectrum of interest rates in estimating the shock we find that shocks to our monetary policy series have particularly large effects on maturities in the middle of the term structure and produce conventionally signed impulse responses of output and inflation

a static approximation for dynamic demand substitution with applications in a competitive market we propose a static approximation of dynamic demand substitution behavior based on a fluid network model and a service inventory mapping this approximation greatly enhances our ability to analyze the interdependent inventory service price and product assortment decisions in noncompetitive and competitive scenarios with demand substitution we demonstrate that the approximation is well behaved and then apply it to two previously intractable applications first we study a price and service competition between single product retailers after establishing a unique pure strategy nash equilibrium we find that competition results in lower price higher demand and a higher level of inventory we also observe that the aggregate profit and inventory level increase to positive constants as the number of retailers goes to infinity second we study a duopolistic competition on price service and product assortment we establish a pure strategy nash equilibrium for the product assortment competition and identify a condition for uniqueness we find that competition on both price and product assortment results in lower price and less variety for each competitor but the total number of products and the aggregate inventory level in a duopoly market are both likely to be higher than in a monopolistic market

delphic and odyssean monetary policy shocks evidence from the euro area abstract what drives the reaction of financial markets to central bank communication on the days of policy decisions we highlight the role of two factors that we identify from high frequency monetary surprises news on future macroeconomic conditions delphic shocks and news on future monetary policy shocks odyssean shocks these two shocks move the yield curve in the same direction but have opposite effects on financial conditions and macroeconomic expectations they also have a different impact on macroeconomic outcomes so that central bankers cannot infer the degree of stimulus they provide by looking at the mere reaction of the yield curve

on measuring the effects of fiscal policy in recessions we do not have a good measure of the effects of fiscal policy in a recession because the methods that we use to estimate the effects of fiscal policy both those using the observed outcomes following different policies in aggregate data and those studying counterfactuals in fitted model economies almost entirely ignore the state of the economy and estimate the government multiplier which is presumably a weighted average of the one we care about the multiplier in a recession and one we care less about the multiplier in an expansion notable exceptions to this general claim sug gest this difference is potentially large our lack of knowledge stems significantly from the focus on linear dynamics vector autoregressions and linearized or close to linear dynamic stochastic general equilibrium dsge models our lack of knowledge also reflects a lack of data deep recessions are few and nonlinearities hard to measure the lack of statistical power in the estimation of nonlinear models using aggregate data can be addressed by exploiting estimates of partial equilibrium responses in disaggregated data microeconomic estimates of the partial equilibrium causal effects of a policy can discipline the causal channels inherent in any dsge model of the general equilibrium effects of policy microeconomic studies can also provide measures of the dependence of the effects of a policy on the states of different agents which is a key component of the dependence of the general equilibrium effects of fiscal policy on the state of the

secrecy and safety we provide a model showing that the use of confidential settlement as a strategy for a firm facing tort litigation leads to lower average safety of products sold than would occur if the firm were committed to openness a rational risk neutral consumer s response in a market wherein a firm engages in confidential settlements may be to reduce demand a firm committed to openness incurs higher liability and r d costs though product demand is not diminished we identify conditions such that if the cost of credible auditing to verify openness is low enough a firm prefers to eschew confidentiality

strategic information revelation we analyze the problem in which agents have non public information and are to play an asymmetric information game the agents may reveal some or all of their information to other agents prior to playing this game revelation is via exogenously specified certifiable statements the equilibria resulting from various revelation strategies are used to determine equilibrium revelation of information sufficient conditions are provided for complete revelation of all private information a number of examples are provided illustrating when revelation will or will not occur in commonly analyzed games many economic problems are characterized by the presence of both strategic behaviour on the part of individuals and by asymmetric information models encompassing both of these characteristics have been used successfully to examine questions in many fields usually using the concept of bayesian nash equilibrium as the solution concept typically the agents information is given exogenously and is fixed throughout the analysis modelling the information structure as static is appropriate for some problems but not for all in particular situations that are inherently dynamic most economic encounters allow for some interchange between the agents before the outcome is settled irrevocably in such circumstances it is possible that at least one or more of the agents possessing non public information may be able to reveal part or all of his information to one or all of the other agents in the economy during the course of their contact to the extent that such a communication is believed by the other agents the priors of the other agents will change and we will have what is in essence a new asymmetric information game new in

an integrated assortment and shelf space optimization model with demand substitution and space elasticity effects abstract retailers must define their assortments and assign shelf space to the items included in these assortments these two planning problems are mutually dependent if space is scarce we formulate a model that maximizes a retailer s profit by selecting the optimal assortment and assigning limited shelf space to items this model is the first decision model to integrate assortment and shelf space planning by considering stochastic and space elastic demand out of assortment and out of stock substitution effects to solve the model we develop a specialized heuristic that efficiently yields near optimal results even for large scale problems we show that our approach outperforms alternative approaches e g a sequential planning approach that first picks assortments and then assigns shelf space by up to 18 and a greedy algorithm by up to 16 in terms of profit we test our model on two real data sets for perishable and non perishable items and show how it can support retailers in increasing their profits by up to 25 we then use the model to generalize these results and find that space elasticity and substitution effects have a significant impact on profits assortment size as well as facing decisions and that both effects reinforce each other using our model we finally derive rules of thumb for planners in practice

