not all price endings are created equal price points and asymmetric price rigidity abstract we document an asymmetry in the rigidity of 9 ending prices relative to non 9 ending prices consumers have difficulty noticing higher prices if they are 9 ending or noticing price increases if the new prices are 9 ending because 9 endings are used as a signal for low prices price setters respond strategically to the consumer heuristic by setting 9 ending prices more often after price increases than after price decreases 9 ending prices therefore remain 9 ending more often after price increases than after price decreases leading to asymmetric rigidity 9 ending prices are more rigid upward than downward these findings hold for both transaction prices and regular prices and for both inflation and no inflation periods

asymmetry in retail wholesale and shipping point pricing for fresh vegetables the linkage among retail wholesale and shipping point prices for a select group of fresh vegetables is measured using wolffram s asymmetry model procedures for dealing with discontinuous time series are shown and granger s causality test is used to show the direction of the price linkage wholesale prices are shown to lead both retail and shipping point prices asymmetry in the retail wholesale response indicates that wholesale price decreases are reflected at the retail more so than are wholesale price increases wholesale price decreases are more fully passed through to the shipping point relative to wholesale increases

growth and profitability of small and medium sized enterprises some welsh evidence foreman peck j makepeace g and morgan b 2006 growth and profitability of small and medium sized enterprises some welsh evidence regional studies 40 307 319 policy makers throughout the organization for economic co operation and development oecd are keen to promote the development of small and medium sized enterprises smes by a wide variety of means the present study of over 1600 welsh smes casts doubt on the effectiveness of doing so by grants by encouraging trade associations by pursuing current initiatives in training or by stimulating innovation as defined by sme management on the other hand it finds that support for selective information technology investment and for marketing planning could be beneficial additional results that might be addressed by policy are short termism by older managers preferring current to future profits more than younger managers signs that fixed costs of tax compliance bear substantially more heavily on the profitability of smaller smes and evidence

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

a methodology for measuring food poverty applied to kenya abstract this paper proposes a new way of establishing a food poverty line taking into account regional food preferences and prices it uses this poverty line to derive a food poverty measure which satisfies the desirable fundamental properties of such measures and has the additional advantage of being additively decomposable the measurement of food poverty is further generalized to heterogeneous groups of households facing different sets of relative prices and exhibiting different food preferences finally the above methodology is applied to the empirical estimation of food poverty among kenyan smallholders and the results contrasted with those obtained by two other methods

penny wise and pound foolish the left digit effect in price cognition through five experiments we provide a cognitive account of when and why nine ending prices are perceived to be smaller than a price one cent higher first this occurs only when the leftmost digits of the prices differ e g 2 99 vs 3 00 second the left digit effect also depends on the numerical and psychological distances between the target price and a competing product s price the closer the two prices being compared the more likely is the left digit effect third the left digit effect is not restricted to the domain of prices it also manifests with other multidigit numbers

agricultural household models extensions applications and policy this book presents the basic model of an agricultural household that underlies most of the case studies undertaken so far the model assumes that households are price takers and is therefore recursive the decisions modeled include those affecting production and the demand for inputs and those affecting consumption and the supply of labor comparative results on selected elasticities are presented for a number of economies the empirical significance of the approach is demonstrated in a comparison of models that treat production and consumption decisions separately and those in which the decisionmaking process is recursive the book summarizes the implications of agricultural pricing policy for the welfare of farm households marketed surplus the demand for nonagricultural goods and services the rural labor market budget revenues and foreign exchange earnings in addition it is shown that the basic model can be extended in order to explore the effects of government policy on crop composition nutritional status health saving and investment and to provide a more comprehensive analysis of the effects on budget revenues and foreign exchange earnings methodological topics primarily the data requirements of the basic model and its extensions along with aggregation market interaction uncertainty and market imperfections are discussed the most important methodological issues the question of the recursive property of these models is also discussed

informational rigidities and the stickiness of temporary sales abstract how do retailers react to cost changes while temporary sales account for 95 of price change in our data retail prices respond to a wholesale cost increase entirely through the regular price sales actually respond temporarily in the opposite direction from regular prices as though to conceal the price hike additional evidence from responses to commodity cost and local unemployment shocks as well as broader evidence from bls data reinforces these findings institutional evidence indicates that sales are complex contingent contracts determined substantially in advance in a standard price discrimination model these institutional practices leave little money on the table

