surplus disposal in world markets an application to egyptian cotton in many countries agricultural exports are managed directly by governments a frequent problem encountered by policy makers involves the accumulation of unwanted surpluses caused by domestic price support programs unforeseen declines in world demand or unexpected shifts in the domestic supply demand balance this paper examines the intertemporal use of the world markets as a means to eliminate these surpluses the analytical results follow directly from the theory of storage they are applied to an analysis of the egyptian els cotton market where stock levels in the early 1980s became about six times as large as normal carryout estimation results suggest that optimal disposal plans may frequently involve selling surplus stocks in a single year

conditional production smoothing in the united kingdom and japan this article investigates the possibility of macroeconomic conditional production smoothing of inventory investment in japan and the uk it is argued that both unconditional and conditional variances and covariances can be useful to interpret the time paths of sales and production after sales and production shocks the vector error correction model of sales and production is estimated by the bivariate garch procedure based on the cointegration relationship between these variables in the two countries the relative magnitude of the conditional variances of sales and production is explained in terms of sales anticipation errors the relative importance of sales and production shocks and serial correlation in sales shocks the relation of how the conditional second moment corresponds to business cycle phases is briefly analyzed

price inertia and market structure empirical evidence from austrian manufacturing 1993 price inertia and market structure empirical evidence from austrian manufacturing applied economics vol 25 no 9 pp 1175 1186

structural instability and the production smoothing model of inventories the production smoothing model of inventories implies that inventories labor inputs sales and factor input prices are cointegrated if sales and factor prices are i 1 with one cointegrating vector for each state variable held these propositions are tested in six nondurable goods industries all industries provide evidence of cointegration fewer quasi fixed factors are found than previous research often assumed estimates of cointegrating vectors provide implausible parameter estimates rank stability tests with fixed or seqentially chosen breakpoints indicate that the cointegrating matrix has unstable rank parameter estimates of cointegrating vectors do not provide much support for the production smoothing model of inventories

multiperiod sales production decisions under uncertainty abstract this paper studies the behavior of an expected profit maximizing multiperiod firm under uncertainty in output and demand the firm s problem is to determine in each period the level of sales and inventory and the expected output for the coming period the optimal policy is derived in an explicit closed form and is proved to be myopic it is shown that the observed phenomenon of downward price inflexibility can be explained and further specified by using the results of our model

the inventory investment equation an empirical work using business survey data abstract the most widely used model in empirical work on inventory investment has been the one that combines the accelerator motive with a target adjustment mechanism however the rationale for this type of relations remains normally quite vague in this paper a small theoretical model of inventory investment developed with solid micro economic foundations is presented and estimated using portuguese and belgian business survey data the model can help explaining some concepts that are frequently confused in empirical work and can also rationalize some of the most popular beliefs about inventory behaviour

finance saving and investment in keynes economics in a very interesting paper on kalecki s and keynes s views on finance saving and investment asimakopulos has recently drawn attention to a similarity between kalecki s and keynes s economics which most economists have tended to overlook 1 not only is there reason to believe that both these authors held investment to be a key element in the determination of economic activity but there is also evidence that they gave a similar treatment of the finance required for an increase in investment besides discussing the latter similarity asimakopulos has criticised both kalecki s and keynes s discussions concerning finance he has in particular questioned the complete independence of saving and investment which he conceives to be assumed by both kalecki and keynes and has concluded that there may be limits related in some way to the propensity to save to the extent to which firms are in a position to increase their rate of investment even if short term credit is available to finance such an increase 2 in relation to this he has argued that contrary to what both kalecki and keynes have assumed finance will be a revolving fund only if the multiplier process subsequent to an increase in investment associated with the provision of finance has been completed two basic assumptions underlie asimakopulos s analysis first it is assumed that savings of an amount equal to ex ante savings must be available to pay the initiating credit and or to replace short term bank loans by long term bonds second and related to the first assumption it is assumed that ex ante savings at any point in time have to increase until they are equal to the new level of investment which requires the com pletion of the multiplier process then and only then the amount of the retired or repaid bank credit will suffice to make credit advances to keep financing the new level of investment asimakopulos therefore conceives of the keynesian claim that there will always be exactly enough saving to take up investment and to release the finance required for the new level of investment as being associated with a confusion between the equality of ex post saving and investment and the conditions for short period equilibrium 3

