the dynamic cost and persistence of asset inequality in an agrarian economy abstract a growing literature suggests that asset inequality can be economically costly in the presence of agency costs that constrain labor and capital markets unclear in this literature is whether asset markets and optimal individual accumulation of self finance capacity suffice to eliminate costly inequality over time this paper uses numerical dynamic programming methods to explore this question with a model of an initially inegalitarian agrarian economy while an egalitarian asset distribution emerges over time the process involves sufficiently great productivity losses along the way that a redistributive policy could improve on the market s performance by both equity and efficiency criteria

branching and competition in the european banking industry in this study branching costs and competitiveness of european banks are measured by fitting a monopolistic competition model to a representative sample drawn from nine eec banking industries in the period from 1990 to 1996 in the theoretical model banks decide strategically the size of their branching network anticipating the degree of competition faced on interest rates from the structural equations of the model an econometric test is derived in order to measure branching costs and degree of competition in banking services the empirical analysis captures their changing over time together with the impact of various european directives aiming at deregulating the banking industry furthermore the study shows persistence of segmentation acoss eec banking industries

state dependent pricing and the dynamics of money and output standard macroeconomic models of price stickiness assume that each firm leaves its price unchanged for a fixed amount of time we present an alternative model in which the pricing decision depends on the state of the economy we find a method of aggregating individual price changes that allows a simple characterization of macroeconomic variables the model produces a positive money output correlation and an empirical phillips curve in addition the impact of monetary shocks depends crucially on the current level of output which points to a natural connection between state dependent microeconomics and state dependent macroeconomics i introduction there is a long tradition in macroeconomics of attributing the real effects of nominal demand shocks to nominal price stickiness in this view if there is no change in prices when nominal demand rises then quantities must bear the burden of adjustment hence nominal price rigidity provides the friction needed for nominal demand shocks to be transmitted to the real economy standard models of this transmission mechanism such as fischer 1977 and taylor 1980 are based on the assumption that each firm leaves its price unchanged for a fixed amount of time the main reason for considering such time dependent pricing rules is their analytic tractability constraining firms to adjust their prices at prespecified times both simplifies the derivation of equilibrium strategies and allows the use of powerful time series techniques to analyze aggregate dynamics the main disadvantage of the timedependent approach is that between price adjustments firms are not allowed to respond even to extreme changes of circumstance this makes it difficult to know whether the qualitative effects of money in these models are the result of nominal rigidities per se or of the exogenously imposed pattern of price changes an alternative approach to modeling price stickiness is to allow the price setting decision to depend on the actual state of the

location and competition in retail banking abstract we investigate the impact of banking deregulation during the 1990s on consumer welfare we estimate a spatial model of consumer demand for retail bank deposits that explicitly accounts for consumer disutility from distance traveled this is important given the substantial changes in banks branch networks observed in the data our model indicates that cross price elasticities between banks whose branches are close to consumers close banks are larger than those between far banks and more than double the cross price elasticity of close banks with respect to far banks we distinguish between thrifts and other banks and find that within thrift competitive effects are stronger than within bank effects or those between thrifts and banks we use our estimates to predict the effect of changes in market structure on consumer welfare following the branching deregulation of the riegle neal act of 1994 our results indicate that the median household gained around 60 per year from the changes approximately two thirds of the gains come from within market changes in market structure the gains were greater in markets with high initial numbers of banks than elsewhere

the behavior of prices and inflation an empirical analysis of disaggregat price data this paper analyzes the effects of inflation on the dispersion of prices as well as other aspects of price behavior using disaggregated data on prices of foodstuffs in israel during 1978 84 we find that the effect of expected inflation on intramarket price variability is stronger than the effect of unexpected inflation we show that even in times of high inflation price quotations are not trivially short and price changes are not synchronized across firms these facts taken together confirm that there is some staggering in the setting of prices we find that the distribution of real prices is far from being uniform as many menu cost based models assume or conclude in fact as inflation increases to very high levels this distribution is not even symmetric when the annual inflation rate reaches 130 percent there are equal chances of finding real prices above or below the market average but upward deviations in the real price are further away from zero than downward ones furthermore as the annu