futures prices as risk adjusted forecasts of monetary policy many researchers have used federal funds futures rates as measures of financial markets expectations of future monetary policy however to the extent that federal funds futures reflect risk premia these measures require some adjustment in this paper we document that excess returns on federal funds futures have been positive on average and strongly countercyclical in particular excess returns are surprisingly well predicted by macroeconomic indicators such as employment growth and financial business cycle indicators such as treasury yield spreads and corporate bond spreads excess returns on eurodollar futures display similar patterns we document that simply ignoring these risk premia significantly biases forecasts of the future path of monetary policy we also show that risk premia matter for some futures based measures of monetary policy shocks used in the literature

voluntary quality disclosure and market interaction marketers disclose quality information directly to potential consumers using a variety of communication channels this study investigates how competition may influence duopoly firms incentive to voluntarily reveal quality information we show that firms in competitive markets reveal less information than a monopoly firm in addition sequential disclosure leads to asymmetric equilibrium disclosure behavior the disclosure leader reveals unambiguously less information than in the simultaneous disclosure case whereas the follower ex ante reveals less more private information than that released by the leader or by the firms in the simultaneous case when the disclosure cost is sufficiently low high we also examine the equilibrium firm profits and social welfare we demonstrate that there may be a u shaped relationship between equilibrium monopoly profits or social welfare under both monopoly and duopoly and the disclosure cost moreover in comparison to the simultaneous disclosure case sequential disclosure can lead to increasingly softened competition improving both firm profitability and social welfare

monetary news in the united states and business cycles in emerging economies abstract this paper identifies anticipated news and unanticipated surprise shocks to the u s fed funds rate using fed funds futures contracts and assesses their propagation to emerging economies anticipated shocks are identified as the expected change in the fed funds rate orthogonal to expected u s business cycle conditions while unanticipated shocks are the one step ahead forecast error anticipated shocks explain around half of the narrative series of u s monetary policy shocks to identify the effects of both shocks i estimate a panel var using a sample of emerging economies an anticipated 25 basis points contractionary u s interest rate shock induces a fall of 0 5 in gdp from its trend two quarters before the shock materializes both anticipated and unanticipated changes in the u s interest rate cause significant and quantitatively similar effects the increase of the u s baa corporate spread in response to both shocks significantly exacerbates the response of emerging economies after accounting for anticipation u s interest rate shocks explain 14 of business cycle fluctuations in emerging economies

optimal search for product information consumers often need to search for product information before making purchase decisions we consider a tractable continuous time model of gradual learning in which consumers incur search costs to learn further product information and update their expected utility of the product at each search occasion we characterize the optimal stopping rules for either purchase or no purchase as a function of search costs and of the importance informativeness of each attribute this paper also characterizes how the likelihood of purchase changes with the ex ante expected utility search costs and the importance informativeness of each attribute we discuss optimal pricing the impact of consumer search on profits and social welfare and how the seller chooses its price to strategically affect the extent of the consumers search behavior we show that lower search costs can hurt the consumer because the seller may then choose to charge higher prices discounting creates asymmetry in the purchase and no purchase search thresholds and may lead to lower prices if search occurs in equilibrium or higher prices if there is no search in equilibrium this paper also considers searching for signals of the value of the product heterogeneous importance of attributes endogenous intensity of search and social learning this paper was accepted by pradeep chintagunta marketing

monetary policy transmission in the united kingdom a high frequency identification approach abstract this paper investigates the impact of monetary policy shocks on macroeconomic and financial variables in the united kingdom using a new series of high frequency monetary policy surprises employing our surprises as an instrument in a monthly svar over the uk s inflation targeting period we show that a monetary policy tightening induces a decline in economic activity and in cpi an appreciation of the pound a reduction in bank credit and a significant increase in mortgage and corporate bond spreads uk monetary policy also affects foreign credit spreads consistent with the extensive presence of large international players in the uk financial intermediation sector we finally propose a novel test of overidentifying restrictions which exploits the availability of the narrative series of monetary policy shocks constructed by cloyne and hurtgen 2016 and find that our high frequency monetary policy surprises are not significantly affected by non monetary news