global warming irreversibility and learning a number of economists have argued that the literature on the irreversibility effect implies that current abatement of greenhouse gas emissions should be greater when there is the possibility of obtaining better information in the future about the potential damages from global warming than when there is no possibility of obtaining better information in this paper we show that even the simplest model of global warming does not satisfy either of epstein s 1980 sufficient conditions so it is not possible to use epstein s analysis to tell whether the irreversibility effect applies to models of global warming we derive an alternative sufficient condition for the irreversibility effect to hold

oil supply shocks and international policy coordination abstract this paper examines the value of international cooperation in an oil supply disruption the perspective is that of oil importing countries since the oil market is integrated internationally the actions of one have spillover effects on the others we focus on buffer stock policies with each player maximizing the present value of national income less the cost of operating the stockpile program we contrast cooperative and cournot nash solutions to the dynamic game paying special attention to the asymmetries between small and large countries the principal results are reviewed to assess the viability of current international agreements

vertical price transmission in the egyptian tomato sector after the arab spring this study assesses price transmission along the egyptian tomato food marketing chain in the period that followed the arab spring which accentuated economic precariousness in egypt static and tim

production lags and price behaviour this paper explores the implications of the production lag for the firm s decisions the authors establish a significant relationship between price behavior and the length of the production lag they show that specific results in the literature are crucially dependent upon the assumption about the production lag by allowing the production time to exceed the decision period the basic framework of the earlier price inventory models is significantly extended the model thus incorporates finished goods inventories as well as goods in process inventories copyright 1992 by the london school of economics and political science

understanding the inventory cycle abstract careful examination of aggregate data from the u s and other oecd countries reveals that production and inventory behavior exhibit paradoxical features 1 inventory investment is strongly countercyclical at very high frequencies e g 2 3 quarters per cycle it is procyclical only at relatively low cyclical frequencies such as the business cycle frequencies e g 8 40 quarters per cycle 2 production is less volatile than sales around the high frequencies it is more volatile than sales only around business cycle or lower frequencies 3 unlike capital investment or gdp the bulk of the variance of inventory investment is concentrated around high frequencies rather than around business cycle frequencies these features of production and inventory behavior at the low and high frequencies provide a litmus test for inventory theories this paper shows that the stockout avoidance theory kahn j 1987 inventories and the volatility of production american economic review 77 667 679 has much better potential than other competing theories for explaining the seemingly paradoxical features of inventory fluctuations observed at different cyclical frequencies my analysis suggests that demand shocks are the main source of the business cycle

precautionary principle and the optimal timing of environmental policy under ambiguity i consider a problem in environmental policy design in which i focus on stock pollutants in particular i consider stock pollutants that cause severe damage on the environment and do not depreciate at all once they are released into the atmosphere and the ocean the purposes of this paper are 1 to provide an economic foundation for environmental policies based on the precautionary principle and the 1992 rio declaration on environment and development and 2 to show that this optimal timing rule has a reservation property furthermore i analyze the effect of an increase in ambiguity on the optimal timing of adopting some environmental policy and show that an increase in ambiguity decreases the optimal timing of adopting the environmental policy

over education across british regions lenton p over education across british regions regional studies this paper analyses levels of over education and wage returns to education for males across eleven regions of the uk using labour force survey data significant differences are found in the probability of being over educated across regions also differences are found in the return to the correct level of education in each region in each case associated with flexibility of movement between and into particular regions which determines the ease of job matching furthermore evidence is found that after controlling for the level of education acquired there exists a premium to the correct level of education which varies across uk regions lenton p 11 over education lenton p la sureducation a travers les regions e

