optimal state dependent rules credibility and inflation inertia abstract we use a state dependent model where pricing rules are optimal to examine the costs of a money based disinflation under various assumptions about the credibility of the policy change our analysis allows us to relate actual credibility and future inflation inertia to the asymmetry of the price deviation distribution an important implication of our state dependent setting is that disinflation can be attained without substantial cost even in a situation of low credibility provided that a mechanism of price alignment eliminates the asymmetry of the price deviation distribution we also develop an analytical framework for analyzing intermediate imperfect credibility cases

is there a glass ceiling in sweden using 1998 data we show that the gender log wage gap in sweden increases throughout the wage distribution and accelerates in the upper tail we interpret this as a strong glass ceiling effect we use quantile regression decompositions to examine whether this pattern can be ascribed primarily to gender differences in labor market characteristics or in the rewards to those characteristics even after extensive controls for gender differences in age education both level and field sector industry and occupation we find that the glass ceiling effect we see in the raw data persists to a considerable extent

optimal symmetric punishments in a bertrand differentiated products duopoly abstract this paper studies how product differentiation affects collusive pricing in a duopoly when products are horizontally differentiated and firms compete in prices in contrast to earlier work the punishment mechanism supporting collusion is assumed to be the optimal symmetric punishment proposed by abreu 1986 journal of economic theory 39 191 225 such punishments have previously been characterized only for cournot oligopolies and for bertrand oligopolies with capacity constraints the optimal symmetric punishment turns out to have a simple two phase structure after one period of an intense price war firms return to the collusive outcome if prices are restricted to be non negative and the discount factor is large the price war will be extended to more than one period the best collusive price is shown to be lower the more substitutable are products

the use of quantile regressions in estimating gender wage differentials a case study of the philippines quantile regressions are used to analyse the size components and nature of the gender earnings differentials as well as the returns to education by gender in the philippines over the entire conditional distribution of earnings using data from the 1999 apis survey this approach allows more focused conclusions about the nature of gender earnings differentials incorporating the quantile regression approach to the oaxaca blinder decomposition allows the localization of gender discrimination to particular quantiles of the earnings distribution and permits more targeted policy intervention

reinterpreting the role of inflation in politico economic models the author attempting to analyze the interplay between politics and economics is faced with a large number of problems ranging from an always too small and idiosyncratic data set to the lack of any generally accepted theory of the process which has testable implications my aims have been 1 to show that past studies have typically treated inflation in an extremely naive way disregarding the fact that it may have political pluses if unanticipated and 2 to test the sensitivity of established formulations to what i believe is the more useful view of voter behavior given in model ii since model i and model ii represent polar extremes of amnesiac and eidetic behavior tests of intermediate lag structures are clearly in order because of administration peculiarities however lost data points will pose a serious problem

counterfactual decomposition of changes in wage distributions using quantile regression we propose a method to decompose the changes in the wage distribution over a period of time in several factors contributing to those changes the method is based on the estimation of marginal wage distributions consistent with a conditional distribution estimated by quantile regression as well as with any hypothesized distribution for the covariates comparing the marginal distributions implied by different distributions for the covariates one is then able to perform counterfactual exercises the proposed methodology enables the identification of the sources of the increased wage inequality observed in most countries specifically it decomposes the changes in the wage distribution over a period of time into several factors contributing to those changes namely by discriminating between changes in the characteristics of the working population and changes in the returns to these characteristics we apply this methodology to portuguese data for the period 1986 1995 and find that the observed increase in educational levels contributed decisively towards greater wage inequality copyright 2005 john wiley sons ltd