some evidence on lump sum versus convex costs of changing prices 2 two models in which price stickiness results from price adjustment costs are tested one an s s pricing model assumes lump sum adjustment costs and predicts firms will make relatively large infrequent price changes the other assumes convex adjustment costs and predicts frequent partial price adjustments survey data of firms price behavior reveal patterns consistent with the s s model however many of the patterns are also consistent with partial adjustment rules although the high percentage of firms which fix prices for a quarter or more casts doubt on the plausibility of the partialadjustment hypothesis i introduction in new keynesian economics price stickiness arises not because of wage rigidity so much as because either the gains to individual firms from changing prices are negligible or the costs of doing so deter full and immediate price changes as a result nominal shocks which affect demand for the firm s product as well as real shocks give rise to changes in output the nature and the timing of the effects of demand changes such as those initiated by monetary policy thus depend on how individual firms respond to the signals they receive sticky price models based on costs of price adjustment take at least two different forms one assumes a lump sum cost to changing prices which leads to predictions that firms generally keep prices fixed and make infrequent relatively large price changes the other assumes convex adjustment costs and leads to the prediction that firms make relatively small and frequent partial adjustments toward a target level evidence drawn from a series of surveys conducted by the national federation of independent business will be used to test the predictions from these two types of models while the data do not allow a definitive test between the two models the available evidence supports the model with lump sum costs of changing prices with the important proviso that there be substantial heterogeneity in the relative costs to firms of making price changes so that the frequency and size of changes vary considerably across firms ii s s rules with lump sum costs of price changes how frequently should a firm change its price when a change takes place how large should it be sheshinski and weiss 1977 and barro 1972 provided the first answers to these questions in their models an individual firm incurs a lump sum cost when changing its nominal price and the firm s profits depend on its real price where real price is defined as the firm s nominal price divided by an index of the prices of all other firms in the economy sheshinski and weiss assume that the firm tries to maximize the present value of its real profits their solution amounts to what is known in the optimal inventory literature as an s s rule in which s s units are ordered when stocks run down to s as applied to a pricing rule when prices rise elsewhere in the economy the firm s real price falls to a lower bound s at which point the firm raises its nominal price so that its real price jumps to s they prove that a more rapid general inflation rate calls for a lower s and higher s furthermore subject to a monotonicity condition a higher general inflation rate calls for a shorter time between price changes after showing a number of numerical examples sheshinski and weiss report that numerical experiments with a quadratic profit function give high intervals between price changes 1 2 years even with very low adjustment costs 1977 300 when the profit function is flat in the neighborhood of the profit maximizing real price there is little benefit from changing price a similar argument appears in the menu cost explanation for real effects of nominal disturbances in the absence of private incentives for individual price changes there may be real aggregate effects of nominal disturbances for example see mankiw 1985 akerlof and yellen 1985 kuran 1986 blanchard and kiyotaki 1987

endogeneity in brand choice models applications of random utility models to scanner data have been widely presented in marketing for the last 20 years one particular problem with these applications is that they have ignored possible correlations between the independent variables in the deterministic component of utility price promotion etc and the stochastic component or error term in fact marketing mix variables such as price not only affect brand purchasing probabilities but are themselves endogenously set by marketing managers this work tests whether these endogeneity problems are important enough to warrant consideration when estimating random utility models with scanner panel data our results show that not accounting for endogeneity may result in a substantial bias in the parameter estimates

a probabilistic choice model for market segmentation and elasticity structure marketing scholars commonly characterize market structure by studying the patterns of substitution implied by brand switching though the approach is useful it typically ignores the destabilizing

money and economic activity inventories and business cycles abstract incomplete information is a necessary condition for any real effects produced by monetary impulses an alternative to the local global inference problem is explored in this paper agents are confronted with permanent and transitory shocks even with full knowledge about the stochastic structure their best perception at any particular time will usually be erroneous prices for each period are set at the beginning of the period on the basis of market conditions the realization of the shock process thus creates a short run disequilibrium absorbed by inventory adjustments this adjustment translates perceived transitory monetary shocks into serially correlated output movements the analysis proceeds within the context of rational expectations it offers a generalization of equilibrium analysis in two respects prices are always in equilibrium relative to perceived conditions but they do not reflect all ongoing shocks quantity adjustments reflect the perceived transitory shocks the framework used involves moreover a stock flow interaction operated by inventory adjustments the stock flow interaction imposes at any time a future expected adjustment path for price level and quantities to the system s unique stock equilibrium a major implication of the analysis resolves a puzzle experienced in a recent paper by robert hall it reconciles intertemporal substitution with lagged effects of monetary impulses it also reconciles small and inconclusive cyclic movements in real wages with the occurrence of production function and large variations in unemployment lastly the nature of the inference problem determined by the pattern of incomplete information produces serially correlated movements conditioned on large permanent shocks