price dynamics in a vertical sector the case of butter we develop a reduced form model of price transmission in a vertical sector allowing for refined asymmetric contemporaneous and lagged own and cross price effects under time varying volatility the model is used to investigate the wholesale retail price dynamics in the u s butter market the analysis documents the nature of nonlinear price dynamics in a vertical sector it finds strong evidence of asymmetric retail price responses both in the short term and the longer term but only weak evidence of asymmetric wholesale price responses asymmetric retail responses play a major role in generating a skewed distribution of butter prices the empirical results indicate the presence of imperfect competition at the retail level

disaggregate level evidence on monetary neutrality existing tests of the neutrality hypothesis focus on aggregate level economic activity however failure to examine disaggregate level effects can lead to incorrect inferences concerning anticipated and unanticipated money growth impacts disaggregate level testing of neutrality is limited also receiving inadequate attention is the impact upon test inferences of the use of generated regressors in the widely used two step estimation procedure this research tests neutrality across eleven manufacturing industries and aggregate gnp incorporating a correction for generated regressors into gls estimation the research finds non neutrality of anticipated money at the disaggregate level under two general money forecasting specifications

terms of trade dynamics in asia an analysis of national saving and domestic investment responses to terms of trade changes in 14 asian ldcs abstract i estimate a three equation model of savings investment and growth on pooled time series data for 14 asian developing countries to explore terms of trade dynamic effects on the current account a terms of trade deterioration lowers aggregate saving and raises investment in the current year it also exerts a positive lagged effect on investment due to the unanticipated temporary nature of the terms of trade change the current account oscillates before returning gradually to its steady state level the model explains 65 per cent of the variance in the sample countries current accounts over the period 1962 1983

a disequilibrium model with smooth regime transitions and a keynesian spillover for switzerland s labor market abstract this paper presents a disequilibrium labor market model in which aggregation over a continuum of micro markets with different demand supply ratios produces smooth macro relationships mapping aggregate demand and supply onto actual employment and regime proportions aggregate labor demand consists of a classical part derived on a putty clay assumption and a keynesian spillover from the goods market the specification of labor supply incorporates intertemporal substitution the degree of aggregate imbalances on labor and goods markets is measured by business survey data the estimated model indicates a growing mismatch between the micro structures of demand and supply of labor the short run fluctuations of employment are primarily traced back to the keynesian spillover classical determinants of labor demand are relevant as well but only in the medium term labor supply is rather inert and thus absorbs the swings of labor demand only partly

looking for a guide to protect the environment the development of the precautionary principle abstract if the precautionary principle is to become the guide of the international community for environmental protection policies an economic interpretation of the principle is in order the analysis of case studies and a survey of the recent decision theoretic literature show the lack of a fully satisfactory economic model more generally various theoretical and empirical results show that the principle cannot be assumed to apply a priori though it has been proposed by international treaties as a rule of thumb for situations of scientific uncertainty the precautionary principle could actually be inefficient

taking stock a critical assessment of recent research on inventories empirical and theoretical aspects of inventory behavior became hot topics in the 1950s and early 1960s no one seemed to notice the tension that was developing between the emerging macroeconomic and microeconomic views of inventories macroeconomists routinely thought of inventories as a destabilizing factor yet the prevailing micro theory viewed inventories as a stabilizing factor it was a fascinating question that was barely explored instead somewhat inexplicably interest in inventories dried up as if inventories were of minor economic significance and little intrinsic interest by the early 1980s then economists once again knew something they had known in the 1950s that inventory investment is of first order importance in business cycles but they were also beginning to realize that the standard production smoothing buffer stock model of inventories was in deep trouble this paper focuses on developments since that realization

price smoothing and inventory this paper explains the phenomenon of price rigidity or price smoothing as the outcome of the optimal inventory policy of a multi period profit maximizing firm under demand and output uncertainties price smoothing may be manifested in two forms first price changes may be moderated with respect to those implied by the demand function and second the firm may choose to restrict price fluctuations by establishing upper and or lower bounds on prices we show that the extent of the asymmetry in price smoothing depends on the relationship between the inventory holding cost and the backlog penalty cost our model accommodates a wide range