expected monetary changes and relative prices a look at evidence from the stock market at the heart of the natural rate theory is the assumption that fully perceived monetary growth is neutral with respect to relative price changes unfortunately there have been few attempts to test this assumption directly because the belief that active contracyclical monetary policies are not superior to friedman s constant growth rule rests upon the assumption that expected monetary changes have neutral relative price effects more evidence is needed on whether such changes are in fact neutral to this end we test the hypothesis that only the unexpected components and not the expected components of monetary changes affect relative price changes by looking at the stock market testing is done on a modification of the well known mean variance capital asset pricing model the capm specifically we modify the capm to allow for differential stock returns depending upon expected and unexpected monetary growth rates section ii explains the basic model used to test for non neutral relative price effects of monetary change section iii deals with the empirical definitions of expected and unexpected money growth section iv discusses the basic data while sections v and vi make neutrality tests of monetary growth using actual expected revisions in expected and unexpected money growths the last part summarizes the paper

is there a glass ceiling over europe exploring the gender pay gap across the wages distribution using harmonised data from the european union household panel we analyse gender pay gaps by sector across the wages distribution for ten countries we find that the mean gender pay gap in the raw data typically hides large variations in the gap across the wages distribution we use quantile regression qr techniques to control for the effects of individual and job characteristics at different points of the distribution and calculate the part of the gap attributable to differing returns between men and women we find that first gender pay gaps are typically bigger at the top of the wage distribution a finding that is consistent with the existence of glass ceilings for some countries gender pay gaps are also bigger at the bottom of the wage distribution a finding that is consistent with sticky floors third the gender pay gap is typically higher at the top than the bottom end of the wage distribution suggesting that glass ceilings are more prevalent than sticky floors and that these prevail in the majority of our countries fourth the gender pay gap differs significantly across the public and the private sector wages distribution for each of our eu countries

relative price variability and inflation evidence from us cities we test whether the time series positive correlation of inflation and intermarket relative price variability is also present in a cross section of u s cities we find this correlation to be a robu

money and the dispersion of relative prices a price dispersion equation is tested with data from the german hyperinflation the equation is derived from a version of lucas s and barro s partial information localized market models in this extension different excess demand elasticities across commodities imply a testable dispersion equation in which the explanatory variable is the magnitude of the unperceived money growth in order to test this hypothesis a price dispersion series is constructed and a measure of the unperceived part of money growth is estimated the model receives support from the empirical analysis although it is evident that unincluded variables have important effects on price dispersion

disadvantage and discrimination in self employment caste gaps in earnings in indian small businesses using the 2004 2005 india human development survey data we estimate and decompose the earnings of household businesses owned by historically marginalized social groups known as scheduled castes and tribes scsts and non scsts across the earnings distribution we find clear differences in characteristics between the two types of businesses with the former faring significantly worse the mean decomposition reveals that as much as 55 of the caste earnings gap could be attributed to the unexplained component quantile regressions suggest that gaps are higher at lower deciles providing some evidence of a sticky floor finally quantile decompositions reveal that the unexplained component is greater at the lower and middle deciles than higher suggesting that scst owned businesses at the lower and middle end of the conditional earnings distribution face greater discrimination

inflation and the distribution of price changes this paper reconsiders the empirical evidence connecting inflation to its higher order moments in particular we examine the statistical properties of the observed positive correlation between the sample mean and the sample cross sectional skewness of price changes this correlation has attracted substantial attention over the years and has recently been the focal point of a debate among macroeconomists we show that the sample mean skewness correlation suffers from a small sample bias that accounts for the entirety of the observed correlation in other words we establish that one of the stylized facts in the literature on aggregate price behavior need not be a fact at all

inflation inflation uncertainty and relative price dispersion evidence from bivariate garch m models abstract one potential real effect of inflation is its influence on the dispersion of relative prices in the economy menu cost models generally imply that higher trend inflation will increase price dispersion in contrast signal extraction models predict that increased inflation uncertainty will raise relative price dispersion existing empirical studies do not distinguish between these separate hypotheses we constuct a bivariate garch m model of inflation and relative price dispersion to test these differing explanations in a single model and find that inflation uncertainty dominates trend inflation as a predictor of relative price dispersion