taylor rules mccallum rules and the term structure of interest rates abstract recent empirical research shows that a reasonable characterization of federal funds rate targeting behavior is that the change in the target rate depends on the maturity structure of interest rates and exhibits little dependence on lagged target rates see for example cochrane and piazzesi 2002 the fed and interest rates a high frequency identification american economic review 92 90 95 the result echoes the policy rule used by mccallum 1994a monetary policy and the term structure of interest rates nber working paper no 4938 to rationalize the empirical failure of the expectations hypothesis applied to the term structure of interest rates that is rather than forward rates acting as unbiased predictors of future short rates the historical evidence suggests that the correlation between forward rates and future short rates is surprisingly low mccallum showed that a desire by the monetary authority to adjust short rates in response to exogenous shocks to the term premiums imbedded in long rates i e yield curve smoothing along with a desire for smoothing interest rates across time can generate term structures that account for the puzzling regression results of fama and bliss 1987 the information in long maturity forward rates the american economic review 77 680 392 mccallum also clearly pointed out that this reduced form approach to the policy rule although naturally forward looking needed to be studied further in the context of other response functions such as the now standard taylor 1993 discretion versus policy rules in practice carnegie rochester conference series on public policy 39 195 214 rule we explore both the robustness of mccallum s result to endogenous models of the term premium and also its connections to the taylor rule we model the term premium endogenously using two different models in the class of affine term structure models studied in duffie and kan 1996 a yield factor model of interest rates mathematical finance 57 405 443 a stochastic volatility model and a stochastic price of risk model we then solve for equilibrium term structures in environments in which interest rate targeting follows a rule such as the one suggested by mccallum i e the mccallum rule we demonstrate that mccallum s original result generalizes in a natural way to this broader class of models to understand the connection to the taylor rule we then consider two structural macroeconomic models which have reduced forms that correspond to the two affine models and provide a macroeconomic interpretation of abstract state variables as in ang and piazzessi 2003 a no arbitrage vector autoregression of term structure dynamics with macroeconomic and latent variables journal of monetary economics 50 745 787 moreover such structural models allow us to interpret the parameters of the term structure model in terms of the parameters governing preferences technologies and policy rules we show how a monetary policy rule will manifest itself in the equilibrium asset pricing kernel and hence the equilibrium term structure we then show how this policy can be implemented with an interest rate targeting rule this provides us with a set of restrictions under which the taylor and mccallum rules are equivalent in the sense if implementing the same monetary policy we conclude with some numerical examples that explore the quantitative link between these two models of monetary policy

a three person game theory model arising in stochastic inventory control theory abstract in this paper we build a game theory model for a single period inventory problem where each of three retailers tries to determine his optimal order quantity their products are substitutable and have random demands therefore multiple direction demand transfers occur when one or more retailers are sold out it is shown that by using nash equilibrium optimal decision exists for each retailer when they work independently the optimal order quantity in this case is larger than that under the newsboy problem model this is because substitution can be a source of sales and hence a justification for inventory in situations where some retailer may act irrationally to inflict a damage on the others the defensive strategy for the latter is to totally ignore the existence of the irrational player we also study the cooperation of retailers by switching excess inventory to those who have excess demand both when side payments are and are not allowed if side payments are not allowed secure nash strategies always exist for each retailer and cooperation will reduce inventory the latter is especially true when the depreciation of value of the item and or inventory carrying cost are large we give conditions for cooperation in both cases and show that although all player cooperation is often feasible it may not always be obtainable even if side payments are allowed

oligopolistic pricing with sequential consumer search n identical stores compete by choosing prices for a homogeneous good with constant marginal costs consumers search sequentially with perfect recall for the lowest price one class of consumers called shoppers have zero search costs while all other consumers have a positive search cost c there is a unique symmetric nash equilibrium price distribution with the property that it changes smoothly from marginal cost pricing when all consumers are shoppers and or c 0 and monopoly pricing when no consumers are shoppers remarkably as the number of stores increases the nash equilibrium becomes more monopolistic copyright 1989 by american economic association

an efficient algorithm for capacitated assortment planning with stochastic demand and substitution abstract the ever increasing product variety in grocery retailing is in conflict with the limited shelf space managing the assortment and regular order quantity for perishable and non perishable products is therefore a core task for retailers retailers want to maximize profit by considering potential revenues purchase costs diminishing profits for products and opportunity costs for unfulfilled demand when determining assortment sizes and order volume to meet stochastic consumer demand we considered a newsvendor based decision model that jointly optimizes assortment size and the associated order volumes for listed items the model considers out of assortment ooa and out of stock oos substitution effects the model is a structural equivalent to the model described in kok and fisher 2007 and solved there via a heuristic procedure we develop an optimal solution procedure and a time efficient heuristic that solves the model the heuristic suggested is applicable for practically relevant large scale problem instances numerical tests reveal that the heuristic procedure produces close to optimal solutions and outperforms the kok and fisher heuristic with regard to both computational time and solution quality a simulation study with discrete demand justifies our approach with using continuous demand distributions the numerical analyses show that considering substitution effects in a decision based model has a significant impact on the total profit and solution structure further managerial insights are presented with regard to assortment heterogeneity when shelf size substitution and demand variability are varied

