restaurant prices and the minimum wage in this paper we examine the effect of the minimum wage on restaurant prices we contribute both to the study of economic impact of the minimum wage and to the study of microeconomic patterns of price stickiness for this purpose we use a unique data set of individual price quotes collected to calculate the consumer price index in france and we estimate a price rigidity model based on a flexible s s rule we find a positive and significant impact of the minimum wage on prices the effect of the minimum wage on prices is however very protracted a change in the minimum wage takes more than a year to fully pass through to retail prices

exchange rate pass through in u s manufacturing industries this paper studies exchange rate pass through in u s manufacturing industries and its cross sectional variation through an adapted dixit stiglitz model of product differentiation the paper predicts that pass through is positively related to the degree of product differentiation and inversely related to the elasticity of marginal cost with respect to output empirical estimates of the pass through elasticities show that pass through is incomplete and varies across industries the degree of pass through is found to be positively correlated to different proxies for product differentiation and negatively to a proxy for the elasticity of marginal cost

convergence to the law of one price without trade barriers or currency fluctuations using a panel of 51 prices from 48 cities in the united states we provide an upper bound estimate of the rate of convergence to purchasing power parity we find convergence rates substantially higher than typically found in cross country data we investigate some potentially serious biases induced by i i d measurement errors in the data and find our estimates to be robust to these potential biases we also present evidence that convergence occurs faster for larger price differences finally we find that rates of convergence are slower for cities farther apart however our estimates suggest that distance alone can only account for a small portion of the much slower convergence rates across national borders

the effects of taxation price control and government contracts in oligopoly and monopolistic competition abstract many government contracts with or policies towards oligopolistic sectors essentially involve private firms selling a given proportion or quantity of output to the government at a fixed price p r with the remainder being sold on the open market often this is combined with consumer rationing examples include cement and sugar in india and health housing and defence in many countries the paper investigates the effects of these schemes including sales and excise taxation on prices output and household welfare under oligopoly and monopolistic competition less government control reduced may raise prices and tax shifting can be above or below 100 percent

efficiency and equalization payments in a federal system of government a synthesis and extensions of recent results this paper investigates the rationale for a system of equalization transfers in a federal system of government the existing sources of inefficiency of resource allocation in economies with more than one level of government are synthesized in the framework of a simple decentralized multiprovince model with mobile factors of production the sources of inefficiency arise first because migrants respond at the margin to incorrect signals owing to the phenomena of rent sharing and fiscal exterality and second because of global rather than local inefficiencies the model is then extended to consider the role of the federal government in providing intergovernmental transfers in the face of such inefficiencies in addition to synthesizing the sources of inefficiency in federal models the equity arguments for equalization are briefly recounted efficacite et paiements de perequation dans un systeme federal de gouvernement synthese et extensions de certains resultats recents ce memoire examine la logique qui soustend un systeme de paiements de perequation dans un systeme fdderal de gouverement les auteurs utilisent un modele simple d un systeme multi provincial decentralise avec des facteurs de production mobiles pour definir les sources d inefficacite dans l allocation des ressources dans les dconomies qui possedent plus d un niveau de gouvernement ces inefficacites proviennent de ce que d abord ceux qui se deplacent le font en reponse a la marge a des signaux incorrects engendres par le partage de la rente sur la base de la residence et par les phenomenes d exteralites fiscales elles sont aussi le resultat d inefficacites globales plutot que locales dans le cadre de ce modele les auteurs analysent le role du gouvernement federal effectuant des transferts inter gouverementaux pour corriger ces inefficacites en plus de presenter une synthese des sources d inefficacite dans les regimes federaux les auteurs font un bref rappel en passant a l ensemble des arguments fondes sur l equite qu on utilise pour rationaliser les paiements de perequation this paper is a linear combination of two papers presented at the may 1982 meetings of the canadian economics association in halifax entitled the case for equalization payments by the authors and recent developments in the theory of regional economic policy in canada by boadway the authors are grateful for comments by the discussants jim johnson and baxter macdonald and by jack mintz brian scarfe gerard belanger david sewell tom courchene and the referees we are especially heavily indebted to dan usher for many stimulating comments and suggestions while the work was in progress some of the above persons will undoubtedly disagree with the emphasis we have chosen to put on various aspects of the analysis for policy purposes support for some of this work has been provided by the economic council of canada and is gratefully acknowledged canadian journal of economics revue canadienne d economique xv no 4 november novembre 1982 printed in canada imprimd au canada 0008 4085 82 0000 0613 01 50 1982 canadian economics association this content downloaded from 207 46 13 127 on wed 12 oct 2016 04 27 47 utc all use subject to http about jstor org terms 614 robin boadway and frank flatters