assessing the variability of inflation although there has been much argument over the impact of variable inflation rates upon economic performance there has been surprisingly little attempt to define the term variability of inflation carefully or to test proposed hypotheses connecting variability and the level of inflation precise definitions are given in the paper and a model is constructed showing that the level variability hypothesis may be formulated in terms of the presence of heteroscedasticity in a regression model this theoretical model is used to criticize existing studies while an empirical study with australian data illustrates the application of the approach

relative price variability inflation and the allocative efficiency of the price system abstract this paper develops a theory of the relationship between aggregate and relative price variability based on the inability of people even in a rational world to identify permanent changes in relative demands whether caused by real or by monetary variability and relative productivities as soon as they occur the theory implies that the variance of the rate of inflation and the variance of relative price change are positively related although expectations are rational and markets always clear production decisions respond sluggishly to changes in relative prices temporary shocks to relative demands cause prolonged changes in the structure of production available information is used so as to maximize the efficiency of the price system however this efficiency decreases when any of the underlying variances increases this decrease is more pronounced when the production lag is longer

the relationship between relative prices and the general price level it is very nearly a truismi amaong neoclassical economists that the public is wont to confuse changes in the general price level with relative price changes correspondingl y one might speak of the independence between the two as one of the central postulates of the neoclassical tradition william stanley jevons was aml ong the first to identify this basic dichotomin economic life as well as to attempt to explain the ordinary citizen s seenming incapacity to understand it

multidivisional firms internal competition and the merger paradox traditional modelling of mergers has the merged firms insiders cooperate and maximize joint profits this approach has several unappealing results in quantity setting games for example mergers typically are not profitable for insiders but are profitable for non merging firms outsiders we take a different approach and allow for a parent company that can play each insider off one another in quantity setting games with our approach mergers are profitable for insiders unprofitable for outsiders socially beneficial and involve in a non monopolizing merger a small number of firms finally we find that the optimal strategy depends on whether firms compete in quantity or prices jel classification l000 entreprises multi divisionnelles concurrence interne et le paradoxe des fusions les modelisations conventionnelles des fusions suggerent que les entreprises fusionnees parties prenantes cooperent et maximisent leurs profits conjoints cette approche engendre plusieurs resultats contre intuitifs dans des jeux de concurrence par les quantites i e les fusions en general ne sont pas profitables pour les parties prenantes mais sont profitables pour des entreprises qui ne sont pas fusionnees les autres les auteurs adoptent une approche differente qui permet a l entreprise mere de jouer les parties prenantes l une contre l autre dans ce genre de jeu avec l approche adoptee les fusions sont profitables pour les parties prenantes non profitables pour les autres socialement benefiques et impliquent un petit nombre d entreprises dans une fusion qui ne cree pas un monopole finalement on trouve que la strategie optimale depend fondamentalement du fait que les entreprises se concurrencent par les prix ou par les quantites

policy impacts under rational expectations abstract this paper re examines for the u s the validity of the macro rational expectations mre hypothesis in contrast to most previous studies in this area the paper a considers the potential real effects of both monetary and fiscal policies b allows for possible endogeneity of these policies and c uses a joint non linear estimation methodology to distangle the hypothesis of rationality from that of neutrality the empirical results reject the joint mre hypothesis for both policies the results also indicate that policy non neutrality is the culprit behind such rejection this evidence offers further empirical support for macro rational expectations models where monetary and fiscal policies can due to some rigidities play a key role in stabilizing the real economy

caste discrimination in the indian urban labour market abstract this the pioneering quantitative analysis of caste in the indian urban labour market examines the age old problem of caste in the light of discrimination theory and government policy using a survey of workers in delhi the gross wage difference between scheduled untouchable and non scheduled caste is decomposed into its explained and discrimination components and from a model of occupation choice into wage and job discrimination discrimination is found to exist and to operate at least in part through the traditional mechanism viz assignment to jobs with the scheduled castes entering poorly paid dead end jobs it is assisted by methods of recruitment based on contacts prevalent in the manual occupation which also cause past discrimination to carry over to the present its practice serves the economic interests of those who exercise a taste for discrimination