can monetary policy influence long term interest rates it depends i introduction a stated goal of u s monetary policy is to maintain full employment in the u s economy 1 to do so however means the federal reserve must be capable of stabilizing aggregate demand particularly the historically volatile category of investment spending as this form of spending is highly sensitive to long term interest rates one implication of the full employment goal for u s monetary policy is that the federal reserve should be able to influence long term interest rates an important question then is whether u s monetary policy actually has any meaningful influence over long term interest rates a number of studies in recent years have examined this question but have come to different conclusions some studies show monetary policy has a sizeable and statistically significant effect on long term interest rates whereas others show the opposite the uncertainty created by this lack of consensus makes it difficult for the federal reserve to determine its impact on long term interest rates it is our objective in this paper to shed new empirical light on this murky relationship between monetary policy and long term interest rates we do so by looking at monetary policy innovations to the monetary base in an estimated vector autoregression var to see how monetary policy shocks impact the entire term structure of u s treasury interest rates 2 other studies that have used vars to examine this relationship have relied on innovations to the federal funds rate as their measure of monetary policy shocks berument and froyen 2006 berument and froyen 2009 edelberg and marshall 1996 evans and marshall 1998 this approach has become problematic as the federal funds rate has grown to be more predictable in recent times and thus less capable of generating monetary policy surprises in estimated vars our approach does not have this problem our study also has richer results than found in previous studies because we identify shocks to the money multiplier and real money demand in addition to the policy shock to the monetary base this allows us to examine the effect of all three monetary shocks on long term interest rates a final improvement that our study brings to this literature is that it uses long run identifying restrictions previous studies rely on short run contemporaneous restrictions that constrain the short run dynamics of the var our long run restrictions avoid this issue while at the same time imposing long run monetary neutrality on the monetary shocks for these reasons our study provides a fresh take on the relationship between monetary policy and long term interest rates using this approach we find that contrary to what the previous var studies show the federal reserve can meaningfully influence the entire term structure of interest rates we also find however that federal reserve can do so only if it maintains its inflation fighting credibility the rest of the paper proceeds as follows first we review previous findings on this issue and use them to help motivate our study second we outline the empirical methods we use to estimate the relationship between monetary policy shocks and long term interest rates third we discuss our data and construction of endogenous variables fourth we report our findings and examine how the results change over sub periods fifth the robustness of our findings are checked by examining how important the faust and leeper 1997 critique is to our identification strategy finally we conclude by discussing the implications for monetary policy ii previous findings motivating this study over the past decade there has been a spate of studies on the relationship between monetary policy and long term interest rates the methods and findings from this empirical research can be grouped into two categories on one hand there have been a number of studies using single equation models with daily data that find unanticipated changes in the federal funds rate can have a statistically significant and sizeable effect on long term interest rates beechey 2007 berument and froyen 2009 cochrane and piazzesi 2002 ellingsten and soderstrom 2003 ellingsen soderstrom and masseng 2004 gurkaynak sack and swanson 2005 kuttner 2001 poole et al

a theory of combative advertising in mature markets with competing firms a common role for advertising is to shift consumer preferences towards the advertiser in a tug of war with no effect on category demand in this paper we analyze the effect of such combative advertising on market power we show that depending on the nature of consumer response combative advertising can reduce price competition to benefit competing firms however it can also lead to a procompetitive outcome where individual firms advertise to increase their own profitability but collectively become worse off this is because combative advertising can intensify price competition such that an advertising war leads to a price war similar to price competition advertising competition can result in a prisoner s dilemma where all competing firms make less profit even when the effect of each firm s advertising is to enhance consumer preferences in its favor given such procompetitive effects we further show that cost of combative advertising could be a blessing in disguise higher unit cost of advertising resulting in lower equilibrium levels of advertising leading to higher prices and profits we conduct a laboratory experiment to investigate how combative advertising by competing brands influences consumer preferences our experimental analysis offers strong support for our conclusions

what can survey forecasts tell us about information rigidities a lot we derive common and conflicting predictions from models in which agents face information constraints and then assess their validity using surveys of consumers firms central bankers and professional forecasters we document that mean forecasts fail to completely adjust on impact to shocks leading to statistically and economically significant deviations from the null of full information the dynamics of forecast errors after shocks are consistent with the predictions of models with information rigidities the conditional responses of forecast errors and disagreement among agents can also be used to differentiate between some of the most prominent models of information rigidities

stocking retail assortments under dynamic consumer substitution we analyze a single period stochastic inventory model newsboy like model in which a sequence of heterogeneous customers dynamically substitute among product variants within a retail assortment when inventory is depleted the customer choice decisions are based on a natural and classical utility maximization criterion faced with such substitution behavior the retailer must choose initial inventory levels for the assortment to maximize expected profits using a sample path analysis we analyze structural properties of the expected profit function we show that under very general assumptions on the demand process total sales of each product are concave in their own inventory levels and possess the so calleddecreasing differences property meaning that the marginal value of an additional unit of the given product is decreasing in the inventory levels of all other products for a continuous relaxation of the problem we then show via counterexamples that the expected profit function is in general not even quasiconcave thus global optimization may be difficult however we propose and analyze a stochastic gradient algorithm for the problem and prove that it converges to a stationary point of the expected profit function under mild conditions finally we apply the algorithm to a set of numerical examples and compare the resulting inventory decisions to those of some simpler naive heuristics the examples show that substitution effects can have a significant impact on an assortment s gross profits the examples also illustrate some systematic distortions in inventory decisions if substitution effects are ignored in particular under substitution one should stock relatively more of popular variants and relatively less of unpopular variants than a traditional newsboy analysis indicates