price pass through and the minimum wage this paper tests a textbook consequence of competitive markets that an industry wide increase in the price of labor is passed on to consumers through an increase in prices using several data sources on restaurant prices i explore the price impact of minimum wage hikes in canada and the united states particular attention is paid to the timing of these price responses to gauge the stickiness of minimum wage cost shocks i find that restaurant prices generally rise with changes in the wage bill and that this response is concentrated in the quarter surrounding the month during which the legislation is enacted

the highs and lows of the minimum wage effect a time series cross section study of the canadian law we examine the effects of minimum wage legislation in canada over the period 1975 93 for teenagers we find that a 10 increase in the minimum wage is associated with roughly a 2 5 decrease in employment we also find that this result is driven by low frequency variation in the data at high frequencies the elasticity is positive and insignificant the difference in the elasticity across the bandwidth has implications for the interpretation of employment dynamics as a result of minimum wage policy and experimental design in minimum wage studies it also provides a simple reconciliation of the new minimum wage research which reports very small negative or positive elasticities

optimum currency pegs for latin america the postwar economic record of latin america from 1950 to 1979 is a mixed one inflation rates range from a low of 3 percent in honduras panama and venezuela to highs of 120 percent in chile 67 percent in argentina and 37 percent in brazil further these rates have been stable in the low inflation countries with a standard deviation s d of about 4 percent while in chile argentina and brazil the standard deviations in the inflation rates were 1 15 percent 95 percent and 20 percent respectively monetary growth rates exhibit the same pattern low and stable in some countries high and unstable in others real growth rates range from lows of 1 percent in uruguay to highs of 9 percent in brazil and mexico for the eighteen latin american countries as a whole the inflation rate since 1950 has averaged 21 percent with a standard deviation of 30 percent monetary growth rates 29 percent s d of 25 percent and real growth rates 5 percent s d of 2 percent one striking fact emerges from a cursory examination of this historical record countries that peg to the u s dollar experience low and stable inflation rates while those that do not exhibit high and unstable inflation rates the choice to peg to the dollar is simultaneously a decision not to inflate more than the united states it is a clear signal regarding the future supply of local money similarly a decision to inflate more than the united states is simultaneously a choice not to have a fixed

the interprovincial migration of canadian physicians does income matter this study applies a multinomial logit model of human capital migration to examine the factors influencing the movement of physicians within canadian provinces between 1976 and 1992 the empirical investigation covers general practitioners and specialists it excludes interns residents between seven regions atlantic canada quebec ontario manitoba saskatchewan alberta and british columbia the results suggest that differences in real income have a positive and significant effect on a physician s decision to migrate form one province to another provinces with the highest after tax income highest expenditure per physician and highest fee per service rates have the highest net rate of in migration income differences are however not the only factor influencing a physician s choice to move working conditions within a province which we proxy with the number of hospitals beds and health expenditures per capita are also important factors likewise the ratio of rural to urban population distance b

minimum wage and real wage inequality evidence from pass through to retail prices this paper considers the impact of the minimum wage on both labor and product markets using detailed store level scanner data i provide empirical evidence that a 10 increase in the minimum wage r

are local minimum wages absorbed by price increases estimates from internet based restaurant menus the authors analyze 884 internet based restaurant menus from inside and outside san jose california which they collected before and after the city implemented a 25 minimum wage increase in 2013

asean income gap and the optimal exchange rate regime this article investigates the optimal exchange rate regime in a group of asean countries which minimizes the adverse effects of foreign demand shocks on real output the real exchange rate price

macroeconomic stabilization and intervention policy under an exchange rate band abstract macroeconomic stabilization and foreign exchange market interventions are investigated for a small open economy with a nominal exchange rate band in a first best situation a band is not advisable from a stabilization perspective even though with money demand shocks no welfare losses are incurred with goods demand shocks narrowing the band affects the optimal coefficient of intramarginal monetary accommodation with restrictions on intramarginal interventions a band may be desirable in particular with supply shocks and no intramarginal interventions a narrower band is desirable when the central bank attaches a relatively smaller weight to price as opposed to output stability

exchange market intervention under alternative forms of exogenous disturbances abstract this paper analyzes exchange market intervention in a stochastic model of a small open economy the distinction is made between disturbances which are unanticipated and anticipated on the one hand and those that are perceived as being transitory or permanent on the other it is shown how the appropriate form of exchange market intervention is sensitive to these aspects of the disturbances of particular interest is the case of an unanticipated permanent disturbance when output may be stabilized perfectly about its frictionless level by the use of a very simple class of intervention rules the optimal rules in other cases are also discussed