a note on the variability of inflation and the dispersion of relative price changes abstract the relationship between the variance of inflation and the variability of relative price changes is analyzed empirically a strong positive association is found for 1948 1969 and 1948 1975 application of chow s test indicates structural instability and granger s test suggests a feedback effect between these variables

on the real effects of short and long run inflation and relative sector price variability some empirical evidence using the kalman filter this paper evaluates empirically the effects of sector relative price variability and short run and long run inflation on the growth rate of real output in the united states since 1947 also permanent and transitory estimates are constructed to evaluate the effects of unanticipated movements in sector relative price on the growth rate of real output the results show a statistically significant inverse relationship beween the growth rate of real output and transitory sector relative price variability and anticipated long run inflation and a direct relationship between the growth rate of real output and unanticipated short run inflation

gender inequality and economic growth a cross country analysis abstract this paper investigates empirically the determinants of economic growth for a set of semi industrialized export oriented economies in which women provide the bulk of labor in the export sector the primary hypothesis tested is that gender inequality which contributes to women s relatively lower wages was a stimulus to growth via the effect on exports during 1975 95 empirical analysis shows that gdp growth is positively related to gender wage inequality in contrast to recent work which suggests that income inequality slows growth evidence also indicates that part of the impact of gender wage inequality on growth is transmitted through its positive effect on investment as a share of gdp

conditional relative price variance and its determinants open economy evidence from germany the authors present empirical tests of two hypothesis derived from an open economy version of the multimarket equilibrium model the first hypothesis holds that the conditional relative price variance is positively related to the variance of domestic monetary and foreign nominal and real shocks the second hypothesis claims a negative impact of an increase in conditional relative price variance on normal output in contrast to earlier studies the authors use direct measures of conditional relative price variance based on arch estimates the authors results show that both hypotheses are consistent with german data copyright 1991 by economics department of the university of pennsylvania and the osaka university institute of social and economic research association

conglomerate mergers as defense against the risk of relative price variability this paper studies the effects of the risk of relative price variability on the optimal structure of a firm s cash flows with an application of portfolio theory it is suggested that when relative price risk is greater it is optimal for the management to diversify at the margin and emphasize economies of scale or scope when the risk is smaller conglomerate mergers should therefore be positively associated with relative price risk given the variables affecting mergers as a whole empirical evidence is found to lend support to the theory the inflation rate explains conglomerate mergers even better which suggests that relative price risk may constitute another real resource cost of inflation

price vs quantity competition in oligopoly supergames abstract in a repeated oligopoly with differentiated products and firms following trigger strategies quantity competition leads to a less efficient outcome than price competition this result contrasts with the repeated duopoly result where price competition is less efficient under certain conditions

privatization and changes in welfare costs of inflation the case of entel argentina abstract in a country with permanent deficit driven inflation problems the proceeds from privatization may translate into potential reductions of the seigniorage needed to finance a given a level of government expenditure the changes in welfare costs of inflation brought about by divestiture are quantified in a monetary model in an argentine case study these changes were found to be small both in terms of gdp and as a percentage of seigniorage revenue within the model this is mainly explained by the low values encountered for the elasticities of money demand with respect to expected inflation and by the exclusion of considerations about unanticipated inflation