demand systems estimation with microdata a censored regression approach demand systems estimation increasingly makes use of household level microdata mainly to measure the effects of demographic variables data based on these household expenditure surveys present a major estimation problem for any given household many of the goods have zero consumption implying a censored dependent variable techniques which do not take this censored dependent variable into account will yield biased results we utilize a censored regression approach that is computationally simple consistent and asymptotically efficient the results are then presented and compared with those obtained using an uncensored technique

an intertemporal model of industrial exit a finite horizon model of industrial exit is developed after an initial lag most exits are by young firms the duration of the lag is positively related to sunk entry costs but not due to the fallacy of sunk costs the conception of entry differs from previous research as a result not all entrants are identical and firm size affects the rate of learning on average larger new firms last longer entrepreneurs in declining firms act more lazily as the firm declines a number of empirical observations about declining firms are organized by the model

generalising gibrat using chinese evidence founded on fieldwork this paper reports on determinants of small firm growth and survival using fieldwork evidence collected by face to face and telephone interviews it extends the basic size age model to a comprehensive growth model with two types of additional explanatory variables firm specific and business environmental estimation is by log linear regression on chinese cross section data with corrections for sample selection bias and heteroskedasticity our results from the comprehensive model highlight the importance of location choice and customer orientation for the growth of chinese private firms

the economics of food aid under subsistence farming with an application to malawi abstract we investigate how food aid affects price and production of staple food with a partial equilibrium model with non separable production and consumption the model captures the key characteristics of sub saharan africa subsistence economies simulations generate negative but also positive food aid elasticities of production conditions are identified which mitigate the negative impact and support a positive impact the share of domestic food production in total staple food demand and the share of income from staple food production in total household income are key determinants price and production equations estimated with a panel of district data of the malawi maize market for the period 1999 2010 show a small positive impact of food aid large negative impacts of food aid are not likely given production and income shares and behavioural responses

the impact of education experience and inner circle advisors on sme performance insights from a study of public development centers in this study we investigate the effects of entrepreneurial human capital on sme performance using data on 2 713 smes within the european union performance was measured in two ways profitability as roa and productivity as revenue per employee results indicate that both profitability and productivity are positively related to industry specific knowledge possessed by the ceo owner prior to starting up the firm and the general business knowledge acquired once the firm is up and running experience as a result of having previously worked in a firm in the same industry before starting a business was related to productivity but there is no relation with profitability there is a link between performance and inclusion of other ceo owners in the founder s inner circle of advisors this relationship is positive when the advisor s venture has experienced failure and negative when the advisor s venture has been successful we discuss the significance of these findings for research and practice

market structure and the nature of price rigidity evidence from the market for consumer deposits panel data on consumer bank deposit interest rates reveal asymmetric impacts of market concentration on the dynamic adjustment of prices to shocks banks in concentrated markets are slower to raise interest rates on deposits in response to rising market interest rates but are faster to reduce them in response to declining market interest rates thus banks with market power skim off surplus on movements in both directions since deposit interest rates are inversely related to the price charged by banks for deposits the results suggest that downward price rigidity and upward price flexibility are a consequence of market concentration

asymmetric wholesale pricing theory and evidence asymmetric pricing or asymmetric price adjustment is the phenomenon where prices rise more readily than they fall we offer and provide empirical support for a new theory of asymmetric pricing in wholesale prices wholesale prices may adjust asymmetrically in the small but symmetrically in the large when retailers face cost of price adjustment such retailers will not adjust prices for small changes in their costs manufacturers then see a region of inelastic demand where small wholesale price changes do not translate into commensurate retail price changes the implication is asymmetrica small wholesale price increase is more profitable because manufacturers will not lose customers from higher retail prices yet a small decrease is less profitable because it will not lower retail prices hence there is no extra revenue from greater sales for larger changes this asymmetry in the behavior of wholesale price vanishes as the price adjustment cost is compensated by the increase in retailers revenue resulting from correspondingly large retail price changes we present a formal economic model of a channel with forward looking retailers and cost of price adjustment test the derived propositions on the behavior of manufacturer prices using a large supermarket scanner data set and find that the results are consistent with the predictions of our theory we then discuss the implications for asymmetric pricing channels and cost of price adjustment literatures as well as public policy