on becoming more flexible exchange rate regimes in latin america and the caribbean abstract this paper examines the shift from fixed to more flexible exchange rate regimes among countries in latin america and the caribbean in contrast to most traditional approaches the one followed here recognizes that fixed rates can be and often are adjusted but argues that policy makers incur a political cost from devaluation at the same time flexible exchange rates even managed ones may be very volatile with persistent misalignment a stylized model of regime choice is developed based on the perceived losses from exchange rate misalignment incurred under fixed versus more flexible regimes the model is estimated for a sample of 24 countries over the period 1978 1992 and empirical results are quite supportive misalignments proxied by current account deficits and moderate to high rates of inflation were associated with a move to more flexible rates during 1978 1986 misalignment indicators appear to have mattered less during 1987 1992 however there appears to have been a major reduction in the perceived difficulty of managing flexible rates during this period the paper then cautions against attributing differences in economic growth between groups of countries to their exchange regime the central point here is that the endogeneity of regime choice introduces selection biases into the samples of countries with fixed and with more flexible exchange regimes

the minimum wage restaurant prices and labor market structure using store level and aggregated consumer price index data we show that restaurant prices rise in response to minimum wage increases under several sources of identifying variation we introduce a general model of employment determination that implies minimum wage hikes cause prices to rise in competitive labor markets but potentially fall in monopsonistic environments furthermore the model implies employment and prices are always negatively related therefore our empirical results provide evidence against the importance of monopsony power for understanding small observed employment responses to minimum wage changes our estimated price responses challenge other explanations of the small employment response too

testing hypotheses about firm behavior in the cigarette industry data on the effects of excise taxes are used to investigate the level of competition in the cigarette industry a lower bound on the numbers equivalent of firms in the context of the conjectural variations model is derived and estimated results point to at least a moderately high level of competition and in particular allow for the rejection of the perfect cartel model this paper relies on comparative statics results and hence circumvents recent criticisms of a study of monopoly behavior in the cigarette industry

employment effects of minimum and subminimum wages panel data on state minimum wage laws using panel data on state minimum wage laws and economic conditions for the years 1973 89 the authors reevaluate existing evidence on the effects of a minimum wage on employment their estimates indicate that a 10 increase in the minimum wage causes a decline of 1 2 in employment among teenagers and a decline of 1 5 2 in employment for young adults similar to the ranges suggested by earlier time series studies the authors also find evidence that youth subminimum wage provisions enacted by state legislatures moderate the disemployment effects of minimum wages on teenagers

measurement of monopoly behavior an application to the cigarette industry a simple scheme is proposed to measure monopoly pricing behavior the coefficient of the tax rate term in a price equation identifies the ratio of price to marginal cost no direct measurement of costs is required so a major problem for other empirical studies of monopoly is avoided empirical results for cross section time series data support rejection of atomistic competition but also provide evidence against the operation of an effective cartel in the cigarette industry the model represents an alternative interpretation of related results in a recent paper by barzel application of the methodology to other markets is feasible

how effective is the minimum wage at supporting the poor this study investigates the antipoverty efficacy of minimum wage policies proponents of these policies contend that employment impacts are negligible and suggest that consumers pay for higher labor costs through imperceptible increases in goods prices adopting this empirical scenario the analysis demonstrates that an increase in the national minimum wage produces a value added tax effect on consumer prices that is more regressive than a typical state sales tax and allocates benefits as higher earnings nearly evenly across the income distribution these income transfer outcomes sharply contradict portraying an increase in the minimum wage as an antipoverty initiative

the choice of an exchange rate system and macroeconomic stability the recent theoretical literature regarding the choice of an exchange rate system has focused on how the choice of an exchange rate regime will affect the stability of the economy while the methodology and emphasis of the various theoretical arguments differ the common thread that runs through all is the notion that the appropriate exchange rate system will differ with the nature of the disturbance to the economy the substantive differences existing among the various studies are to a certain extent due to different criteria used for exchange system choice it is not surprising that one s beliefs with regard to the effect of exogenous shocks on exchange system choice will be sensitive to the objective function used for instance fischer 1977 and frenkel and aizenman 1982 focus on the minimization of real consumption shocks and derive the result that the greater the domestic money shocks the more likely is a float alternatively flood 1979 and aizenman 1983 with an objective of minimizing domestic price shocks conclude that the greater the domestic money shocks the more preferred is a fixed exchange rate while the evidence presented below will indicate which approach is more consistent with actual country practice we should first consider the rationale behind the criteria considered fischer appeals to basic micro theory when he says that concavity of utility functions expressed as a function of consumption justifies concern with the stability of consumption but it is not obvious that price stability is of itself undesirable