a classification of the literature on the planning of substitutable products abstract a company s assortment of products and corresponding inventory levels are constrained by available resources such as production capacity storage space and capital to acquire the inventory thus customers may not always be able to find a most preferred product at the time of purchase this unsatisfied demand is often substituted with an alternative in the extant literature there have been an increasing number of studies that consider product substitution when planning product assortment inventory and capacity in conjunction with pricing in this paper we classify the literature on the planning of substitutable products published in the major om and marketing journals during the past thirty years 1974 2013 and present a comprehensive taxonomy of the literature one criterion is adopted to discuss modeling objectives and three major criteria are provided to define the nature of product substitution including substitution mechanism substitution decision maker and direction of substitutability we also identify research gaps to provide guidance for related research in the future

a retail store sku promotions optimization model for category multi period profit maximization consumer promotions are an important element of competitive dynamics in retail markets and make a significant difference in the retailer s profits but no study has so far included all the elements that are required to meet retail business objectives we extend the existing literatures by considering all the basic requirements for a promotional decision support system dss reliance on operational store level data only the ability to predict sales as a function of prices and the inclusion of other promotional variables affecting the category the new model delivers an optimizing promotional schedule at stock keeping unit sku level which maximizes multi period category level profit under the constraints of business rules typically applied in practice we first develop a high dimensional distributed lag demand model which integrates both cross sku competitive promotion information and cross period promotional influences we estimate the model by proposing a two stage sign constrained regularization approach to ensure realistic promotional parameters based on the demand model we then build a nonlinear integer programming model to maximize the retailer s category profits over a planning horizon under constraints that model important business rules the output of the model provides optimized prices display and feature advertising planning together with sales and profit forecasts empirical tests over a number of stores and categories using supermarket data suggest that our model generates accurate sales forecasts and increases category profits by approximately 17 and that including cross item and cross period effects is also valuable

the determinants of future u s monetary policy high frequency evidence this paper examines the determinants of future u s monetary policy by studying the relationship between a predictor of the future direction of monetary policy and a pertinent information set specifically we investigate the impact of the surprise component of an array of macro economic announcements upon federal funds futures rates this investigation is conducted using high frequency intraday data in order to examine the exact timing of rate reactions to announcements in doing this we find that non farm payrolls and civilian unemployment announcements play a dominant role in determining future monetary policy moreover we document evidence that shows that the release of such information is rapidly incorporated into rates particularly when considering federal funds futures contracts traded via an electronic trading platform as opposed to an open auction trading platform

high frequency identification of monetary non neutrality the information effect we present estimates of monetary non neutrality based on evidence from high frequency responses of real interest rates expected inflation and expected output growth our identifying assumption is that unexpected changes in interest rates in a 30 minute window surrounding scheduled federal reserve announcements arise from news about monetary policy in response to an interest rate hike nominal and real interest rates increase roughly one for one several years out into the term structure while the response of expected inflation is small at the same time forecasts about output growth also increase the opposite of what standard models imply about a monetary tightening to explain these facts we build a model in which fed announcements affect beliefs not only about monetary policy but also about other economic fundamentals our model implies that these information effects play an important role in the overall causal effect of monetary policy shocks on output

semiparametric estimates of monetary policy effects string theory revisited we develop flexible semiparametric time series methods for the estimation of the causal effect of monetary policy on macroeconomic aggregates our estimator captures the average causal response to discrete policy interventions in a macrodynamic setting without the need for assumptions about the process generating macroeconomic outcomes the proposed estimation strategy based on propensity score weighting easily accommodates asymmetric and nonlinear responses using this estimator we show that monetary tightening has clear effects on the yield curve and on economic activity monetary accommodation however appears to generate less pronounced responses from both estimates for recent financial crisis years display a similarly dampened response to monetary accommodation

optimizing product assortment under customer driven demand substitution abstract the problem of product assortment and inventory planning under customer driven demand substitution is analyzed and a mathematical model for this problem is provided in this paper realistic issues in a retail context such as supplier selection shelf space constraints and poor quality procurement are also taken into account the performance of three modified models one that neglects customers substitution behavior another that excludes supplier selection decision and one that ignores shelf space limitations are analyzed separately with computational experiments the results of the analysis demonstrate that neglecting customer driven substitution or excluding supplier selection or ignoring shelf space limitations may lead to significantly inefficient assortments the effects of demand variability and substitution cost on optimal assortment and supplier selection decisions as well as on the optimal revenue are also investigated the main contribution of this paper is the development of a practical and flexible model to aid retailers in finding optimal assortments to maximize the expected profit