non price strategic behavior the case of bank branches abstract we perform an empirical study of banks branching decisions as a strategic non price variable in an oligopolistic setting using panel data of banks from norway we find clear evidence that banks act strategically in their branching decisions taking into consideration the future response from rival banks the analysis is applied to a unique data set which covers the entire banking sector during both pre and post banking crisis periods where very different types of conduct are found in each of these periods both for banks and borrowers moreover we find that a bank specific branch network does not confer externality on other banks as a result branch network affects only market shares but not market size

multimarket competition in banking with an example from the portuguese market abstract banks typically have more than one branch and their activities usually span over several markets this multilocational nature of banks generates equilibrium price dispersion the paper proposes a spatial competition model to explain price differences across banks in the deposits market the model allows to separate two different sources of observed market power collusion in the industry and product differentiation induced by location in local markets an application to portuguese commercial banking is reported as an illustration

origins of exploitation and class value theory of pre capitalist economy both the class position of agents and their status as exploiters or exploited is endogenously determined as they optimize against asset constraints which limit their capacity to produce revenue the class exploitation correspondence principle cecp asserts that class and exploitation status are related in a classical way it is further shown that the class structure associated with a labor market can be generated isomorphically by a credit market demonstrating the functional equivalence of these markets morever these results hold in models of precapitalist subsistence economy showing that the phenomena of marxian exploitation and class are applicable in economic mechanisms other than capitalist ones the possibility for a general theory of exploitation is thereby suggested

the rationality and price effects of u s department of agriculture forecasts of oranges this article examines the effect of public information on the orange juice market we investigate the rationality information content and price effects of u s department of agriculture forecasts of the production of oranges u s department of agriculture forecasts are found to be unbiased and efficient the first forecast contains the most new information and subsequent reports become valuable only when freezes occur significant price movements occur in response to announced production in both florida and california however the majority of price variations cannot be explained by these movements in supply

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

dynamic branching and interest rate competition of commercial banks evidence from hungary abstract i supplement previous models of bank competition by incorporating the endogenous branching choices of commercial banks i apply a dynamic structural model of banks branching and interest rate choices to a unique bank level dataset on hungarian commercial banks during 2004 2007 i find that banks charge a premium in interest rates for relative branch network dominance and banks with relatively smaller networks are less likely to close branches i present significant and robust estimates of branch setup costs and scrap values and discuss the potential use of branching restrictions as regulatory tools to alter lending rates and consumer surplus

low inflation pass through and the pricing power of firms abstract recently there has been a significant decline in the degree to which firms pass through changes in costs to prices a decline that is frequently characterized as a reduction in the pricing power of firms the decline appears to be associated with the decline in inflation in many countries the decline has important implications for monetary policy because it affects both forecasts of inflation and the effects of changes in monetary policy on inflation some have argued that the decline in pricing power helped to keep inflation low in the face of apparently strong demand pressures in the united states in the late 1990s this paper puts forth the view that the decline in pass through or pricing power is due to the low inflation environment that has recently been achieved in many countries first a microeconomic model of price setting is used to show that lower pass through is caused by lower perceived persistence of cost changes evidence is then presented showing that inflation is positively correlated with persistence of inflation suggesting that the low inflation itself has caused the low pass through an economy wide model consistent with the micromodel is then presented to illustrate how such changes in pricing power affect output and inflation dynamics in favorable ways but can disappear quickly if monetary policy and expectations change

investigating heterogeneity in brand preferences in logit models for panel data in analyzing panel data the issue of heterogeneity across households is an important consideration if heterogeneity is present but is ignored in the analysis it will result in biased and inconsi