aspects of the optimal management of exchange rates abstract this paper shows that the choice of the optimal exchange rate regime depends on the stochastic shocks affecting the economy the higher the variance of real shocks the larger the desirability of fixity of exchange rates the desirability of exchange rate flexibility increases the larger are the variances of the shocks to the demand for money to the supply of money to foreign prices and to purchasing power parities when the economy produces traded and non traded goods the desirability of exchange rate flexibility diminishes the higher is the relative share of non traded goods and the lower are the elasticities of demand and supply of the two goods

the degree of openness and the cost of fixing exchange rate abstract fixing the exchange rate entails costs in terms of suboptimal output if nominal wages are sticky it is generally assumed that these costs decrease with the degree of openness we demonstrate that they are either non monotonic or increasing in openness

the impact of the minimum wage on other wages in this paper i explore how changes in the minimum wage affect various occupational wages i postulate that other wages increase for two reasons first firms try to mitigate the deterioration in a worker s relative wage which would cause him to reduce his work effort and second there is an increase in the demand for nonminimum wage workers wage adjustment patterns are examined to ascertain whether wage comparisons play a role in the adjustment process the empirical work shows a short run wage compression among white collar occupations which is consistent with the wage comparison model however large standard errors make inferences weak

zero hours contracts and labour market policy the evolving nature of atypical work arrangements is studied a particular focus is placed on one such form of work relation zero hour contracts zhcs the paper uses existing secondary data and new survey data collected for the specific purpose of studying alternative work arrangements to describe the nature of zhc work in the uk labour market the interaction with labour market policy is explored in the context of the 2016 introduction of the uk s national living wage zhc work is shown to be an important feature of today s work arrangements and the wage cost shock induced by the new higher minimum wage resulted in an increased use of zhcs in the uk social care sector and in low wage sectors more generally

the comparison between ad valorem and specific taxation under imperfect competition abstract this paper compares ad valorem and specific taxation in two models of oligopoly with and without free entry predominantly ad valorem taxation implies a relatively low consumer price high tax revenue and when entry is precluded low profits ad valorem taxation dominates specific taxation from the welfare perspective the set of circumstances under which with free entry specific taxation raises welfare is a strict subset of that in which ad valorem taxation is welfare improving and in both models the maximisation of consumer welfare subject to a binding revenue constraint requires maximum reliance on ad valorem taxation

industry dynamics and the minimum wage a putty clay approach we document two new findings about the industry level response to minimum wage hikes first restaurant exit and entry both rise following a hike second there is no change in employment among continuing restaurants we develop a model of industry dynamics based on putty clay technology that is consistent with these findings in the model continuing restaurants cannot change employment and thus industry level adjustment occurs gradually through exit of labor intensive restaurants and entry of capital intensive restaurants interestingly the putty clay model matches the small estimated short run disemployment effect of the minimum wage found in other studies but produces a larger long run disemployment effect

comparing the intensity of exchange market intervention with frenkel and aizenman s index of managed float abstract the large literature on the optimum intensity of foreign exchange market intervention contains two different characterizations of the central bank s policy choice variable most of the literature focuses on the central bank s intensity of intervention in the foreign exchange market and its implications for the domestic money supply an important contribution by frenkel and aizenman 1982 however carries out its analysis in terms of a so called index of managed float this note clarifies the relation between these policy measures by deriving the frenkel aizenman index from a standard specification of financial market equilibrium

physicians choices of specialty location and mode a reexamination within an interdependent decision framework in this paper physicians decisions regarding the specialty community size and mode of their first practices are analyzed in a simultaneous decision model using a nested logit specification physicians face a choice set consisting of eight specialties seven community sizes and three practice settings data come from the longitudinal survey of the class of 1960 income is found to be statistically significant and the average income elasticity is 1 05 which is considerably larger than previous estimates however the elasticity estimate is very sensitive to the assumed decision process a series of policy simulations are then performed to estimate the effect of specified income based policies on the predicted distribution of physicians across specialties community sizes and modes

devaluation and liberalization in the presence of tariff and quota restrictions an equilibrium model abstract the purpose of this paper is to examine and compare the effects of devaluation and trade liberalization policies on a monetary economy which uses quotas in contrast to an economy which uses tariffs this is done in a general equilibrium framework the paper also investigates the reasons for coupling liberalization policies with a devaluation