quality disclosure and competition we analyze costly quality disclosure with horizontally differentiated products under duopoly and a cartel and characterize the effect of competition on disclosure and welfare we show that expected disclosure is higher under a cartel than under duopoly and the welfare comparison depends on the level of disclosure cost when the disclosure cost is low welfare is higher under a cartel than duopoly but when the disclosure cost is high welfare is higher under duopoly in either market structure disclosure is excessive in terms of total surplus but insufficient in terms of consumer surplus

product variety and endogenous pricing with evaluation costs one important decision firms must make is to select the product line characteristics and number of products to offer consumers this paper explores the effect of the interaction between consumer evaluation costs and pricing on the optimal product line length to offer consumers before deciding to buy a product among all products offered a consumer learns the product line length given the product line length a consumer decides whether to evaluate the products available and their prices this decision to evaluate depends on the expected consumer surplus after the evaluation being greater than the evaluation costs when the firm offers few products the firm may not attract many consumers because of lack of product fit and may be forced to offer low prices when the firm offers many products all consumers will find a great product fit that is the variance of consumer valuations per product chosen is lower this allows the firm to charge high prices to extract ex post consumer surplus resulting in lower ex ante expected consumer surplus which may lead consumers not to evaluate the products in the first place that is by offering fewer products a firm can commit not to extract all possible consumer surplus these two forces may then lead to the existence of an interior optimal number of products to offer the optimal number of products offered is decreasing in the evaluation costs

quality disclosure formats in a distribution channel firms normally disclose quality information to consumers using two alternative formats either directly to consumers or indirectly through downstream retailers this study investigates optimal disclosure strategies formats in a channel setting with bilateral monopolies it shows that retail disclosure leads to more equilibrium information revelation this is because the manufacturer can through wholesale price cuts partially absorb the retailer s effective disclosure cost and thus increase the retailer s incentive for disclosure the conditions under which a particular disclosure format arises as the manufacturer s optimal choice are also examined even though direct disclosure is the ex post dominated option the manufacturer may benefit from committing ex ante to the direct disclosure format when the cost of disclosure is sufficiently high

the newsstand problem a capacitated multiple product single period inventory problem abstract practically all of the many earlier papers on the newsboy problem consider a single newsboy product with no capacity constraint this paper presents formulations and solution procedures for handling multiple newsboy type products under two cases a one resource capacity constraint and b multiple resource constraints for case a we present a necessary extension to the classical hadley whitin result for handling general demand distributions for case b we present a solution procedure that can efficiently handle the common situation where a very large number of products are involved

inattentive consumers and product quality this paper studies a model in which some consumers shop on the basis of price alone without attention to potential differences in product quality a firm may offer a low quality product to exploit these inattentive consumers in the unique symmetric equilibrium of the model firms choose prices with mixed strategies similarly to varian 1980 in which some consumers purchase from a random seller without attention to market prices in our model though firms also choose quality stochastically and there is both price and quality dispersion two stylized policy interventions are considered competition policy which acts to increase the number of sellers and market transparency reforms which act to increase the fraction of attentive consumers with fewer inattentive consumers firms are less likely to cheat i e cut quality which therefore improves welfare but profit and consumer surplus can either increase or decrease when there is a large number of sellers approximately half the sellers cheat regardless of the fraction of inattentive consumers and introducing more sellers boosts consumers surplus and reduces profit while the impact on welfare is ambiguous

the impact of consumer attentiveness and search costs on firm quality disclosure a competitive analysis firms can invest to disclose quality information about their products to consumers but consumers are not always perfectly attentive to these disclosures indeed technologies such as digital video recorders have increased the ease with which disclosures can be avoided by consumers although such inattention may result in a consumer missing information from one or more competing firms consumers who have missed disclosures might decide to search for quality information to become fully informed before making a purchase decision in this paper we incorporate consumer attentiveness as well as the related endogenous search decision into a model of quality disclosure our results suggest that firms should disclose less quality information as the share of partially informed consumers informed about one firm but not the other increases or as consumer search costs increase we also provide insights into the potential impact of consumer trends toward lower attentiveness and lower search costs this paper was

the fed and interest rates a high frequency identification we measure monetary policy shocks as changes in the fed funds target rate that surprise bond markets in daily data these shock series avoid the omitted variable time varying parameter and orthogonalization problem of monthly vars and do not impose the expectations hypothesis we find surprisingly large and persistent responses of bond yields to these shocks 10 year rates rise as much as 8 10 of a percent to a one percent target shock the usual view that monetary policy only temporarily raises long term rates and influences inflation would lead one to predict a negative long rate response this abstract was borrowed from another version of this item

the return of the liquidity effect a study of the short run relation between money growth and interest rates in this article i use band pass filters to investigate the short run relationship between money growth and interest rates i find a negative correlation between short run movements in money growth and interest rates which i interpret as evidence that the liquidity effect dominates the anticipated inflation effect

subjective price search and price competition abstract in this paper we study price rivalry between two firms facing a population of imperfectly informed buyers the two sellers are geographically dispersed and consumers search for the lowest price the competitive process either suffers from cyclical instability or stabilises at that price at which no buyer searches