determination of employment with wage and price speculation the purpose of this paper is to investigate whether aggregate fluctuations in employment may be explained within a market clearing framework as intertemporal substitution in labor supply and demand an intertemporal substitution model for the firm is derived this model is estimated with a lucas rapping type supply equation empirical results with finnish data lend support to the intertemporal substitution model particularly concerning the demand function specification on the other hand the results for the supply equation are somewhat mixed being rather sensitive to the dynamic specification

the information content of quantity signals and downward inflexible prices it is shown that nonmarket clearing prices can persist in noncooperative nash competition among firms when the dis semination of information depends critically on the flexibility of pr ices the key to this explanation is that the value of the informatio n revealed by quantity signals when prices are fixed can be greater t han the short run profit obtained by an instantaneous price adjustmen t copyright 1987 by the editors of the scandinavian journal of economics

interest rate demand and input price uncertainty and the value of firms abstract in an infinite horizon inventory model an increase in interest rate uncertainty increases the value of a firm which has positive value an increase in input price uncertainty increases the value of the firm if decisions are made before the realization of demand uncertainty increased uncertainty about an additive demand shock reduces the value of a price setting firm with a concave value function and leaves unchanged or increases the value of a quantity setting firm if decisions are made after the realization of demand uncertainty an increase in the uncertainty of an additive demand shock increases the value of the firm

sticky prices inventories and market power in wholesale gasoline markets a model with costly adjustment of production and costly inventories implies that wholesale gasoline prices will respond with a lag to crude oil cost shocks unlike explanations that rely upon menu costs imperfect information or long term buyer seller relationships this model predicts that futures prices for gasoline will adjust incompletely to crude oil price shocks that occur close to the expiration date of the futures contract we test and confirm this implication examining wholesale price responses in 188 gasoline markets we also find that firms with market power adjust prices more slowly than do competitive firms consistent with the model

the linear quadratic inventory model as a micro foundation for keynesian theories of the business cycle abstract aggregate inventory investment is invariably procyclical this suggests that inventories play a destabilizing role in the economy as predicted by early keynesian models of the business cycle however this behavior is believed to be inconsistent with the most prominent micro theory of inventories the linear quadratic model this is not the case the linear quadratic model when placed in a simple macro framework can account for the procyclical behavior of inventory investment even when the only shocks are independent demand shocks inventory targets are independent of sales and individual firms adjust inventories slowly towards their target levels

optimists pessimists and the precautionary principle the precautionary principle has emerged as a leading guide to public decision making about environmental risks under irreversibility and uncertainty in this paper we adopt a two period model with irreversibility and agents differentiated by their degree of optimism to characterize the conditions under which the precautionary principle applies we show in particular that it is more often applied if the decision maker has an intermediate optimism index if scientific research is more effective at reducing uncertainty and if the same decision maker makes the decisions for both periods moreover we show that socially optimal decisions lead to apply the precautionary principle more often than an elected decision maker does

the production and inventory behavior of the american automobile industry understanding inventory movements is central to an understanding of business cycles this paper presents an empirical study of the behavior of inventories in the automobile industry it finds that inventory behavior is well explained by the assumption of intertemporal optimization with rational expectations the underlying cost structure appears to have substantial costs of changing production as well as substantial costs of being away from target inventory thelatter being a function of current sales given this cost structure whether inventory behavior is stabilizing or destabilizing depends on the characteristics of the demand process in the automobile industry inventory behavior is destabilizing the variance of production is larger than the variance of sales

price and output responsiveness to nominal changes under differential information abstract the paper considers how changes in nominal income are transmitted into price and output changes within a setting where the traditional assumption of instantaneous market clearing costless coordination is given up in favour of a more realistic setting where price decisions are made by numerous agents firms acting independently on their private decentralized information the responsiveness of firm specific prices is considered and it is shown how absolute or nominal price rigidity can be explained building this into a theory of the general price level it is proved that heterogenously perceived nominal changes affect the price level less than proportionally moreover it is shown how a phillips curve relation between inflation and output can be rationalized within the model finally the issue of relative price variability is considered and related to misallocation of economic resources under differential information