optimal foreign exchange rate policy for a small open economy abstract this paper examines optimal exchange rate policy for a small open economy which faces temporary and pemanent real and nominal disturbances it demonstrates that exchange rate stabilization is desirable if most diturbances are nominal if most disturbances are real then stabilization should be greater 1 the greater the fraction of exchange rate variance accounted for by permanent disturbances 2 the greater the information available to firms in setting the wage 3 the greater the fraction of exchange rate variance attributed to domestic productivity shocks compared with foreign relative price shocks and 4 the more elastic is labor supply

determinants of exchange rate regime switching abstract exchange rate policy in many emerging markets shifts between a stronger and weaker commitment to peg this observation raises the following questions which we address in our paper does intervention policy exhibit switching and if so what causes policy to shift the theoretical literature increasingly points to the critical importance of financial fundamentals chinn m d kletzer k m 2001 imperfect information domestic regulation and financial crises in glick r moreno r spiegel m eds financial crises in emerging markets cambridge university press cambridge pp 196 237 dooley 2000 chang r velasco a 2005 monetary policy and the currency denomination of debt a tale of two equilibria kennedy school of government working paper series harvard university cambridge massachusetts among others direct empirical validation to date is limited however although relevant intuitions come from duration and indicators literature kaminsky g l reinhart c m vegh c a 2004 when it rains it pours procyclical capital flows and macroeconomic policies nber macroeconomics annual national bureau of economic research inc domac i peria m s 2003 banking crises and exchange rate regimes is there a link journal of international economics 61 41 72 tudela m 2004 explaining currency crises a duration model approach journal of international money and finance 23 799 816 we use a panel of quarterly data starting 1985 through 2004 for 14 countries mainly from latin america and east asia and adopt a novel two step empirical strategy first we apply regime switching methods to two simple indices of central bank exchange rate policy this generates likelihoods of high and low intervention in the second step we establish the variables that determine these probabilities we find strong evidence that the economy s balance sheet and economic performance determine the likelihood of switching in the exchange rate regime specifically an increase in reserve currency debt relative to assets raises potential capital losses from devaluation and reduces the probability of switching to a low intervention regime as does a decline in growth the purpose here is not to present an alternative regime classification levy yeyati e sturzenegger s 2005 classifying exchange rate regimes deeds vs words european economic review 49 1603 1635 reinhart c m rogoff k 2004 the modern history of exchange rate arrangements a reinterpretation quarterly journal of economics available at http www puaf umd edu faculty papers reinhart papers htm but to establish the relative importance of different constraints on the central bank which has policy implications the empirical approach and specification is flexible to whether intervention is discrete or gradual and to whether or not the central bank sterilizes

incomplete exchange rate pass through and imperfect competition the effect of local production extent to which product prices respond to exchange rate induced changes in costs this research has revealed that the percentage change in the prices of imported goods is smaller than the percentage change in exchange rates of the exporting country and that price responses differ across destinations a phenomenon termed pricing to market this finding may indicate market imperfections in international trade for example those that may arise in the case of segmented markets alternatively these empirical facts may reflect the sale of products whose production occurs in multiple locations when firms are able to shift their production across borders or alter their location of sourcing their costs will not change one for one with home country exchange rate movements and therefore their prices are unlikely to change one for one with exchange rate movements however this possibility has not been addressed empirically in the literature on pricing to market this study contributes to the literature by estimating exchangerate pass through while controlling for local production in the destination market we focus on the u s automobile market and the pricing of u s and japanese firms in particular for several reasons first we have product level information on pricing and content and there is substantial variation in destination country production across products and over time second existing studies have found evidence of pricing to market and incomplete exchange rate passthrough in automobile markets providing a useful comparison for our results and making this an appropriate market in which to study the effect of local production on exchange rate passthrough consistent with other studies we find that japanese firms partially pass through japanese cost changes to their u s customers in addition we find that this partial pass through characterizes not only japanese cost shocks but cost shocks that these japanese firms experience in their u s production this finding persists in a sample that includes both u s and japanese firms automobile firms generally do not pass through cost shocks in their entirety our data also show that those japanese auto

on the dynamic non equivalence of tariffs and quotas in the monetary model of the balance of payments abstract this is a reply to a comment by daniel fried and tower 1984 regarding the observation in blejer and hillman 1982 that the adjustment mechanism of the monetary model of the balance of payments provides another instance of tariff quota asymmetry

openness relative prices and macro policies abstract this paper analyzes the role of relative prices in the conduct of wage indexation monetary policy and exchange rate policy in a small economy producing traded and nontraded goods under a managed float exchange rate regime it is shown that the beneficial effect of using relative prices in addition to aggregate prices as indicators for the conduct of the above policies increases with openness the response of policies to relative prices rises with openness and has dampening effects on the volatility of deviations from purchasing power parity