longitudinal analysis of relationships between planning and performance in small firms this paper investigates causal relationships between planning and performance utilizing a longitudinal database with responses from the same 2 956 businesses over a four year period results confirm the association between planning activity and performance that is evident in most extant literature they also however cast doubt on the traditional perception of the causal sequence of that association although subject to a number of limitations the results indicate that planning is more likely to be introduced into a small firm after a period of growth rather than before a period of growth these results make an important contribution to understanding the planning performance relationship for two main reasons they overcome the static data and relatively smaller sample size restrictions of many past studies and they provide evidence concerning the sequence of the relationship between planning and performance

staying in business abstract the paper analyses factors which help a small entrepreneurial firm to stay in business the time scale for the analysis is three years 1985 1988 the main issue that the paper is concerned with is the role of market and financial variables primary source data are used an estimated probit model indicates that for this sample product range and gearing are the key maket and financial variables respectively the greater the product range and the lower the gearing ceteris paribus the better the chances of staying in business

prices rise faster than they fall output prices tend to respond faster to input increases than to decreases this tendency is found in more than two of every three markets examined it is found as frequently in producer goods markets as in consumer goods markets in both kinds of markets the asymmetric response to cost shocks is substantial and durable on average the immediate response to a positive cost shock is at least twice the response to a negative shock and that difference is sustained for at least five to eight months unlike past studies which documented similar asymmetries in selected markets gasoline agricultural products etc this one uses large samples of diverse products 77 consumer and 165 producer goods accordingly the results suggest a gap in an essential part of economic theory as a start on filling this gap the study finds no asymmetry in the resonse of an individual decision maker a supermarket chain to its costs but it finds above average asymmetry where a cost shock is filtered through a fragmented w

a quantitative content analysis of the characteristics of rapid growth firms and their founders a group of firms that is attracting attention are rapid growth firms these firms are of particular interest because rapid growth is an indication of market acceptance and firm success by studying rapidgrowth firms researchers can help all firms better understand the attributes associated with firm growth despite these positive outcomes however rapid firm growth is difficult to achieve and maintain this study adds to the literature through a quantitative content analysis of the narrative descriptions of 50 rapid growth firms and a comparison group of 50 slow growth companies the purpose of the study was to draw from the narratives a list of empirically grounded growth related attributes that are associated with rapid growth firms the findings of the study resulted in the advancement of a conceptual model of the attributes of rapid growth firms in four areas founder characteristics firm attributes business practices and human resource management hrm practices

multimarket analysis of agricultural price policies in an operational context the case of cyprus this article presents a method of analysis of agricultural price policies its basic features are i the incorporation of important supply and demand substitution possibilities ii a flexible structure which can account for institutional features of the agricultural sector and its relationships with the rest of the economy and iii a focused policy oriented approach an application to cyprus is presented which highlights the differences between this approach and analyses of single markets the method incorporates supporting software on personal computers with the longer term objective of developing this type of approach as a standard tool in pricing policy analysis