a measure of bullwhip effect in supply chains with a mixed autoregressive moving average demand process abstract in this paper we quantify the impact of the bullwhip effect the phenomenon in which information on demand is distorted as moving up a supply chain for a simple two stage supply chain with one supplier and one retailer assuming that the retailer employs a base stock inventory policy and that the demand forecast is performed via a mixed autoregressive moving average model arma 1 1 we investigate the effects of the autoregressive coefficient the moving average parameter and the lead time on the bullwhip effect

credit constraints interest rates and agricultural prices although there are some earlier contributions the paper by schuh the exchange rate and u s agriculture touched off a controversy within the agricultural economics profession that has yet to be resolved in its original form the controversy centered around whether or not exchange rates had a significant effect on u s agricultural prices exports and farm income later the argument seems to have moved one step further back along the logical line to a question of whether or not monetary phenomena can have real effects thus to some extent agricultural economists interested in this issue have polarized themselves into two camps that closely resemble what for lack of a better term might be called keynesians and non keynesians this paper is not an attempt to settle this dispute indeed if observations based on developments in macroeconomics offer any guide i think that the dispute is based upon such fundamentally different perceptions of the world that no single paper or series of papers will ever settle the issue rather in this paper i want to discuss what i perceive to be one of the key issues in this debate are agricultural prices more flexible than nonagricultural prices my choice of this topic is somewhat personal and i choose it mainly because i feel that if monetary variables are going to have real effects these effects can only be short run in nature and are best explained by differential price adjustments the argument is simple suppose you have two goods a and b and suppose that good a is priced administratively a la gardiner means while good b s price is perfectly flexible now suppose further that the money supply is artificially inflated in the current instances the price of a will not adjust instantaneously while the price of b is free to adjust if the price of b does adjust as a result of an increase in the money s pply then manipulation of the money supply has caused a real change since the price ratio between a and b changes in this case therefore we can also expect other real changes in the economy but such effects should be only short run in nature the real effects set in motion by the relative price change should ultimately be self correcting under the usual ceteris paribus assumptions since even administered prices have to adjust in the long run to maintain entrepreneurial profitability however even if such issues of relative flexibility are not a central element in the discussion that is germane to the present paper and the associated controversy the general belief that agricultural prices are more flexible than nonagricultural prices is firmly rooted in the stylized facts of agricultural economics moreover the high degree of instability of agricultural prices is often given as the primary argument for extensive government interference in the agricultural economy in what follows i will first offer a brief survey of some of the studies of the effects of monetary phenomena on u s agricultural prices exports and incomes in this part of the paper i specifically exclude papers of what i think of as the is inflation neutral with

optimal price adjustment under imperfect information abstract variations in cost and demand do not have symmetrical impact on the optimal price of the imperfectly competitive firm this asymmetry is not so important as long as information regarding both cost and demand is sufficient however it becomes crucially important in case of incomplete information usually firms have more complete or harder information on cost than on demand this difference in information status on the cost and on the demand side can explain both cost based pricing and slow price adjustment to demand in an optimizing framework with bayesian learning about changed demand conditions

in pursuit of monopoly power recent quantitative work in industrial economics this paper reviews empirical work in industrial organization devoted to the question of inferring the existence of monopoly power from data on observed market outcomes like profits and prices the discussion covers inter industry work long conventional in the area newer developments in intra industry analysis and case studies and concludes with some remarks on a small but growing body of work assessing market dynamics the wide range of studies reviewed all generally reveal that market power exists in many industries

rational expectations and the smoothing properties of inventories of finished goods abstract this paper formulates and estimates a dynamic rational expectations equilibrium model of inventories of finished goods and employment of labor the view that the primary role of inventories of finished goods is to act as a buffer stock in the face of fluctuating demand is examined both the model and estimation results indicate that this is the case because of differences in the costs involved for firms in changing their inventory stocks and labor force in addition to providing some new evidence on the behavior of inventories of finished goods and employment the paper illustrates a technology for maximum likelihood estimation of structural parameters under the hypothesis of rational expectations

