can the risk shifting employment model explain fluctuating employment it is shown by numerical examples that for the simple two states of the world version of azariadis original model of implicit labour contracts enormous fluctuations in output price are required to generate layoffs the paper then modifies the simple model replacing the perfectly competitive product market specification with a sales constraint this modification makes a significant difference the combination of sales constraints and risk shifting is shown to have the potential to explain layoffs since this sales constraint is unmotivated by micro analysis its inclusion does not satisfy the original aim of the risk shifting employment model to explain layoffs as based on micro foundations a secondary aim of the paper is to make the workings of the risk shifting employment model easier to understand by introducing a new diagrammatic analysis based on a contract curve

imperfect information and price rigidity the purpose of this paper is to present a microeconomic model of pricing behavior that is consistent with macroeconomic theory and evidence the essential ingredient in the model is the hypothesis that imperfect information implies that firms face kinked demand curves i provide a detailed analysis of this hypothesis and develop its empirical implications the model provides a microeconomic rationale for the price stickiness assumed in disequilibrium macroeconomic models

estimating the degree of market integration existing tests of spatial market integration are commonly based on statistical criteria without an explicit link to an economic model of price determination this article proposes new measures of market integration defined directly in terms of a well known spatial price determination model and develops an econometric methodology for estimating these measures due to the intractability of the conditional density function of prices we use indirect inference to estimate the model parameters and market integration measures the methodology is illustrated with simulated data and is applied to soybean price data for the united states brazil and the eu copyright 2008 oxford university press

commercial policy and the domestic carrying trade in this paper the authors examine the economic consequences of existing u s restrictions on trade in domestic water transportation cabotage services they briefly trace the history of u s policy on cabotage the authors also use an applied general equilibrium model of the united states to analyze the effects of the jones act on welfare and on production trade and employment in important upstream and downstream sectors the economic effects of u s maritime policies rank them with u s trade policies like the mfa the automobile and steel quotas of the mid 1980s and agricultural import restraints coauthors are hugh m arce kenneth a reinert and joseph e flynn

trade and trade policy with imperfect competition the case of identical products and free entry abstract this paper analyses intra industry trade between economies containing an imperfectly competitive industry in which firms produce a homogeneous output production is subject to increasing returns to scale and there is free entry and exit of firms trade is shown to unambiguously increase welfare by reducing the degree of monopoly in each market and increasing firm size the effects of differences in technology and endowments on the pattern of trade and welfare are examined import tariffs are shown to raise welfare in the country employing the tariff and the welfare implications of various types of industry subsidy are examined

cointegration and market integration an application to the indonesian rice market this article suggests improvements in the use of regression analysis to measure spatial market integration the procedure pioneered by ravallion is still widespread but is valid only under certain conditions of exogeneity the alternative offered here is an error correction mechanism which makes it possible to test for exogeneity as well as indicating the direction and strength of causality in price formation between markets the method is illustrated with data on rice prices in different parts of the indonesian market the results confirm among other things that supply sources are more important than demand sources in driving prices

cotton market integration and the impact of china s new exchange rate regime this article studies the integration of china s cotton market with the international market especially the u s market investigating the futures prices from the intercontinental exchange ice in the u s and the zhengzhou commodity exchange zce in china with several time series models we find that a long run cointegration relationship exists between these two series the two markets share price transmissions and based on results from an autoregressive conditional heteroskedasticity arch model we find their price volatilities are similar we argue that china s recent exchange rate reform and its gradual liberalization in bilateral cotton trade since it joined world trade organization have had important impacts on these futures markets based on these findings several important economic and policy implications are derived

us and canadian livestock prices market integration and trade dependence cointegration of canadian and us livestock prices points to the existence of market integration in the period january 1996 to december 2004 trade flows of livestock and beef products were nonexistent between canada and the united states for many months in 2003 and 2004 suggesting market segmentation this lack of trade in beef and livestock was due to livestock beef import bans by both countries due to bovine spongiform encephalopathy it was also determined that canada s trade dependence in livestock and beef is cointegrated with canadian and us livestock prices however as the trade dependence variable is shocked the effects on canadian and us prices are opposite although one would expect that in an integrated market the price responses to an exogenous shock would be similar or statistically identical this result reinforces the case against the use of price cointegration analysis in determining presence or absence of market integration empirical results in this article raise some very difficult q

an empirical investigation of customer market analysis a microfoundation for macroeconomics the slow adjustment and stickiness of output prices is widely regarded as an important determinant of macroeconomic behaviour recently a number of writers have argued that customer market analysis can provide a microfoundation for price stickiness this paper develops the theory of a firm selling in a customer market and investigates the empirical implications of the theory the model is shown to imply a particular pattern of behaviour between retail prices and wholesale prices data on retail and wholesale prices for the united states the united kingdom and australia at various levels of aggregation is investigated and found to support the predictions of the customer market model in the conclusion the macroeconomic implications of the empirical conslusions are drawn out

domino dumping i competitive exporters when exporting firms face the prospect of voluntary export restraints they have an incentive to export more than with no prospect of a voluntary export restraint since greater exports lead to larger license allocations in the event of a voluntary export restraint export country governments incentives differ leading either to export tax or subsidy depending on the circumstances the prospect of one departure from free trade thus leads to another a domino effect antidumping enforcement will ordinarily not eliminate and ironically may increase dumping copyright 1992 by american economic association