variable price adjustment costs i introduction costly price adjustment models often called menu cost models see mankiw 1985 are based on the assumption that nominal price changes in product markets are costly with aggregate inflation the optimal pricing policies are state contingent the firm lets its real price drift until it reaches a threshold the nominal price is then changed so as to make the new real price equal to a target value the simplest case is the one sided s s policy studied by sheshinski and weiss 1977 the real price is increased to s after it has been eroded by inflation to s 1 nominal prices are held constant for extended periods of time as is apparent to anyone with eyesight rotemberg 1987 as the timing of price changes is chosen optimally the optimal policies dominate time contingent policies 2 not surprisingly the models have been adopted in the new keynesian literature as a microfoundation for nominal rigidities along with monopolistic competition and coordination failures they have entered the mainstream of that literature 3 given their importance for the new keynesian approach costly price adjustment models require closer scrutiny there are two basic problems first it is not clear what the costs of price adjustment are second there is empirical evidence inconsistent with the standard fixed cost model 4 1 more complex policies are studied by barro 1972 tsiddon 1988 caplin and leahy 1991 and dixit 1991 2 see discussions in blanchard and fischer 1990 and caplin and leahy 1991 a notable exception are time inconsistent problems which may arise in long term contracts 3 rotemberg 1987 ball mankiw and romer 1988 blanchard 1990 and gordon 1990 review macroeconomic applications textbook expositions are in blanchard and fischer 1990 mccafferty 1990 abel and bernanke 1992 and mankiw 1992 4 another issue is how a smooth aggregate price level results from lumpy individual adjustments on this see caplin and spulber 1987 and caballero and engel 1991 the costs of price changes are of two basic types first are the costs of market response customers switching competitors pricing more aggressively etc second are the costs of changing the menu deciding on the new price changing labels informing salesmen and customers etc in existing literature the costs are assumed to be fixed which suggests that they are of the latter type 5 the main criticism of this approach is that as menu costs are small the results are unlikely to be empirically relevant or economically significant mccallum 1989 summarizes this argument in response akerlof and yellen 1985 and mankiw 1985 argued that as the profit function is flat around its maximum profits are not responsive to changes in the real price thus even small costs may result in infrequent price changes empirical evidence supports neither the criticism nor the response the observed frequency of price changes is often too low and real price variations are too large to be generated by a small menu cost for example cecchetti 1986 finds that a typical u s weekly magazine would change its nominal price once every four to six years allowing the real price to deteriorate by about 25 percent results for monopolistic newspapers in canada studied by fisher and konieczny 1992 are similar the average price increase for the twenty six products in israel studied by lach and tsiddon 1992 was 12 percent when the monthly inflation rate was 7 3 percent also in kashyap 1990 price changes vary greatly in size across products sold in the same catalog even though presumably the menu cost is similar with respect to the second problem fixed cost models imply that the size of adjustment rises with inflation the real price is allowed to be eroded more and is reset to a higher value yet in lach and tsiddon 1992 this holds for only sixteen out of twenty six products adjustments become smaller for eight and there is no effect in two cases

food aid domestic policy and food security contrasting experiences from south asia and sub saharan africa abstract food aid both for short term emergency relief and as program food aid that helps address medium term food deficits is often a major component of food security strategies in developing countries this study reviews the experience with food aid of four major recipients of food aid india bangladesh ethiopia and zambia regarding food production trade markets consumption and safety nets as well as the policy responses to food emergencies the widely varying experiences of the study countries suggest that food aid that supports building of production and market enhancing infrastructure is timed to avoid adverse price effects on producers and is targeted to food insecure households can play a positive role in enhancing food security however food aid is not the only or in many cases the most efficient means of addressing food insecurity in many cases private markets can more effectively address shortfalls in food availability and cash transfers may be a viable alternative to food transfers in kind

an empirical analysis of price endings with scanner data several consumer behavior theories have been offered to explain the preponderance of prices that end in the digit 9 this study attempts to incorporate these proposed behaviors into the implicit utility function of consumer choice models resulting in both a more accurate tool for managerial decision making and additional insights into how consumers actually behave toward price endings an attempt is made to compensate for both level effects those effects in which consumers may underestimate the value of a price and image effects those effects in which consumers may infer meaning from the right hand digits the models are estimated using scanner panel data for two frequently purchased products tuna and yogurt the results support the importance of accounting for the digits in consumer choice models providing evidence for both image effects and level effects

does more mean worse three decades of enterprise policy in the tees valley this paper argues that there have been three distinct phases of enterprise policy in the uk in the past 30 years the 1970s saw no effective enterprise policy policy off the 1980s witnessed an attempt to increase the number of start ups and the 1990s saw a concentration on business quality this paper looks at how enterprise has evolved in cleveland tees valley over the past three decades it suggests and finds that businesses in the 1980s were more numerous but of lower quality even if the influence of unemployment is accounted for than those from the 1970s and 1990s this implies that we should be cautious about the value of policy attempts to increase business formation rates in areas such as cleveland tees valley