precautionary principle as a rule of choice with optimism on windfall gains and pessimism on catastrophic losses abstract the paper investigates a decision making process involving both risk and ambiguity differently from existing papers basili m chateauneuf a fontini f 2005 choices under ambiguity with familiar and unfamiliar outcomes theory and decision 58 195 207 chichilnisky g 2000 axiomatic approach to choice under uncertainty with catastrophic risks resources and energy economics 22 221 231 chichilnisky g 2002 in el shaarawi a h piegorsch w w eds catastropic risks encyclopedia of environmetrics vol 1 john wiley sons ltd chichester uk pp 274 279 we assume that in a choquet expected utility framework the decision maker is pessimistic with respect to unfamiliar catastrophic losses optimistic with respect to unfamiliar windfall gains and ambiguity neutral with respect to the familiar world a representation of the decision maker s choice is obtained that mimics the restricted bayes hurwicz criterion in this way a characterization of the precautionary principle is introduced for decision making processes under ambiguity with catastrophic losses and or windfall gains

price dynamics under imperfect information abstract the paper considers the pricing decision of a monopolist firm having demand and costs exposed to nominal and real shocks which include both permanent and transitory changes the firm obtains information through both price and quantity signals and the price equation is found by use of a filtering technique it is shown that imperfect information implies nominal price smoothing where the price adjusts only partially relative to the past price by incorporating new information observed through price and quantity signals

spatial price transmission and asymmetry in the ghanaian maize market abstract this paper utilizes recently developed threshold cointegration tests that allow for asymmetric adjustment toward a long run equilibrium relationship to examine price linkages between principal maize markets in ghana unlike previous studies the approach employed here assumes that economic agents only act to move the system back to equilibrium when the deviation from equilibrium exceeds a critical threshold whereby the benefits of this adjustment exceed the costs the findings indicate that major maize markets in ghana are well integrated both the threshold cointegration and asymmetric error correction models reveal that wholesale maize prices in local markets accra and bolgatanga respond more swiftly to increases than to decreases in central market techiman prices accra prices are found to react faster than bolgatanga prices to changes in techiman market prices

micro adjustment toward long term equilibrium abstract a dynamic model is constructed in which the behavior of economic agents is based on adjustment decisions are made in disequilibrium prices respond to differences between supply and demand inventories capital is moved according to profitability differentials and money is issued by a bank which reacts to the general price level a proof of local stability of long term equilibrium with production prices is demonstrated we further distinguish between two aspects of the stability problem concerning the allocation of capital and relative prices stability in proportions and with respect to the general levels of activity and prices stability in dimension

an empirical analysis of backlog inventory production and price adjustments an application of recursive systems of log linear models this article presents an empirical analysis of firms order backlogs inventories production and price adjustments to unanticipated demand shocks the data are obtained from quarterly insee business survey tests on firms realizations expectations and appraisals of some various economic variables the analysis is based on the formulation and the estimation of a recursive system of conditional log linear probability models

bounded awareness heuristics and the precautionary principle the precautionary principle has been proposed as a basis for making decisions about environmental issues but remains controversial using a model of inductively justified propositions about awareness this paper shows how the precautionary principle may be interpreted as a heuristic guide for boundedly rational decision makers faced with the possibility of unfavorable surprises