stabilization with wage indexation and exchange rate flexibility abstract this survey examines the role of wage indexation and exchange rate policy in dampening fluctuations in output around its target level it is demonstrated that the appropriate choice for wage indexation and exchange rate flexibility is highly sensitive to the nature and the relative importance of the shocks impinging upon the economy as well as to the relevant parameters in the economy moreover the question of the desired flexibility of the exchange rate should be studied in the context of wage indexation and vice versa this interdependence raises the possibility of both policies being complements or substitutes to each other depending on the number of shocks that perturb the economy

measuring the degree of exchange market intervention in a small open economy abstract in this article i introduce an index of intervention activity which can be calculated on the basis of observed data this intervention index measures intervention activity as the proportion of exchange market pressure relieved by exchange market intervention the properties of the intervention index are established analytically using a model of a small open economy with rational expectations the index is used to calculate measures of bilateral and multilateral intervention for canada over the period 1975 1990

the response of exchange rate pass through to market concentration in a small economy the evidence from korea this paper finds that domestic market concentration in korea a small country systematically affects pass through of individual industries the estimates suggest that exchange rates are only partially passed on to import prices in korea the evidence implies that imperfect competition is relevant for the exchange rate pass through even in a small economy this finding has important implications for issues such as inflationary effects of depreciation and the effect of trade liberalization

the effect of the minimum wage on the fast food industry using a longitudinal survey of fast food restaurants in texas the authors examine the impact of recent increases in the federal minimum wage on a low wage labor market less than 5 of fast food restaurants were using the new youth subminimum wage in july august 1991 even though the vast majority paid a starting wage below the new hourly minimum wage immediately before it became effective although some restaurants increased wages beyond the level needed to comply with higher minimum wages in both 1990 and 1991 those federal minimum wage increases greatly compressed the distribution of starting wages in the texas fast food industry two findings at variance with conventional predictions are that 1 employment increased more in those firms likely to have been most affected by the 1991 minimum wage increase than in other firms and 2 price changes were unrelated to mandated wage changes

product market evidence on the employment effects of the minimum wage we infer the employment response to a minimum wage change by calibrating a model of employment for the restaurant industry whereas perfect competition implies that employment falls and prices rise after a minimum wage increase the monopsony model potentially implies the opposite we show that estimated price responses are consistent with the competitive model we place fairly tight bounds on the employment response with the most plausible parameter values suggesting that a 10 increase in the minimum wage lowers low skill employment by 2 4 and total restaurant employment by 1 3

consequences of unintended food policies food price dynamics subject to the israeli palestinian conflict abstract israel s imposition of military security measures in the palestinian territories as a consequence of the long lasting violent conflict between them has negative economic effects on all parties concerned one crucial outcome is the limited ability to carry out trade which brings about welfare losses conflict induced policies such as security measures can result in sizable unintended externalities that shape the markets of and the trade in food we assess the dynamics of daily wholesale prices of food produced in israel and the west bank that is traded between them and is therefore subject to restrictions on movement to do so we suggest a regime switching cointegration model which is estimated using a novel extension of the johansen estimation method we find that the two major wholesale markets of the two regions are integrated with regard to these main trading products deviations from price equilibria are quickly adjusted the model suggests that movement restrictions temporarily cut off markets from each other implications of conflict induced closures for welfare depend on the direction of trade and are harming both palestinian and israeli consumers

minimum wage increase and firm productivity evidence from the restaurant industry abstract the purpose of this paper is to examine the effects of increasing the federal minimum wage on productivity in the restaurant industry based on the equity theory and fair wage hypothesis this study empirically investigated the relationship between the federal minimum wage and restaurant productivity the results revealed that increasing the federal minimum wage immediately enhances restaurant productivity for up to two years the results further indicated that both full service restaurants and low wage restaurants benefit from the positive effect while there is no significant effect on limited service restaurants and high wage restaurants the results suggest that restaurants should cope with minimum wage policies by focusing on implementing initiatives that can maximize enhanced work efforts and productivity more importantly the results further highlight that restaurants should consider either continuously raising wage levels or raising them every two years to consistently obtain enhanced motivation and productivity

anticipated effects of the minimum wage on prices there is little empirical evidence on the effect of minimum wage increases on prices particularly for developing countries this paper provides estimates of this effect using monthly brazilian household and firm data over 18 years as minimum wage increases in brazil sare large and frequent they have a potentially important impact on aggregate prices rational agents in anticipation of such price effects may take minimum wage increases as a signal for future price and wage bargains we find that the minimum wage raises overall prices not only on the month of the increase but also in the two months prior to the change as well as after the change