menu costs posted prices and multiproduct retailers we use a unique store level data set to directly measure menu costs and to study the price change process at a large u s drugstore chain we compare and contrast the magnitude of these measures with similar measures from four large u s supermarket chains we find that 1 the actual magnitude of menu costs as a share of revenues 2 menu costs per price change 3 the frequent use of promotional pricing and 4 the use of weekly pricing rules are similar across both retail formats given that the main common features of these two types of retail formats are that i they both use posted prices and ii both are multiproduct retailers selling a large number of products our findings suggest that the magnitude of the menu cost components we measure and the price change practices we document may be generalizable across retail formats with these two features

price stickiness empirical evidence of the menu cost channel abstract a leading explanation in the economic literature is that monetary policy has real effects on the economy because firms incur a cost when changing prices using a unique database of cost and retail price changes we find that variation in menu costs results in up to 13 3 fewer price increases we confirm that these effects are allocative and have a persistent impact on both prices and unit sales we provide evidence that the menu cost channel operates only when cost increases are small in magnitude which is consistent with theory and provides the first empirical evidence of boundary conditions

food subsidies and exchange rate distortions in mozambique abstract in response to acute food shortages in mozambique induced by civil war drought and policies that favoured state farms and restricted private trade the government introduced a food rationing system in the two largest cities maputo and beira the primary function was to assure an equitable distribution of the limited food available but it has evolved into an untargeted income support programme as the crisis that led to its inception has abated this article emphasizes the need to transform the subsidy which at present is financed implicitly through exchange rate distortions into an explicit and targeted subsidy this would be consistent with the long term objectives of mozambique s economic recovery programme in which liberalization of commodity markets and exchange rate realignment are key policy reforms

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

sticky prices new evidence from retail catalogs this paper presents new results on the size frequency and synchronization of price changes for twelve selected retail goods over the past 35 years three basic facts about the data are uncovered first nominal prices are typically fixed for more than one year although the time between changes is very irregular second prices change more often during periods of high overall inflation third when prices do change the sizes of the changes are widely dispersed both large and small changes occur for the same item and the sizes of these changes do not closely depend on overall inflation

comparing consumer preferences for color and nutritional quality in maize application of a semi double bound logistic model on urban consumers in kenya consumer preferences for white maize in east and southern africa concerns developers of maize biofortified with provitamin a carotenoids since carotenoids impart a yellow or orange coloration urban consumers willingness to pay wtp for yellow maize was estimated using a semi double bounded logistic model based on a survey of 600 maize consumers in nairobi kenya at posho mills kiosks and supermarkets consumers showed a strong preference for white maize only a minority would buy yellow maize at the same price as white maize and fewer consumers in the posho mills 24 and kiosks 19 than in the supermarkets 34 would do so on average consumers need a price discount of 37 to accept yellow maize this discount was less at the posho mills 35 and kiosks 37 than in the supermarkets 48 most respondents 76 were aware of the existence of fortified meal and the generally showed an interest the average premium for fortified maize was much less than the discount for yellow 5 9 for those aware and 7 4 for those unaware consumer preferences were influenced by socioeconomic factors such as gender education income and ethnic background women have a stronger preference for both white maize and fortified maize than men and consumers with more education have a stronger preference for white income decreases the wtp for yellow maize as well as the price elasticity but increases the wtp for fortified maize consumers originating from western kenya have a lower preference for white while those from central kenya had a stronger preference for fortified maize

prices are sticky after all abstract economists have interpreted the evidence that prices change every four months as implying that sticky prices cannot be important for monetary transmission theory implies that this interpretation is correct if most price changes are regular but not if a large fraction are temporary as in the data since regular prices are much stickier than temporary ones our models predict that the stickiness of the aggregate price level matches that in a standard calvo model or a standard menu cost model in which micro level prices change about once a year in this sense prices are sticky after all

