the impact of government size on economic growth a threshold analysis we examine the nature of the relationship between government size and economic growth and identify the optimal level of government size using a large dataset through a novel and very general non linear panel generalized method of moments approach we show that this relationship is statistically significant above and below the optimal level even after splitting our sample to developed and developing countries finally we find an asymmetric impact of government size on economic growth in both developed and developing countries around the estimated threshold

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

activity choice labor allocation and forest use in malawi this article examines the determinants of activity choice affecting forest use among low income households in malawi data from three villages are used to estimate a system of household labor share equations for maize production forest employment and non forest employment a system estimation approach is used to identify factors influencing the competing and synergistic livelihood strategies which households undertake at the forest margin results from constrained maximum likelihood estimation indicate heightened incentives to degrade forests when returns to forest use are high factors reducing forest pressure include favorable returns to non forest employment secondary education of the household head and wealth

oil price volatility and the asymmetric response of gasoline prices to oil price increases and decreases this paper analyzes the effect of volatility in oil prices on the degree of asymmetry in the response of gasoline prices to oil price increases and decreases several time series measures of the asymmetry between the responses of gasoline prices to oil price increases and decreases and several measures of the oil price volatility are constructed in all models the degree of asymmetry in gasoline prices declines with an increase in oil price volatility the results support the oligopolistic coordination theory as a likely explanation of the observed asymmetry and are not consistent with the standard search theory and the search theory with bayesian updating

testing for asymmetric pricing in the canadian retail gasoline market abstract this paper applies a threshold regression model to test for asymmetric pricing in the retail gasoline market in canada using weekly data for the period january 1990 to december 1996 we present results for 13 canadian cities for both premium and regular gasoline within the context of an error correction model we test for the presence of asymmetric price behaviour using average changes in crude prices as well as various lags for the change in crude as possible thresholds we are unable to find any evidence to support this view

symmetric pass through of tariffs and exchange rates under imperfect competition an empirical test abstract this paper examines the effect of tariffs and exchange rates on u s prices of japanese cars trucks and motorcycles in particular we test whether the long run pass through of tariffs and exchange rates are identical the symmetry hypothesis we find that this hypothesis is easily accepted in our sample we also find that the pass through relation varies across products ranging from about 0 6 for trucks to unity for motorcycles these coefficients have very different implications for trade policy we explain the results based on demand cost and institutional conditions in each industry

exchange rate pass through into import prices revisited what drives it a large sample of developed and emerging economies is utilized to investigate import exchange rate pass through panel models reveal that various economic aspects of the destination country can explain about one third of the total variation in pass through elasticities and the remaining variation comes largely in the form of unobserved country specific effects inflation exchange rate volatility openness and relative wealth play a clear role as drivers of emerging markets pass through whereas the output gap and protectionism appear influential more generally nonlinearity regarding large versus small changes in the exchange rate is quite pervasive our evidence challenges the widely held view that pass through has been universally falling in developed markets and that it is higher for emerging markets the economic drivers are shown to play a role as out of sample predictors of pass through the findings confirm pricing to market theories and have implications for the optimal conduct of monetary policy

an optimal path to extinction poverty and resource degradation in the open agrarian economy this paper constructs a model of the open agrarian economy in order to explore the tendency of many such economies to evolve along paths characterised by severe environmental degradation it pays special attention to the importance of commodity prices and the transfer system in determining agricultural activity levels in ecologically delicate systems

price pass through in us gasoline markets abstract using an error correction model in a seemingly unrelated regression framework we examine regional differences in the price pass through from crude oil spot prices to retail gasoline pump prices we show that regional differences do exist both in the short run and long run adjustment processes depending on the region a 1 per barrel change in crude oil prices is correlated with a change in retail gasoline pump prices somewhere between 2 36 and 2 58 we examine the presence of the rockets and feathers phenomenon using both single period coefficient tests and multiple period impulse response functions