equilibrium adjustment with endogenous information and inventories the paper analyzes the interaction of information acquisition and inventory flexibility with industry adjustment to imperfectly perceived cost and demand disturbances improved information about disturbances reduces the extent to which disturbances are unperceived and dampens the use of inventories reduced inventory flexibility induces firms to devote more resources to acquiring information about disturbances the analysis demonstrates how equilibrium price and output adjustment depend endogenously on the degree of inventory flexibility and other structural parameters influencing the acquisition of information in this paper we analyze how endogenous information acquisition and inventory flexibility influence price and output adjustment in a competitive industry we focus on the potential substitutability of information acquisition for inventory flexibility when disturbances are imperfectly perceived by individual firms the analysis highlights the general issue of how market adjustment depends on structural parameters that influence agents incentives to acquire information there are several reasons why information acquisition may play a role in market adjustment first the rapid development of information technology has enabled firms to gather and process data relevant to production and sales decisions from a greater number of external and internal sources this trend has reduced the costs of forecasting and monitoring factors influencing production and demand conditions for the individual firm relative to those of its competitors as well as for the industry as a whole in particular it has permitted quicker awareness of changing customer demand as well as greater control of the flow of inputs and intermediate goods during the production process this implies that the resources devoted to information acquisition and processing have come to play an important role in firm decisions 2 second improved information about demand and cost conditions may affect the function of inventories inventory adjustment allows a firm s production costs to be smoothed in response to anticipated movements in demand and costs and to be buffered against unanticipated disturbances see ashley and orr 1985 thus

scientific progress and irreversibility an economic interpretation of the precautionary principle abstract we consider the problem of the optimal use of a good whose consumption can produce damages in the future scientific progress is made over time that provides information on the distribution of the intensity of damages we show that this progress induces earlier prevention effort only if prudence is larger than twice absolute risk aversion this paper thus identifies the class of quite restrictive but plausible conditions such that scientific uncertainties justify an immediate reduction of the consumption of a potentially toxic substance

choice under uncertainty with the best and worst in mind neo additive capacities the concept of a non extreme outcome additive capacity neo additive capacity is introduced neo additive capacities model optimistic and pessimistic attitudes towards uncertainty as observed in many experimental studies moreover neo additive capacities can be applied easily in economic problems as we demonstrate by examples this paper provides an axiomatisation of choquet expected utility with neo capacities in a framework of purely subjective uncertainty

target buffer stocks the behaviour of a buffer stock holding firm facing stationary demand shocks is considered from the viewpoint of recent evidence on inventories and price setting attention is focussed on the responses of price and supply to changes in autonomous demand and compared with those of a nondurable producer the results conflict with recent theoretical work in providing support for a keynesian interpretation of inventory series

a theorem on policy neutrality this paper offers a general condition which resolves the debate over the neutrality of systematic monetary policy in linear macroeconomic models with non equilibrium prices and rational expectations as expressed in papers by gordon 1976 gordon 1977 modigliani 1977 fischer 1977 phelps and taylor 1977 fethke and policano 1979 fethke and policano 1981 mccallum 1977 mccallum 1978 mccallum 1979a mccallum 1979b mccallum 1980 and green and honkapohja 1983 the policy neutrality theorem states that a non equilibrium price function will preserve the neutrality of monetary feedback with respect to exchange in a representative macroeconomic model if and only if the difference between the conditionally expected values of the equilibrium and non equilibrium prices is independent of monetary feedback in each period the policy neutrality results of mccallum 1977 mccallum 1978 mccallum 1979b and the policy effectiveness results of fischer 1977 phelps and taylor 1977 fethke and policano 1979 fethke and policano 1981 are analyzed in terms of the theorem

disequilibrium dynamics an empirical study despite the amount of attention devoted in economics to the study of equilibria the process by which an equilibrium can be attained is not well understood stephen smale 1977 called this the fundamental problem of economic theory this paper explores the microeconomics of the adjustment process by examining empirically the disequilibrium behavior of firms implications for the microeconomic foundations of macroeconomics are stressed the data from german industry describe the month by month price and output changes of individual firms as well as the firms own assessments of the levels of their inventories and unfilled orders because the data are qualitative use is made of the multivariate conditional logit model developed by marc nerlove and s james press 1973 1976 and extended by kawasaki and zimmermann section i discusses the underlying model of firm behavior and the significance of the inquiry for macroeconomics in section ii the econometric techniques are briefly described in section iii the empirical results are summarized and interpretations of the results are offered in section iv