asymmetric information and the structure of the banking industry abstract we analyze the effects of informational asymmetries on the market structure of the banking industry in a multi period model of spatial competition in the process of lending incumbent banks gather proprietary information about their clients acquiring an advantage over potential entrants we show that these informational asymmetries are important determinants of the industry structure and of banks strategic behavior contrary to traditional models of horizontal differentiation the steady state equilibrium is characterized by a finite number of banks even in the absence of exogenous fixed costs in addition less concentrated industry structures may be associated with higher interest rates

inflation debt and indexation these twelve essays cover topics on the frontier of indexation and practice an often proposed and debated tool of economic policy they range from highly theoretical discussions to practical experiences in brazil and europe rudiger dombush is ford international professor of economics at mit mario henrique simonsen is director of the postgraduate school of economics getulio vargas foundation rio de janeiro and former minister of finance and planning brazil

demand fluctuations in the ready mix concrete industry i investigate the role of demand shocks in the ready mix concrete industry using census data on more than 15 000 plants i estimate a model of investment and entry in oligopolistic markets these estimates are used to simulate the effect of eliminating short term local demand changes a policy of smoothing the volatility of demand has a market expansion effect the model predicts a 39 increase in the number of plants in the industry since bigger markets have both more plants and larger plants a demand smoothing fiscal policy would increase the share of large plants by 20 finally the policy of smoothing demand reduces entry and exit by 25 but has no effect on the rate at which firms change their size

imperfect competition in bank retail markets deposit and loan rate dynamics and incomplete pass through this paper examines determinants of pass through from the market interest rate to bank retail deposit and loan rates a dynamic adjustment cost model with imperfect competition implies that these rates depend on own lagged values and on lagged current and expected future values of the security rate greater competition in retail markets reduces the impact of lagged and expected rates on current retail rates while raising the effect of the current security rate yielding greater pass through these results have important implications for both the specifications used in empirical work and biases introduced into estimates of pass through effects

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

modeling multiple sources of heterogeneity in multinomial logit models methodological and managerial issues we offer a framework to specify and estimate various sources of heterogeneity in multinomial logit brand choice models we let each brand specific intercept and each parameter of the explanatory variable vector vary randomly across households in addition we distinguish loyal households from the rest our results suggest that incorporating multiple sources of heterogeneity improves the model fit and suggests higher impact of marketing mix elements on brand choice we highlight the importance of incorporating multiple sources of heterogeneity the model we implement yields valuable managerial insights

branch banking and the geography of bank pricing we show that bank branching tends to mitigate localized market power by broadening the geographic scope of competition among banks even though branch banking allows banks to differentiate themselves through their choices of branch locations banking services at peripheral locations will be priced more competitively when those locales are served by branch networks we develop a theoretical model in support of this view and offer empirical evidence

economic fluctuations market power and returns to scale evidence from firm level data recent research on aggregate fluctuations coupled with ongoing work in industrial organization has renewed interest in the existence magnitude and cyclical pattern of market power and the extent of increasing returns to scale by exploiting restrictions from dynamic theory and information from financial markets we present a framework for generating quantitative evidence on market power and returns to scale tailoring the econometric model to firm level panel data we calculate the percentage differential between price and marginal cost the lerner index in terms of the parameters from the econometric system results for firms in eleven industries indicate that there is a great deal of heterogeneity in the extent of market power industries with significantly positive lerner indices tend to have substantial increasing returns in the production technology we find that there is only a modest relation between our estimated lerner indices and traditional measures of market power and that when market power varies temporally it is usually procyclical thus variations in the markup of price over marginal cost may help dampen aggregate economic fluctuations

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

new classical macroeconomics a sympathetic account the essential ingredients of new classical nc macroeconomics are 1 adoption of the equilibrium approach to model construction 2 acceptance of the natural rate hypothesis 3 a belief in the superiority of policy based on rules and 4 a strong skepticism regarding the empirical relevance for macroeconomic issues of rational bubble phenomena recent keynesian analyses stressing the interaction of monopolistic competition with pricechange menu costs are not incompatible with the nc approach but have not been highly successful a nc policy strategy that recognizes current weaknesses in macroeconomic understanding is described and rationalized and an analytical basis for nc skepticism regarding bubbles sunspots etc is outlined