retail price cycles and response asymmetry weekly retail gasoline prices in windsor ontario from 1989 to 1994 appear to respond faster to wholesale price increases than to decreases but exhibit a cyclic pattern inconsistent with a common explanation of response asymmetry i reconcile these observations through a model of price cycles prices on the downward portion of the cycle appear insensitive to costs compared with price increases supporting the theory that price decreases result from battles over market share this pattern resembles a faster response to cost increases than to decreases and the conclusion that asymmetry indicates a role for competition policy may be inappropriate jel classification l13 l71 cycles des prix de detail et reponse asymetrique les prix de detail hebdomadaires de la gazoline a windsor ont entre 1989 et 1994 semblent reagir plus vite aux accroissements qu aux chutes des prix de gros mais suivent un pattern cyclique qui ne semble pas consistant avec l explication traditionnelle en termes de reponse asymetrique l auteur reconcilie ces observations a l aide d un modele de cycle de prix les prix dans la portion descendante du cycle semblent insensibles aux variations de couts par comparaison avec les accroissements de prix ce qui supporte la theorie que les chutes de prix resultent de luttes pour les parts de marche le pattern ressemble a celui declenche par une reponse plus rapide aux augmentations qu aux chutes de couts et la conclusion qui voudrait qu on puisse attribuer le tout a l asymetrie des reponses et que donc une intervention de la politique de la concurrence s impose peut etre inappropriee

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

retail gasoline price dynamics and local market power using monthly data from the 48 contiguous states except nevada for the 1988 2002 period it is shown that retail gasoline prices respond faster to wholesale price increases than to equivalent wholesale price decreases moreover markets with high average retail wholesale margins experience a slower adjustment and a more asymmetric response since gasoline is the only variable input average margins in a state likely reflect the degree of retail market power this suggests that sticky prices and response asymmetries in the gasoline market are at least partially a consequence of retail market power

exchange rate behaviour are fundamentals important one of the most controversial issues in the international economics literature concerns the role of economic fundamentals in explaining exchange rate behaviour we interpret this controversy as having three different aspects the first concerns the relationship between exchange rates and fundamentals in the long run the second the usefulness of fundamentals in producing out of sample forecasts which dominate a random walk and the third controversy concerns the relative importance of shocks to real and nominal fundamentals in explaining real exchange rate variability this as we shall see is related to the first controversies one and two therefore may be thought of as relating to the first moment of exchange rate behaviour while the third is associated with the second moment the first controversy may be motivated by referring to fig 1 which portrays the logarithm of the real and nominal exchange rates of the mark dollar

fuelwood consumption and forest degradation a household model for domestic energy substitution in rural india this paper disusses domestic en ergy supply and demand in rural india links be tween forest scarcity and household fuel collec tion are analyzed in a non separable household model focusing on substitution of non commer cial fuels from the commons and the private do main based on data from villages bordering a protected area a novel maximum entropy ap proach is used for estimation it is found that households respond to forest scarcity and in creased fuelwood collection time by substituting fuels from private sources for forest fuelwood however the magnitude of the response appears insufficient to prevent current fuelwood collection practices from causing serious forest degrada tion jel q24

dynamic pricing in retail gasoline markets supergame models of tacit collusion show that supportable price cost margins increase with expected future collusive profits ceteris paribus as a result collusive margins will be larger when demand is expected to increase or marginal costs are expected to decline using panel data on sales volume and gasoline prices in 43 cities over 72 months we find behavior consistent with tacit collusion in retail gasoline markets controlling for current demand and cost current margins increase with expected next month demand and decrease with expected next month cost the results are not consistent with intertemporal l inkages due to inventory behavior or customer loyalty

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

exchange rate pass through and relative prices an industry level empirical investigation in this paper we explore the extent of exchange rate pass through for the usa uk and japan using a post bretton woods industry level dataset we investigate how different channels of exchange rate pass through affect domestic and import prices our analysis is suggestive of two channels of transmission and we find considerable variation in the extent of pass through across industries and countries

exchange rate pass through to bilateral import prices abstract this paper estimates exchange rate pass through for a unique set of bilateral us import prices over the period 1992 2006 it finds evidence of a significant decline in pass through to us import prices from some but not all of the trading partners in the sample these differences rule out a universal decline in pass through rates to bilateral us import prices they further indicate a growing divergence in the import price response to a uniform dollar decline

asymmetric price adjustments in us gasoline markets impacts of spatial dependence on the rockets and feathers hypothesis gasoline retail prices show sometimes wild asymmetric fluctuations over time we explore the impact of spatial dependence on gasoline retail price formation by using for the first time an asymmetr

price transmission in the eu wholesale petroleum markets this article employs nonlinear smooth transition models to analyze the relationship between upstream and midstream prices of petroleum products we test for the presence of nonlinearities in price linkages using both weekly series constructed using official eu procedures and also daily industry series applied for the first time our results show that the estimated shape of the transition function and equilibrium reversion path depend on the frequency of the price dataset our analysis of the crude oil to wholesale price transmission provides evidence of nonlinearities when prices are observed with daily frequency the nature of the nonlinearities provides evidence in support of the existence of menu costs or more generally frictions in the markets rather than supply adjustment costs this result differs from that found for the u s petroleum markets