targeting of food aid in rural ethiopia chronic need or inertia abstract this paper quantifies the factors underlying the allocations of food aid by the ethiopian government together with local and international non governmental organizations ngos both across rural regions and to households within regions we focus on reduced form specifications in which as little structure as possible is put on the decision rules because so little is known about these rules and their implementation nationally representative rural household data from ethiopia collected in 1996 are used the paper determines the extent to which food aid both free distribution and food for work is targeted to poor households and communities we also demonstrate that food aid allocations display a large degree of spatial continuity over time and are concentrated in areas that at least during the time of the survey are not the poorest the paper attempts to disentangle two competing explanations for the apparent spatial rigidity of food aid allocations that the recipient areas are chronically needy or that needs shift geographically from 1 year to the next but that fixed costs in setting up operations and in the process of identifying needs lead to a degree of inertia in the location of food aid programs over time we conclude that the evidence best fits the inertia explanation

how robust is a poverty profile comparison of poverty such as when poverty is greatest typically matter far more for policy choices than do aggregate measures of poverty such as how many people are deemed poor the authors examine alternative methods for constructing poverty profiles focusing on their internal consistency and appropriateness for guiding policy none is perfect but some methods appear to be preferable to others when the aim is to inform policies for fighting absolute consumption poverty a case study on indonesia reveals that the country s regional and sectoral poverty profile is highly sensitive to some aspects of measurement but quite robust to others

estimating consumer willingness to pay for food quality with experimental auctions the case of yellow versus fortified maize meal in kenya biofortification of maize with provitamin a carotenoids is a new approach to the alleviation of vitamin a deficiencies in africa unfortunately these varieties are yellow or orange while consumers generally prefer white consumer willingness to pay for yellow and fortified maize was compared in experimental auctions in three regions in kenya the premium that consumers are willing pay for fortified maize 24 was higher than the discount they require to buy yellow maize 11 and in one zone consumers prefer yellow yellow color is therefore not an impossible obstacle for biofortified maize although it would clearly be easier to introduce this maize first in regions where yellow maize is currently grown

trajectories of small business financial structure a dynamic theory of the small firm is expounded assuming entrepreneurs maximise business value over a finite time horizon predicted trajectories for key financial variables are seen to depend on whether debt or equity are cheaper the predicted trajectories are compared with actual trajectories using empirical evidence from three years of detailed primary source data on one hundred and fifty new business startups in scotland evidence largely confirms predictions of the model for the cheap equity case for this case as capital and sales rise steadily debt is retired rapidly except when interest rates on long term debt are low this finding is supported by explicit empirical trajectories of key financial variables

relative price changes as aggregate supply shocks this paper proposes a theory of supply shocks or shifts in the short run phillips curve based on relative price changes and frictions in nominal price adjustment when price adjustment is costly firms adjust to large shocks but not to small shocks and so large shocks have disproportionate effects on the price level therefore aggregate inflation depends on the distribution of relative price changes inflation rises when the distribution is skewed to the right and falls when the distribution is skewed to the left we show that this theoretical result explains a large fraction of movements in postwar u s inflation moreover our model suggests measures of supply shocks that perform better than traditional measures such as the relative prices of food and energy

a dynamic economy with costly price adjustments this paper studies a general equilibrium model of a dynamic economy with menu costs each firm s productivity is exposed to idiosyncratic and aggregate productivity shocks around a trend and the money supply to monetary shocks around a trend all consumption pricing and production decisions are based on optimizing behavior there exists a staggered markov perfect equilibrium with prices determined by a two sided s s markup strategy the paper analyzes the optimal markup strategy and investigates the dynamics of the price index and the aggregate output the welfare consequences of the uncertain aggregate productivity and money supply are also examined

when little things mean a lot on the inefficiency of item pricing laws abstract item pricing laws ipls require a price tag on every item sold by a retailer we study ipls and assess their efficiency by quantifying their costs and comparing them to previously documented benefits on the cost side we posit that ipls should lead to higher prices because they increase the costs of pricing and price adjustment we test this prediction using data collected from large supermarket chains in the tri state area of new york new jersey and connecticut we find that ipl store prices are higher by about 20 25 per item on average as a control we use data from stores that use electronic shelf labels and find that their prices fall between ipl and no ipl store prices we compare the costs of ipls to existing measures of the benefits and find that the costs are an order of magnitude higher than the upper bound of the estimated benefits