optimal pricing with costly adjustment evidence from retail grocery prices in many theoretical models it is assumed that there are costs associated with adjusting prices in this paper the existence type and magnitude of such costs are investigated empirically a discrete choice dynamic programming model that nests fixed and variable costs is developed and econometric estimates of the adjustment cost function are obtained the data used to implement the model consist of weekly retail prices and sales of three brands of saltine crackers sold by four chains of grocery stores in a small u s town the study has several distinguishing characteristics first the data are highly disaggregate at the level of brand and store second variables are sampled at weekly intervals third the model nests fixed and variable adjustment costs and can therefore determine their relative importance finally the discrete choice model is both structural and dynamic

intermediate goods and business cycles implications for productivity and welfare this paper presents an aggregate demand driven model of business cycles that provides a new explanation for the procyclicality of productivity and simultaneously predicts large welfare losses from monetary nonneutrality the key features of the model are an input output production structure imperfect competition countercyclical markups and for some results state dependent price rigidity true technical efficiency is procyclical even though production takes place with constant returns without technology shocks or technological externalities the paper has observable implications that distinguish it empirically from related work these implications are generally supported by data from u s manufacturing industries copyright 1995 by american economic association

spatial competition in the banking system localization cross subsidies and the regulation of deposit rates abstract the paper analyses a spatial competition model of the banking sector banks offer two kind of services deposits and credit and can either borrow or lend on the money market we investigate the consequences of the regulation of rates paid on deposits the main conclusions are as follows regulation first increases network size beyond social optimum in the long run it results in lower equilibrium credit rates because of increased competition secondly regulation generates tied sales contracts by which banks propose bundles of credit and deposit services tied sales in turn motivate the introduction of cross subsidies between the two activities the rent levied upon regulated deposits financing lower rates in the credit market finally it is shown that in a regulated environment the effectiveness of monetary policy is reduced in the sense that fluctuations of money market rates are less than fully transmitted in credit rates

class and exploitation in general convex cone economies abstract in this paper we examine what appropriate formulations for labor exploitation are in order to explain the emergence of class and exploitation status in capitalist economies given the well known controversy pertaining to plausible formulations for labor exploitation in joint production economies we propose an axiom axiom for labor exploitation le which every appropriate formulation of labor exploitation should satisfy using this axiom the necessary and sufficient condition for plausible formulations of labor exploitation is characterized to verify class exploitation correspondence principle cecp roemer 1982 according to this cecp no longer holds in general convex cone economies if the well known formulations of labor exploitation such as morishima 1974 and roemer 1982 chapter 5 are applied therefore we propose two new definitions of labor exploitation each of which verifies cecp

price dynamics in uk manufacturing a microeconomic view this paper examines the response of prices to cost and demand shocks in seventy five three digit and four digit industries in the united kingdom during the 1980s the results suggest that prices responded sluggishly to costs but virtually not at all to demand the short run response to materials and fuel shocks was much larger than the response to unit labor cost shocks and some of this difference persisted into the long run prices responded more sluggishly to cost and demand shocks when aggregate inflation was lower and finally pricing dynamics were more sluggish in less competitive industries copyright 1992 by the london school of economics and political science

quality perceptions and asymmetric switching between brands rotating indifference curves are used to induce an income effect that favors superior brands at the expense of inferior brands in a discrete choice model when calibrated on scanner panel data the model yields an objective measure of brand quality which is related to the rate of rotation the model also leads to asymmetric responses to price promotions where switching up to high quality brands is more likely than switching down the model is capable of nesting the standard logit model and is similar to a nested logit model when there exists clusters of brands of like quality the model is used to explore a product line pricing decision where profits are maximized subject to the constraint that consumer utility is maintained

the rigidity of prices this paper uses evidence on individual transaction prices to analyze price behavior the evidence shows that for many transactions pricesremain rigid for periods exceeding one year the rigidity of price ispositively correlated with industry concentration for several productsthe correlation of price changes across buyers is low the paper alsoinvestigates the relationship between price rigidity price change andthe length of time a buyer and seller have been doing business together the author interprets the evidence as emphasizing the importance of nonprice rationing and the inadequacy of models in whichprice movements alone clear markets copyright 1986 by american economic association