competition and confidentiality signaling quality in a duopoly when there is universal private information abstract we model non cooperative signaling by two firms that compete over a continuum of consumers assuming each consumer has private information about the intensity of her preferences for the firms respective products and each firm has private information about its own product s quality we characterize a symmetric separating equilibrium in which each firm s price reveals its respective product quality we show that the equilibrium prices the difference between those prices the associated outputs and profits are all increasing functions of the ex ante probability of high safety if horizontal product differentiation is sufficiently great then equilibrium prices and profits are higher under incomplete information about quality than if quality were commonly known thus while signaling imposes a distortionary loss on a monopolist using price to signal quality duopolists may benefit from the distortion as it can reduce competition finally average quality is lower since signaling quality redistributes demand towards low quality firms

the impact of product substitution on retail merchandising abstract we analyze the impact of product substitution on two key aspects of retail merchandising order quantities and expected profits to perform this analysis we extend the basic news vendor model to include the possibility that a product with surplus inventory can be used as a substitute for out of stock products this extension requires a definition and an approximation for the resulting effective demand under substitution a service rate heuristic is developed to solve the extended problem the performance of this heuristic is evaluated using an upper bound generated by solving the associated lagrangian dual problem our analysis suggests that this heuristic provides a tractable and accurate method to determine order quantities and expected profits under substitution we apply this heuristic to examine how the level of demand uncertainty and correlation and the degree of substitution between products affect order quantities and expected profits under substitutable demand in addition we use the heuristic to better understand the mechanism by which substitution improves expected profits

identifying vars based on high frequency futures data abstract using the prices of federal funds futures contracts we measure the impact of the surprise component of federal reserve policy decisions on the expected future trajectory of interest rates we show how this information can be used to identify the effects of a monetary policy shock in a standard var this alternative approach to identification is quite different and we argue more plausible than the conventional identifying restrictions we find that a usual recursive identification of the model is rejected as is any identification that insists on a monetary policy shock having an exactly zero effect on prices contemporaneously we nevertheless agree with the conclusion of much of the var literature that only a small fraction of the variance of output can be attributed to monetary policy shocks

monetary policy predictability in the euro area an international comparison we evaluate the ability of market participants to anticipate monetary policy decisions in 14 countries first by looking at both the magnitude and volatility of changes in the money market rates we show that the days of policy meetings are special days for financial markets second we find that the predictability of federal reserve fed bank of england and european central bank ecb is fully comparable finally an econometric analysis of the ability of market participants to incorporate in the current short term interest rates the expected policy changes shows that in the euro area and in other countries policy decisions are anticipated well in advance

channels of us monetary policy spillovers to international bond markets abstract we show significant us monetary policy mp spillovers to international bond markets our methodology identifies us mp shocks as the change in short term treasury yields around federal open market committee meetings and traces their effects on international bond yields using panel regressions we emphasize three main results first us mp spillovers to long term yields have increased substantially after the 2007 2009 global financial crisis second spillovers are large compared with the effects of other events and at least as large as the effects of domestic mp after 2008 third spillovers work through different channels concentrated in risk neutral rates expectations of future mp rates for developed countries but predominantly on term premia in emerging markets in interpreting these findings we provide evidence consistent with an exchange rate channel according to which foreign central banks face a trade off between narrowing mp rate differentials or experiencing currency movements against the us dollar developed countries adjust in a manner consistent with freely floating regimes responding partially with risk neutral rates and partially through currency adjustments instead emerging countries display patterns consistent with foreign exchange interventions which cushion the response of exchange rates but reinforce capital flows and their effects in bond yields through movements in term premia our results suggest that the endogenous effects of currency interventions on long term yields should be added into the standard cost benefit analysis of such policies

an empirical analysis of stock and bond market liquidity this article explores cross market liquidity dynamics by estimating a vector autoregressive model for liquidity bid ask spread and depth returns volatility and order flow in the stock and treasury bond markets innovations to stock and bond market liquidity and volatility are significantly correlated implying that common factors drive liquidity and volatility in these markets volatility shocks are informative in predicting shifts in liquidity during crisis periods monetary expansions are associated with increased liquidity moreover money flows to government bond funds forecast bond market liquidity the results establish a link between macro liquidity or money flows and micro or transactions liquidity a number of important theorems in finance rely on the ability of investors to trade any amount of a security without affecting the price however there exist several frictions 1 such as trading costs short sale restrictions and circuit breakers that impact price formation the influence of market imperfections on security pricing has long been recognized liquidity in particular has attracted a lot of attention from traders regulators

international monetary policy surprise spillovers abstract this is the first paper to examine international monetary surprise spillovers and to estimate the response of security prices to monetary and nonmonetary surprises monetary surprises have a slope effect on the domestic yield curve short maturity yields adjust much more than longer maturity yields these results are similar to other studies the following results are new us monetary surprises spill over and affect australian yields and equity returns australian monetary surprises do not spill over to the us nonmonetary surprises are much more important than monetary policy surprises in explaining longer maturity yield changes and equity returns