pricing in inflationary times the penny drops how does the frequency and magnitude of micro price rises and falls relate to macroeconomic crisis as well as moderation weekly micropricing behaviour in british groceries was investigated across three leading retailers over the moderation period 2004 7 and the crisis period 2008 10 we find significant price flexibility sharply distinguished from behaviour observed in most previous works downward price flexibility increased markedly in 2008 overall basket prices rise but significantly more individual prices fall than rise in the latter period tests of obfuscation in price setting suggested that large numbers of small price falls were used to disguise the basket price rises

poverty alleviation in mozambique a multi market analysis of the role of food aid abstract the use of food aid in poverty alleviation programs has been hampered by two problems the inability to target to households in need and the disincentive effects on agriculture in this paper we present econometric estimates of in almost ideal demand system aids for households in maputo mozambique and develop a multi market model to show that in maputo imported yellow maize is not only self targeting but that owing to a combination of the low cross price elasticity with locally produced staples particularly white maize and cross border trade in food products the disincentive effects on domestic agriculture have been negligible

what makes a new business start up successful this paper seeks a good measure of new business performance and then explains this measure by various dimensions of business strategy three criteria are used to create a one dimensional ordinal ranking of high medium and low performance for new business starts employment growth return on capital employed and labour productivity it is shown that statistical cluster analysis provides a convincing separation of a sample of new business starts into high medium and low performance categories using a minimum distance criterion for clustering an ordinal logit model with selection is then used to explain this performance ranking the results indicate that many widely discussed features of small business strategy have little or even negative impact on performance of the numerous aims that owner managers may adopt survival growth etc only one appears to have a major impact on performance the pursuit of the highest rate of return on investment many entrepreneurial perceptions of their own capabilities appear false or unimportant with the exception of organisational features and systems

reference prices costs and nominal rigidities we assess the importance of nominal rigidities using a new weekly scanner dataset we find that nominal rigidities take the form of inertia in reference prices and costst defined as the most common prices and costs within a given quarter reference prices are particularly inertial and have an average duration of roughly one year even though weekly prices change roughly once every two weeks we document the relation between prices and costs and find sharp evidence of state dependence in prices we use a simple model to argue that reference prices and costs are useful statistics for macroeconomic

why are so many goods priced to end in nine and why this practice hurts the producers abstract the widespread phenomenon of goods being priced at d dollars and 99 cents is explained without abandoning the assumption of full rationality and it is shown that as a consequence of such pricing it is the producers who are generally worse off

elasticities in aids models in the literature a variety of approaches have been used to calculate demand elasticities in almost ideal demand system aids models of demand it is common to estimate the linear approximate almost ideal demand system la aids instead of the aids when the la aids is estimated all of the previously reported approaches to compute elasticities are theoretically incorrect this paper presents correct formulas for la aids elasticities and illustrates the potential errors from using incorrect computing the almost ideal demand system aids of deaton and muellbauer 1980a b has become popular in recent years anderson and blundell blanciforti and green 1983a b blanciforti green and king chalfant eales and unnevehr fujii khaled and mak fulponi heien and willett murray parsons ray a variety of approaches to computing elasticities has been used and some of the approaches may lead to significant errors this paper clarifies the differences between alternative approaches to estimating demand elasticities in aids models

limited attention and income distribution economists have long been interested in the idea that there is a direct circular relation between poverty and low productivity and not just one that is mediated by market failures usually in asset markets the nutrition based efficiency wage model partha dasgupta and debraj ray 1987 is the canonical example of models where this happens however it has been variously suggested see for example t n srinivasan 1994 that the link from nutrition to productivity and especially the link from productivity to nutrition is too weak to be any more than a small part of the story partha dasgupta himself acknowledges this when he writes nutrition productivity construct provides a metaphor for an economic environment harboring poverty traps partha dasgupta 1997 page 5 we propose an alternative approach to this question based on the idea that attention is a scarce resource that is important for productivity specifically people may not be able to fully attend to their jobs if they are also worrying about problems at home and being distracted in this way reduces productivity but not paying attention at home is also costly early symptoms of a child s sickness may go unnoticed water may run out at the end of the day kerosene for lighting lamps at home might run out and make it hard to do homework etc finally the extent to which home life distracts depends on the nature of home life specifically certain goods e g a good baby sitter a 24 hour piped water supply a connection to a power supply grid can reduce the extent of home life distraction these three assumptions generate an interesting relation between income and productivity that is at the core of our model the non poor in this model by virtue of owning distraction saving goods and services at home are able to focus more on their work hence they will be more productive at work and will be able to afford more distraction saving goods this simple two way relationship between in this abstract was borrowed from another version of this item