heterogeneity in price rigidity evidence from a case study using microlevel data we combine two data sets to study price rigidity the first consists of weekly time series of retail wholesale and spot prices for twelve products these time series contain two exogenous cost shocks we find that prices exhibit more rigidity in response to the second shock than the first the second data set consists of all publicly available information about the shocks content analysis of these information reveals that the first shock is larger and more persistent and the market has more information on it than the second we conclude therefore that prices are more flexible in response to cost shocks that are larger that are more persistent and on which market participants have more information

sticky prices in a dynamic oligopoly an investigation of s s thresholds abstract the strategic implications of costly price adjustment are investigated empirically i assume that managers are engaged in a state space game and ask if the dynamic considerations that arise when they condition their choices on the state cause prices to be more or less rigid than when players use more myopic pricing rules the answer to this question depends on a parametric specification of the problem that lends itself to empirical assessment the micro panel data used to investigate this issue consist of weekly prices sales costs and promotional activity for three brands of saltine crackers sold by four chains of grocery stores in a small us town i find that in this market strategic behavior exacerbates price rigidity the thresholds are wider and the time between changes is longer than would be observed in a more myopic setting

price flexibility in channels of distribution evidence from scanner data in this study we empirically examine the extent of price rigidity using a unique store level time series data set consisting of i actual retail transaction prices ii actual wholesale transaction prices which represent both the retailers costs and the prices received by manufacturers and iii a measure of manufacturers costs for 12 goods in two widely used consumer product categories we simultaneously examine the extent of price rigidity for each of the 12 products at both final goods and intermediate goods levels we study two notions of price rigidity employed in the existing literature i the frequency of price changes and ii the response of prices to exogenous cost changes we find that retail prices exhibit remarkable flexibility in terms of both notions of price rigidity i e they change frequently and they seem to respond quickly and fully to cost changes furthermore we find that retail prices respond not just to their direct costs but also to the upstream manufacturers costs which further reinforces the extent of the retail price flexibility at the intermediate goods level of the market in contrast we find relatively more evidence of rigidity in the response of manufacturers prices to cost changes this despite the fact that wholesale prices change frequently and therefore exhibit flexibility according to the first notion of price rigidity

what is new keynesian economics this research was supported by the national science foundation i am grateful to george williams for help with the data and to steven allen laurence ball olivier j blanchard timothy bresnahan charles calomiris dennis carlton robert chirinko russell cooper stanley fischer herschel grossman r glenn hubbard david laidler john leahy assar lindbeck n gregory mankiw david romer julio rotemberg dennis snower john taylor andrew weiss and two anonymous referees for comments on one or more earlier drafts i am also indebted to michael parkin and edmund s phelps for helping to establish the etymology of the phrase new keynesian

the dynamics of inequalities and unequal exchange of labor in intertemporal linear economies abstract introducing a concept of fairness of economic allocations namely exploitation as the unequal exchange of labor henceforth ue exploitation by generalizing roemer s 1981 1982a seminal models this paper aims to answer the following two questions in the context of an intertemporal economy with linear technology how is income and wealth inequality related or unrelated to the existence and persistence of ue exploitation what are the mechanisms driving the persistent existence of ue exploitation in growing economies agents are ue exploited resp exploiters if the amount of labor that they contribute to the economy is bigger resp smaller than the amount of labor received by them via their income it is proved first that ue exploitation is monotonically correlated to functional income inequality second it is shown that unless agents discount the future asset inequalities are necessary but not sufficient for the persistence of ue exploitation and capital accumulation leading to the disappearance of ue exploitation cannot be ruled out in equilibrium third it is shown that regardless of whether agents discount the future labor saving technical progress may yield sustained growth with persistent ue exploitation by keeping labor abundant relative to capital which restrains wages from rising unlike in models with differentiable production functions this mechanism does not rely on changes in the marginal productivity of inputs and it is entirely driven by the interaction between innovation and labor markets

do gasoline prices respond asymmetrically to crude oil price changes the authors test and confirm that retail gasoline prices respond more quickly to increases than to decreases in crude oil prices among the possible sources of this asymmetry are production inventory adjustment lags and market power of some sellers by analyzing price transmission at different points in the distribution chain the authors attempt to shed light on these theories spot prices for generic gasoline show asymmetry in responding to crude oil price changes which may reflect inventory adjustment effects asymmetry also appears in the response of retail prices to wholesale price changes possibly indicating short run market power among retailers