identification in macroeconomics abstract this paper discusses empirical approaches macroeconomists use to answer questions like what does monetary policy do how large are the effects of fiscal stimulus what caused the great recession why do some countries grow faster than others identification of causal effects plays two roles in this process in certain cases progress can be made using the direct approach of identifying plausibly exogenous variation in a policy and using this variation to assess the effect of the policy however external validity concerns limit what can be learned in this way carefully identified causal effects estimates can also be used as moments in a structural moment matching exercise we use the term identified moments as a short hand for estimates of responses to identified structural shocks or what applied microeconomists would call causal effects we argue that such identified moments are often powerful diagnostic tools for distinguishing between important classes of models and thereby learning

expectations bond yields and monetary policy through explicitly incorporating analysts forecasts as observable factors in a dynamic arbitrage free model of the yield curve this research proposes a framework for studying the impact of shifts in market sentiment on interest rates of all maturities an empirical examination reveals that survey expectations about inflation output growth and the anticipated path of monetary policy actions contain important information for explaining movements in bond yields estimates from a forward looking monetary policy rule suggest that the central bank exhibits a preemptive response to inflationary expectations while accommodating output growth and monetary policy expectations forecasted gdp growth plays a significant role in explaining time variation in the market prices of risk the sensitivity of long yields is linked to the persistence of expected inflation under the risk neutral measure models of this type may provide traders and policymakers with a new set of tools for formally assessing the reaction of bond yields to shifts in market expectations the author 2010 published by oxford university press on behalf of the society for financial studies all rights reserved for permissions please e mail journals permissions oxfordjournals org oxford university press

the newsvendor problem review and directions for future research in this paper we review the contributions to date for analyzing the newsvendor problem our focus is on examining the specific extensions for analyzing this problem in the context of modeling customer demand supplier costs and the buyer risk profile more specifically we analyze the impact of market price marketing effort and stocking quantity on customer demand how supplier prices can serve as a coordination mechanism in a supply chain setting integrating alternative supplier pricing policies within the newsvendor framework and how the buyer s risk profile moderates the newsvendor order quantity decision for each of these areas we summarize the current literature and develop extensions finally we also propose directions for future research

market based measures of monetary policy expectations a number of recent articles have used different financial market instruments to measure near term expectations of the federal funds rate and the high frequency changes in these instruments around federal open market committee announcements to measure monetary policy shocks this article evaluates the empirical success of a variety of financial market instruments in predicting the future path of monetary policy all of the instruments we consider provide forecasts that are clearly superior to those of standard time series models at all of the horizons considered among financial market instruments we find that federal funds futures dominate all the other securities in forecasting monetary policy at horizons out to six months for longer horizons the predictive power of many of the instruments we consider is very similar in addition we present evidence that monetary policy shocks computed using the current month federal funds futures contract are influenced by changes in the timing of policy actions tha

when more alternatives lead to less choice this paper shows that when the alternatives offered to consumers span the preference space as it would be chosen by a firm search or evaluation costs may lead consumers not to search and not to choose if too many or too few alternatives are offered if too many alternatives are offered then the consumer may have to engage in many searches or evaluations to find a satisfactory fit this may be too costly and result in the consumer avoiding making a choice altogether if too few alternatives are offered then the consumer may not search or choose fearing that an acceptable choice is unlikely these two forces result in the existence of a finite optimal number of alternatives that maximizes the probability of choice

do measures of monetary policy in a var make sense no in many vector autoregressions vars monetary policy shocks are identified with the least squares residuals from a regression of the federal funds rate on an assortment of variables such regressions appear to be structurally fragile and are at odds with other evidence on the nature of the u s federal reserve s reaction function furthermore the residuals from these regressions show little correlation across various vars or with funds rate shocks that are derived from forward looking financial markets my results provide a sharp critique of current monetary vars

information gatekeepers on the internet and the competitiveness of homogeneous product markets we examine the equilibrium interaction between a market for price information controlled by a gatekeeper and the homogenous product market it serves the gatekeeper charges fees to firms that advertise prices on its internet site and to consumers who access the list of advertised prices gatekeeper profits are maximized in an equilibrium where a the product market exhibits price dispersion b access fees are sufficiently low that all consumers subscribe c advertising fees exceed socially optimal levels thus inducing partial firm participation and d advertised prices are below unadvertised prices introducing the market for information has ambiguous social welfare effects

assortment planning and inventory decisions under a locational choice model we consider a single period assortment planning and inventory management problem for a retailer using a locational choice model to represent consumer demand we first determine the optimal variety product location and inventory decisions under static substitution and show that the optimal assortment consists of products equally spaced out such that there is no substitution among them regardless of the distribution of consumer preferences the optimal solution can be such that some customers prefer not to buy any product in the assortment and such that the most popular product is not offered we then obtain bounds on profit when customers dynamically substitute using the static substitution for the lower bound and a retailer controlled substitution for the upper bound we thus define two heuristics to solve the problem under dynamic substitution and numerically evaluate their performance this analysis shows the value of modeling dynamic substitution and identifies conditions in which the static substitution solution serves as a good approximation