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

welfare costs of the u s antidumping and countervailing duty laws abstract the antidumping ad and countervailing duty cvd laws in the united states have become the most pervasive form of import relief sought by domestic producers this paper estimates the collective economic effect of the hundreds of active u s ad cvd orders using a computable general equilibrium model we estimate that the collective net economic welfare cost in 1993 of these orders to be 4 billion this welfare estimate is sensitive to various modeling assumptions which are explored in the paper with the implementation of the uruguay round agreements the ad cvd laws remain one of the costliest programs restraining u s trade

customer markets trade unions and stagflation customer market analysis combined with trade union wage setting is shown to yield a range of equilibrium levels of employment only when employment is forced outside this range can the disequilibrium acceleration or d eceleration of the price level be expected to operate numerical calc ulations suggest that this range is quite large implying that the ma ximum level of unemployment consistent with nondecelerating inflation is way above the minimum level of unemployment consistent with nonac celerating inflation a range of equilibrium employment levels appear s to be in closer agreement with empirical experience than a unique natural rate of unemployment copyright 1987 by the review of economic studies limited

applying cointegration and error correction to measure trade linkages maize prices in the united states and mexico the impact of u s grown maize on mexican markets is a subject of heated debate and is complicated by limited substitution between white and yellow maize as well as regional price differences within mexico this article improves on previous analyses using a detailed data set of white maize prices reported weekly in 11 states across mexico from 1998 through 2005 using cointegration analysis and the error correction model we find that prices between the united states and mexico do not share a common long run relationship within mexico prices in michoacan and oaxaca are only weakly related with prices in neighboring states whereas prices in sinaloa and jalisco exert considerable influence on prices elsewhere in mexico we conclude that despite north american free trade agreement nafta white maize prices in mexico are determined by local conditions including particularly the degree of integration to other regions within mexico

domino dumping ii anti dumping abstract domino dumping anderson american economic review 1992 82 65 83 arises when exporting firms dump to obtain more export licenses in the future when there is a positive probability of a future ver anti dumping policy may then be in the public interest for the importing country via lowering the probability of a ver increased enforcement may perversely lead to a rise in dumping also it may increase the probability of a ver and may reduce the probability of free trade it is possible for the public interest to require some enforcement however it is normally in the public interest to permit some dumping

international market integration for natural gas a cointegration analysis of prices in europe north america and japan this paper investigates the degree of integration of natural gas markets in europe north america and japan in the time period between the early 1990s and 2004 the relationship between international gas market prices and their relation to the oil price are explored through principal components analysis and johansen likelihood based cointegration procedure both of them show a high level of natural gas market integration within europe between the european and japanese markets as well as within the north american market at the same time the obtained results suggest that the european respectively japanese and the north american markets were not integrated

on the use of international commodity futures spread for forecasting china s net imports of commodities in this paper we show that the price spreads of copper and aluminium s futures in the london metal exchange lme and the shanghai futures exchange shfe have strong predictive power of china s net imports of the corresponding commodities 2 months later the modified diebold mariano test of harvey et al international journal of forecasting 13 1997 281 indicates that our futures based model significantly outperforms the arima model and static model in terms of 1 month ahead out of sample forecasts of net imports moreover the market timing test of clements evaluating econometric forecasts of economic and financial variables 2005 palgrave macmillan xxxxx indicates that there is a significantly high correlation between the predicted signs of our model and the actual outcomes when sorting all sign predictions according to the absolute magnitude of the out of sample movements our proposed model achieves a 100 per cent forecasting accuracy for both copper and aluminium when predicting the largest movements at the top 10 percentile

trade reform with quotas partial rent retention and tariffs quotas are the predominant means of protection in developed countries with quota rents commonly shared between exporter and importer this paper derives shadow prices appropriate to evaluating trade reform under these circumstances and provides a number of useful sufficient conditions for welfare improving piecemeal reform in doing so the authors apply the distorted quantity constrained expenditure function and use implicit separability to derive more powerful results than have previously been available

welfare costs of u s quotas in textiles steel and autos this paper deals with the problems of partial equlibrium analysis by presenting estimates from a static ten sector computable general equilibrium cge model of the u s economy calibrated to the year 1984 following the introduction the paper is organized as follows section 2 outlines the model section 3 details the sources of estimates of premia on preexisting qrs quota rents in 1984 and the sources for the parameters describing demand and supply elasticities welfare and employment estimates of qr removal are presented by industry and in the aggregate in section 4 conclusions follow in section 5

the effects of rising labour costs on global supply chains the case of china s cotton yarn industry abstractrapid economic growth in china and india has resulted in rapidly rising labour costs in those countries in this study a muth type model is used to assess the potential effects of this deve

some further evidence on the law of one price the law of one price still holds international trade models often postulate the existence of a representative price i e the price which prevails at all markets this is known as the law of one price in this paper the law of one price is tested for seven commodities among four countries by explicitly considering transaction costs the empirical evidence suggests that in most cases the law of one price cannot be rejected asa maintained hypothesis furthermore for the remaining cases transaction costs seem to cause the failure

price transmission asymmetric adjustment and threshold effects in the cotton supply chain a case study for vidarbha india this study examines price transmission asymmetries in vidarbha s india cotton supply chain from 2002 to 2012 the analysis takes account of thresholds in price adjustments toward their long run equilibrium the first stage considers the price dynamics between international and indian domestic cotton prices the second stage considers price transmission from domestic to farm gate cotton prices in vidarbha results from the first stage indicate that indian and international cotton markets are well integrated in contrast the second stage reveals significant threshold type nonlinearities as well as asymmetries in price transmission between domestic and farm gate prices the short run dynamics suggest that the pass through from domestic to farm gate prices is larger when domestic prices decrease than when they increase moreover back of the envelope calculations suggest that the loss in revenue for a typical farmer from a decrease in domestic price is larger than the gains from an increase in domestic price of the same magnitude the implication is that traders benefit from price fluctuations at the expense of farmers evidence from fieldwork in vidarbha suggest that asymmetries revealed in this analysis may be linked to trader s market power and inadequate market information among farmers