taxation and the asymmetric adjustment of selected retail energy prices in the uk this paper investigates the adjustment of the prices of four key petroleum products in the uk following changes in the price of crude oil we find significant evidence that the pre tax prices of diesel kerosene and gas oil adjust more rapidly in an upward than a downward direction but that the pre tax price of unleaded petrol adjusts symmetrically however these patterns are obscured at the pump once one accounts for fuel duty and value added tax raising the possibility that firms can use the tax system to conceal rent seeking behaviour

asymmetries outliers and structural stability in the us gasoline market abstract by using a recently developed nonlinear cointegration methodology and a sample that encompasses more than thirty years of monthly data we investigate whether the transmission of crude oil price variations to gasoline prices in the us market is asymmetric i e depends on the sign of the change in the explanatory variable considering both the long and the short run the model is further extended by taking separately into account the effects of extreme and mild changes in crude oil prices this allows us to verify whether and to what extent the size and shape of any observed asymmetry in pricing is affected by the presence of outliers moreover given the substantial length of the sample considered we test for the possible presence of multiple structural breaks of unknown timing in the cointegrating vector our results indicate that the relationship between the prices of gasoline and crude oil has undergone a single structural break in the late 2008 and that after the break extreme observations have a non negligible role in shaping asymmetry

determinants of nonfarm earnings of farm based husbands and wives in northern ghana the nonfarm work participation decisions of married men and women in rural northern ghana were jointly and separately estimated for married couples through a bivariate probit using recent survey data selectivity bias was corrected for in estimating wage offer and labor supply equations using heckman s procedure education experience infrastructure distance to the capital and population density as well as interactions between education and infrastructure and between education and distance to the city were found to be significantly related to the probability of nonfarm labor market participation wages and the amount of nonfarm labor performed with significant differences by gender

explaining the exchange rate pass through in different prices abstract this paper examines the performance of a variety of new open economy macroeconomic models in explaining the exchange rate pass through in a wide range of prices quantitative versions of different models are used to derive the dynamic response of various prices to an exchange rate shock predicted responses are compared with the evidence based on var models to examine how well different models fit the data the results show that the best fitting model incorporates a number of features highlighted by different strands of the literature sticky prices sticky wages distribution costs and a combination of local lcp and producer currency pricing pcp

goods prices and exchange rates what have we learned import prices typically change by a smaller proportion than the exchange rate between the exporting and importing country recent research indicates that common currency relative prices for similar goods exported to different markets are highly correlated with exchange rates between those markets this evidence suggests that incomplete pass through is a consequence of third degree price discrimination while distance matters for market segmentation borders have independent effects the source of the border effect has not been clearly identified furthermore there is little evidence yet to suggest substantial market power is implied by the observed price discrimination

do gasoline prices respond asymmetrically in the euro zone area evidence from cointegrated panel data analysis this paper uses the generalized method of moments gmm estimation to a panel data error correction model ecm in order to measure the asymmetries in the transmission of shocks to input prices and exchange rate onto the wholesale and retail gasoline price respectively for this purpose we use an updated data set of 6369 weekly observations january 2000 to february 2011 for 11 euro zone countries the results indicate the existence of asymmetric responses in the retail and wholesale segment due to possible reasons oligopolistic structure of the refining industry existence of consumers search costs regulatory and legal barriers

price adjustment and exchange rate pass through abstract this paper develops a simple theoretical model that can be used to account for the determinants of exchange rate pass through to consumer prices while recent evidence has found low estimates of pass through in many countries there is little consensus on an explanation for this our paper argues that sticky prices represent a key determinant of exchange rate pass through we make this argument in two stages first holding the frequency of price change constant we show that our model calibrated to data from low inflation countries can reproduce the estimates of very low pass through for these countries the principal determinant of low pass through in this case is the slow adjustment of prices we then extend the model to allow the frequency of price change to be endogenous calibrating to a wider set of countries including both low inflation and high inflation countries we show that our model implies that exchange rate pass through is increasing in average inflation but at a declining rate performing the identical exercise on the data we find a striking correspondence between the predictions of the model and those of the data