a model of constructing the poverty line abstract this paper proposes a model which defines the poverty line as that level of expenditure at which all caloric and nutrient shortfalls are eliminated where requirements with respect to these are tailored to the age sex occupation characteristics of each household the methodology avoids all the allegations of subjectivity and conceptual circularity levelled against the traditional methods an application of the model to the nss data for indian punjab demonstrates the computational simplicity and easy identifiability of the poverty line

the role of safety nets during the process of economic growth discussion what should governments and donors be trying to accomplish with resources devoted to safety nets safety nets are programs that protect peoples livelihood in the face of transitory or chronic poverty e g direct food distribution food for work and cash for work in recent years there have been greater attempts to link relief to development by creating investments that support long run growth in the process of providing a safety net to the poor in the short run

patterns of rightmost digits used in advertised prices implications for nine ending effects analysis of the rightmost digits of selling prices in a sample of retail price advertisements confirmed past findings indicating the overrepresentation of the digits 0 5 and 9 the high cognitive accessibility of round numbers can account for the overrepresentation of 0 and 5 ending prices and suggests the existence of two effects that could account for the overrepresentation of 9 ending prices 1 a tendency of consumers to perceive a 9 ending price as a round number price with a small amount given back and 2 a tendency of consumers to underestimate a 9 ending price by encoding it as the first round number evoked during incomplete left to right processing analysis of the patterns of rightmost digits observed in the sample provides supportive evidence particularly for the second of these two 9 ending effects

why are prices sticky the dynamics of wholesale gasoline prices the menu cost interpretation of sticky prices implies that the probability of a price change should depend on the past history of prices and fundamentals only through the gap between the current price and the frictionless price we find that this prediction is broadly consistent with the behavior of nine philadelphia gasoline wholesalers nevertheless we reject the menu cost model as a literal description of these firms behavior arguing instead that price stickiness arises from strategic considerations of how customers and competitors will react to price changes

frequency of price adjustment and pass through we empirically document using u s import prices that on average goods with a high frequency of price adjustment have a long run pass through that is at least twice as high as that of low frequency adjusters we show theoretically that this relationship should follow because variable mark ups that reduce long run pass through also reduces the curvature of the proflt function when expressed as a function of the cost shocks making the flrm less willing to adjust its price lastly we quantitatively evaluate a dynamic menu cost model and show that the variable mark up channel can generate signiflcant variation in frequency equivalent to 37 of the observed variation in the data on the other hand the standard workhorse model with constant elasticity of demand and calvo or state dependent pricing has di culty matching the facts

do more heavily regulated economies have poorer performing new ventures evidence from britain and spain we test two alternative perspectives on the start up size and subsequent growth of new firms in a heavily regulated hr economy and a lightly regulated lr economy the first argues that in an hr economy there will be fewer new firms and those that do start will be larger than those in an lr economy but they will grow more slowly a second perspective is that regulation does not influence the scale of entrepreneurship merely its distribution between that which is registered and that which is not registered using parallel datasets for hr spain and lr britain we find some support for both perspectives specifically we find that registered new firms in britain do start smaller than in spain and do grow faster however when both registered and unregistered firms are included these differences disappear

asymmetric effects of positive and negative money supply shocks this paper examines whether positive and negative money supply shocks have symmetric effects on output the results are consistent with the hypothesis that positive money supply shocks do not have an effect on output while negative money supply shocks do have an effect on output this finding is independent of whether or not expected money is assumed to affect output the results reported in this paper imply that the fed could increase the growth rate of real output by reducing the standard deviation of unexpected changes in the money supply