aggregation and stabilization policy in a multi contract economy abstract this paper presents a model of a multi sector economy in which each sector is characterized by a different type of wage or price stickness the various sectors experience the same exogenous shocks and have the same money supply the analysis shows that demand shocks pose no serious problems for stabilization policy in contrast supply shocks may force the policymaker to choose between stability in one sector and stability in another the analysis also shows that the economist as to the economy s underlying structure and obscures the tradeoffs the policymaker must confront in particular a feedback rule chosen on the basis of an aggregate model could be either better or worse than a passive policy

measure of bullwhip effect in supply chains with autoregressive demand process abstract in supply chain management one of the most critical problems which require a lot of effort to deal with is how to quantify and alleviate the impact of bullwhip effect the phenomenon in which information on demand is distorted while moving upstream although it is well established that demand forecast lead time order batching shortage gaming and price fluctuation are the main sources that lead to the bullwhip effect the problem of quantifying bullwhip effect still remain unsolved in many situations due to the complex nature of the problem in this research a measure of bullwhip effect will be developed for a simple two stage supply chain that includes only one retailer and one supplier in the environment where the retailer employs base stock policy for their inventory and demand forecast is performed through the first order autoregressive model ar 1 the effect of autoregressive coefficient and lead time on this measure will then be investigated

inventories and sticky prices more on the microfoundations of macroeconomics the role of inventories in making prices sticky is studied by analyzing a dynamic linear quadratic model of a monopoly firm facing stochastic demand but able to store its finished goods in inventory it is shown that in contrast to the usual presumption firms that exhibit the smallest output responses to demand fluctuations may also exhibit the smallest price fluctuations specifically firms which have very flexible inventory storage facilities or are subjected to very transitory demand shocks will rely on inventories as buffers and will change neither production nor price very much on the other hand firms which have very inflexible storage facilities or whose demand shocks are quite permanent will display large swings in both price and output the standard assumption about inventory carrying costs that has been used in the literature that they are linear is shown to imply that production is impervious to fluctuations in demand it is also established that prices may respond more strongly to positive demand shocks than to negative ones if it is impossible to hold negative inventories i e to have unfilled orders the model offers an explanation for stickiness in relative prices however under certain circumstances it may help explain the persistence of inflation this abstract was borrowed from another version of this item

a test of the linear rational expectations equilibrium inventory model in the eec abstract in this paper i test an extension of the familiar holt modigliani muth and simon 1960 inventory model using annual data from the eec countries the two step two stage least squares estimation technique of cumby et al 1983 is used the model is tested using the generalized variance bounds test developed by kollintzas 1988 and the variance bounds test of west 1986 in the majority of the cases the empirical evidence gives support to the traditional inventory model when allowing for stochastic cost shocks and stock out avoidance motives

price determination in a competitive industry with costly information and a production lag we analyze the role of information for price and output adjustment when competitive firms with rational expectations cannot directly distinguish between industrywide and firm specific cost disturbances firms may become informed about industrywide cost conditions by acquiring information at a cost the sensitivity of price and output to cost disturbances decreases as more firms choose to purchase information the equilibrium industry share of informed firms increases as the cost of information falls and total cost variability increases the equilibrium share of informed firms is largest when there is a comparable degree of variability in both industrywide and firm specific costs

credit rationing and effective supply failures the topic of this paper is among the oldest and most fundamental in monetary theory how and why does monetary policy affect real economic activity traditional answers hold that the central bank can manipulate aggregate demand by engineering expansions or contractions of the medium of exchange in its monetarist variant this story posits a direct link between something called m and aggregate spending in its keynesian variant the story holds that adjustments in asset prices brought about by a change in m lead to more spending especially on capital goods in either case short run stickiness of prices is needed to translate some of the changes in demand into movements of real output in recent years these conventional stories have become increasingly implausible as stiglitz and i blinder and stiglitz i 983 have argued elsewhere with money becoming more and more difficult to define it is becoming increasingly difficult to believe that the central bank can cause a recession by contriving a shortage of an arbitrary subset of assets called m put differently the point seems both simple and compelling if there are ready substitutes for money control of money will not give the authorities much leverage over the real economy hence this paper develops an explanation for how central bank policy affects