rockets and feathers revisited an international comparison on european gasoline markets this paper re examines the issue of asymmetries in the transmission of shocks to crude oil prices onto the retail price of gasoline relative to the previous literature the distinguishing features of the present paper are i use of updated and comparable data to carry out an international comparison of gasoline markets ii two stage modeling of the transmission of oil price shocks to gasoline prices first refinery stage and second distribution stage in order to assess possible asymmetries at either one or both stages iii use of asymmetric error correction models to distinguish between asymmetries that arise from short run deviations in input prices and from the speed at which the gasoline price reverts to its long run level iv explicit possibly asymmetric role of the exchange rate as crude oil is paid for in dollars whereas gasoline sells for different sums of national currencies v bootstrapping of f tests of asymmetries in order to overcome the lowpower problem of conventional testing procedures in contrast to several previous findings the results generally point to widespread differences in both adjustment speeds and short run responses when input prices rise or fall

rockets and feathers meet joseph reinvestigating the oil gasoline asymmetry on the international markets abstract we reinvestigate the rockets and feathers effect between retail gasoline and crude oil prices in a new framework of fractional integration long term memory and borderline non stationarity the most frequently used error correction model is examined in detail and we find that the prices return to their equilibrium value much more slowly than would be typical for the error correction model such dynamics is usually referred to as the joseph effect the standard procedure is shown to be troublesome and we introduce two new tests to investigate possible asymmetry in the price adjustment to equilibrium under these complicated time series characteristics on the dataset of seven national gasoline prices we find no statistically significant asymmetry the proposed methodology is not limited to the gasoline and crude oil case but it can be utilized for any asymmetric adjustment analysis

an alternative semiparametric approach to the modelling of asymmetric gasoline price adjustment in this paper we revisit the wholesale and retail gasoline price adjustments to fluctuations in the input cost prices for a monthly panel dataset of 48 us states over the period 1994 to 2011 in doing so we employ for the first time in the empirical literature nonlinear semiparametric models with local generalized method of moments gmm estimators our findings indicate that wholesale and retail gasoline prices adjust more rapidly in an upward than a downward direction confirming the rockets and feathers hypothesis

the role of tenure security and private time preference in neotropical deforestation a survey of 209 chimane amerindian households in 18 villages in the bolivian rain forest was done to examine the role of tenure security and private time preference on the clearance of old growth forest results of tobit regressions suggest that conflict with abutters was associated with more deforestation but the average impatience of the household heads was associated with less deforestation results suggest that governments should protect the land rights of indigenous people if they wish to enhance conservation results cast doubts on the idea that high private time preference increases the depletion of natural resources

can exchange rate pass through explain the asymmetric gasoline puzzle evidence from a pooled panel threshold analysis of the eu abstract this study contributes to the literature since it tries to link the exchange rate pass through erpt with the rockets and feathers hypothesis using a panel of eu 28 countries allowing for the existence of an endogenous threshold variable our empirical findings indicate that the threshold model is better suited to this analysis than the baseline linear adjustment model this is the case since the latter restricts the threshold to be centered around zero and the dynamic response to cumulative shocks cannot be properly identified the empirical findings reveal that the threshold variable expressed by the trade weighted dollar exchange rate index is statistically significant only in the sample above the threshold high regime this means that for the net eu exporting countries fluctuations in the real effective exchange rate of the us against its major eu trading partners do affect the level of pre tax retail gasoline prices with the relevant elasticity exceeding unity complete erpt moreover all the statistical tests reject the null hypothesis that there is no significant threshold and thus an asymmetric adjustment gasoline mechanism prevails the impulse response functions confirm our empirical findings that erpt can explain asymmetric gasoline pricing within the eu periphery

rockets and feathers meet markup margins applications to the oil and gasoline industry this article investigates the existence of asymmetric price transmission between crude oil rack wholesale and retail gasoline prices a threshold cointegration technique is used with regime switches being triggered by the size of the markup margin there is consistent evidence of band tar in which the crude rack and retail prices are free to diverge until the markup margin is squeezed or stretched beyond a lower or upper critical threshold this finding indicates that abnormally high markup margins cannot be sustained which provides evidence against market power exertion the threshold error correction models indicate that there is no systematic relationship between the speed of adjustment back to the long run relationship and the markup margin which rules out the existence of rockets and feathers

exchange rates and prices the adjustment of relative prices to exchange rate movements is explained in an industrial organization approach given labor costs in the respective currencies exchange rate movements change costs for firms selling in the home market and thus disturb the industry equilibrium the extent of absolute and relative price adjustment is shown to depend on market integration product substitutability the relative number of domestic and foreign firms and the market structure the impact of exchange rates on prices is illustrated in a variety of approaches including the cournot a dixit and j stiglitz 1977 and s salop 1979 models some empirical evidence is offered in support of the theory copyright 1987 by american economic association