the transmission of disturbances under alternative exchange rate regimes with optimal indexing the paper develops a general stochastic macroeconomic model that can be used to study the international transmission of disturbances under four alternative exchange rate systems uniform flexible exchange rates uniform fixed exchange rates and two versions of two tier exchange rates the analysis makes two general points first one cannot assume stability of structure when assessing the consequences of alternative exchange rate regimes for example the slope of the aggregate supply curve and the rationally formed expectations in the asset markets can respond dramatically to the government s choice of exchange rate regime second exchange rate regimes that provide full insulation from foreign disturbances may nevertheless be inferior to other regimes in terms of their ability to maximize social welfare

a survey of the effects of the minimum wage on prices abstract it is well established in the literature that minimum wage increases compress the wage distribution firms respond to these higher labour costs by reducing employment reducing profits or raising prices while there are hundreds of studies on the employment effect of the minimum wage there are merely a handful of studies on its profit effects and only a couple of dozen studies on its price effects furthermore a comprehensive survey on minimum wage price effects is not available in the literature given the policy relevance of this neglected issue in this paper we summarize and critically compare the available evidence on the effects of minimum wages on prices

the spending and debt response to minimum wage hikes abstract immediately following a minimum wage hike household income rises on average by about 250 per quarter and spending by roughly 700 per quarter for households with minimum wage workers most of the spending response is caused by a small number of households who purchase vehicles furthermore we find that the high spending levels are financed through increases in collateralized debt our results are consistent with a model where households can borrow against durables and face costs of adjusting their durables stock jel d12 d14 d91 j38

floating exchange rates expectations and new information abstract this paper analyzes the relationship between forward exchange rates future spot rates and new information a stochastic model of exchange rate determination is used to formally show how unanticipated changes in the exchange rate determinants or news affect the spot rate the empirical analysis indicates that new information plays an important role in explaining the market forecasting error or difference between the spot rate and the forward rate determined in the previous period

employment effects of the new german minimum wage evidence from establishment level microdata the authors present the first evidence on the consequences of the new statutory minimum wage in germany which was implemented on january 1 2015 using the iab establishment panel they identify e

interregional migration and interindustry labour mobility in canada a simultaneous approach this paper argues that interindustry labour mobility and interregional migration are simultaneously determined processes it estimates a bivariate probit model of migration and mobility using data for canada and concludes that the interindustry mobility of labour is dominated by the availability of employment hours and that wage differentials are a statistically significant but small determinant of interregional migration since interindustry mobility is much larger in magnitude than interregional migration quantity constraints in labour markets are of central importance to the adaptive capacity of the economy summary in fre excerpt

commodity taxation and imperfect competition a note on the effects of entry abstract this paper looks at the effects of allowing the number of firms to vary in seade s model of oligopoly and taxation we show that the normative and positive consequences of a specific commodity tax are affected by entry in significant ways

optimal and time consistent exchange rate management in an overlapping generations economy abstract this paper analyzes exchange rate management in a simple overlapping generations model this framework is used to evaluate alternative policies in terms of their implications for the welfare of individuals in the economy and for generating seigniorage when the chief concern is to provide a desirable store of value a policy of fixing the exchange rate does better when shocks are primarily of domestic origin while floating becomes more desirable when foreign shocks predominate the same is true when the government is concerned with maximizing total expected seigniorage although more intervention is typically desirable when generating seigniorage is the major objective when seigniorage concerns are paramount and when the monetary authority cannot establish a reputation for conducting monetary policy in a way that makes the currency a desirable store of value a national currency may not be viable in the absence of exchange controls such controls may be justified in this situation

the pass through of minimum wages into us retail prices evidence from supermarket scanner data this paper estimates the pass through of minimum wage increases into the prices of us grocery and drug stores we use high frequency scanner data and leverage a large number of state level increase

the local aggregate effects of minimum wage increases using variation in minimum wages across cities and controlling for differences in business cycle factors and long run local economic trends we find that following minimum wage increases both prices and nominal spending rise modestly these gains are larger for certain subcategories of goods such as food away from home and in locations where low wage workers account for a larger share of employment further minimum wage increases are associated with reduced total debt among households with low credit scores higher auto debt and increased access to credit

how firms construct price changes evidence from restaurant responses to increased minimum wages we use price data underlying the consumer price index to assess how restaurants whose prices are generally quite sticky respond to minimum wage increases aggregate prices rise quickly by amounts reflecting the increase in costs and they rise more among fast food outlets and in low wage locations but restaurants do not construct price increases by raising all their prices by amounts reflecting the increase in wages instead they raise only some prices but by larger amounts prices at cluster points are less likely to be changed and prices that were recently increased decreased are less more likely to be raised

global inequities and emissions in western european textiles and clothing consumption abstract rising demand for cheaper textiles and clothing in western europe is well documented as are changes in the textiles and clothing industry s globalised production structure we apply a sub systems global multi regional input output accounting framework to examine the sustainability implications of meeting western european demand for textiles and clothing goods between 1995 and 2009 our framework estimates environmental and socio economic impacts of consumption in a consistent manner and shows where these occur both geographically and in the value chain the results demonstrate that western european textiles and clothing consumption remains dependent on low cost labour from brazil russia india and china bric principally in the textiles and clothing and agricultural sectors conversely we show that the wage rate for bric workers in the global value chains serving western european textiles and clothing consumption has risen over time but remains low relative to the wage rate paid to western european workers likewise we find that profits are increasingly generated within bric and that they are now at comparable levels to those generated in western europe we find a slight overall decrease in the amount of carbon emitted in the production of textiles and clothing goods for western europe between 1995 and 2009 however the trend is not linear and the importance of different underlying drivers varies over the timeseries we conclude by discussing the implications of these results for a more sustainable future for western european textiles and clothing consumption

money stock targeting and money supply an intertemporal optimization approach with an application to canada we propose a model of the short term behaviour of the monetary authorities of a small open economy that is willing to stabilize to some extent its bilateral exchange rate vis a vis a dominant partner the optimal money supply strategy is derived using intertemporal optimization arguments in a rational expectations environment the model is formulated so as to avoid the time inconsistency problem stressed by kydland and prescott 1977 it allows econometric estimation of the optimal money supply rule as well as of the parameters of the intertemporal utility function and of the function that defines the intermediate target money stock the model is successfully estimated on canadian quarterly data using maximum likelihood techniques copyright 1988 john wiley sons ltd

dynamics of monetary intervention under managed floating abstract this paper studies the dynamics of the money stock in the presence of official intervention under fixed exchange rates and certain types of managed floating in response to an external disturbance the long run change in the stock of domestic currency is found to be the largest in magnitude under fixed rates however in the context of the present model managed floating may entail relatively larger short run movements this is the case when foreign disturbances originate in the commodity market and under certain conditions even if they originate in the asset market

do minimum wage price effects hurt the poor more minimum wage legislation is potentially a powerful policy tool to help alleviate poverty in developing countries this is especially the case when the detrimental employment effects are small however of critical importance is whether and to what extent minimum wage increases will generate price effects that might adversely affect the poor this might occur firstly if the poor consume a lot of goods produced in sectors dominated by minimum wage workforces secondly this may occur if minimum wage increases raise overall prices as the poor disproportionately suffer from inflationary costs in this paper we estimate minimum wage price effects for brazil using monthly household and firm data over nearly two decades we find that minimum wage increases significantly raise overall prices in brazil furthermore we examine the price effect of the minimum wage separately on poor and rich consumers the poor experience inflation rates three times higher that the latter in the immediate aftermath of a minimum wage increase with the differential effect diminishing over time

exchange rate pass through and the effects of tariffs on economic performance and welfare abstract we develop a stochastic two country general equilibrium model where prices are determined under conditions of monopolistic competition to examine the macroeconomic and welfare effects of tariffs on the world economy under alternative nominal rigidities producer currency pricing pcp and local currency pricing lcp where the exchange rate pass through is absent we find that the significance of export pricing for the effects of tariffs depends critically upon whether tariffs are anticipated or unanticipated in the former case both pcp and lcp yield the same outcome as do perfectly flexible prices although the mechanism whereby this is achieved is different in the latter case the effects of unanticipated permanent tariffs are highly sensitive to the pricing scheme adopted by exporters leading to a wide range of conflicting outcomes involving tradeoffs among key parameters

last place aversion evidence and redistributive implications we present evidence from laboratory experiments showing that individuals are last place averse participants choose gambles with the potential to move them out of last place that they reject when randomly placed in other parts of the distribution in modified dictator games participants randomly placed in second to last place are the most likely to give money to the person one rank above them instead of the person one rank below last place aversion suggests that low income individuals might oppose redistribution because it could differentially help the group just beneath them using survey data we show that individuals making just above the minimum wage are the most likely to oppose its increase similarly in the general social survey those above poverty but below median income support redistribution significantly less than their background characteristics would predict jel codes h23 d31 c91

on the viability of monetary unions abstract this paper contrasts the notion of optimality with that of viability of monetary unions and attempts to provide a positive analysis of the latter by dwelling upon herbert simon s work on models of bounded rationality a macro model developed by frenkel and aizenman is appended to the above theoretical framework and it is shown that viability is strictly related to certain specific properties of the economy