interpreting the correlation between inflation and the skewness of relative prices a comment on bryan and cecchetti large literature in macroeconomics has examined how the inflation rate is related to the distribution of relative price changes this work has established a striking fact there is a strong correlation between inflation and the skewness of this distribution when inflation is high the distribution of relative price changes is typically skewed to the right when inflation is low it is skewed to the left the oil shocks of the 1970s are one example of this phenomenon inflation rose while a few goods oil products experienced especially large relative price increases but the inflationskewness correlation is not just a result of oil shock years this fact holds for many time periods and many countries e g vining elwertowski 1976 and ball mankiw 1995 for the united states amano macklem 1997 for canada de abreu lourenco and gruen 1995 for australia bryan and cecchetti 1999 argue that this fact need not be a fact at all because of small sample bias if true this is an important claim it would eliminate an apparently robust stylized fact that might otherwise hold a clue to understanding the causes or effects of inflation we are not however convinced by bryan and cecchetti s assertion our goal in this note is to explain why on its face bryan and cecchetti s claim is puzzling their paper presents a model in which there is an underlying true distribution of price changes and the observed distribution is obtained by sampling a subset of these price changes they show that the skewness of the sample distribution may be correlated with the sample mean even if there is no skewness in the population distribution this model however does not capture the reality of how price indices are constructed it is not the case that there are a large number of sectors and the government computes the cpi by sampling a small number of them instead the government measures prices in all sectors of which there may be a small or large number depending on the level of disaggregation the observed correlation of the mean and skewness is based on the full population of sectors so small sample bias does not appear to be possible because the data used to construct price indices are comprehensive one cannot avoid the conclusion that the inflation skewness correlation is a fact 1 if the idea of small sample bias is not relevant here how should one interpret the numerical simulations presented by bryan and cecchetti the substance of their argument we believe is that it is easy to explain the correlation between inflation and skewness previous authors have worked hard to explain this fact ball and mankiw 1995 propose that this correlation can be explained with menu cost models of price adjustment while balke and wynne 1996 argue that it can be explained by a multisector real business cycle model by contrast bryan and cecchetti generate the inflation skewness correlation in a much simpler model although it would be wrong to interpret their results as showing that the correlation doesn t exist one could plausibly interpret them as showing that this correlation doesn t prove anything as they put it such statistics are not useful in distinguishing sticky from flexible price setting behavior in macroeconomic models to evaluate this argument it helps to step back and review the motivation behind the ball mankiw and balke wynne theories the starting point for these authors is the classical theory of price determination central to this theory is the classical dichotomy relative prices are determined by real factors and the aggregate price level is determined by monetary factors specifically if there are n sectors in the economy there are n 1 relative prices real variables such as shifts in demand and costs in the various sectors determine these n 1 prices using any good or combination of goods as the numeraire the aggregate price level is determined by the supply and demand for money this idea is summarized by the quantity equation mv 5 py the n 1 relative prices and the price level which equals the average of all nominal prices together determine the n nominal prices in this classical model there is no obvious reason that the behavior of the aggregate price level is related to the distribution of relative prices if m v and y remain constant then p is constant and any shifts in the distribution of relative prices do not influence the price level to explain the observed inflation skewness correlation one must explain how the economy differs from this classical baseline balke and wynne offer one story for the inflationskewness correlation in their model certain shocks to the economy generate both skewness in the relative price distribution and changes in aggregate output for instance when opec raised oil prices relative prices in energy related sectors rose by 50 or more balanced by smaller relativeprice decreases in the rest of the economy this generated

on inflation and real price variability this paper studies the consequences of costly price adjustments for the variability of real prices accompanying inflation for constant elasticity demand and cost of production it is shown that a higher demand a lower cost of production or a lower cost of price adjustment leads to less intertemporal variability of real prices if the marginal cost of production does not increase too fast then the average real price is less than the real price that would prevail in the absence of inflation additionally a higher demand a lower cost of production or a lower cost of price adjustment leads to a higher level of real prices

inflation and relative price variability in yugoslavia abstract granger causality tests show that inflation granger causes relative price variability but the feedback relationship cannot be excluded

variability of inflation and the dispersion of relative prices evidence from the chinese hyperinflation of 1946 1949 abstract this paper uses data from the chinese hyperinflation of 1946 1949 to focus on the relationship between the variability in the general price level and the dispersion in relative prices the issue is important because it bears on the natural rate hypothesis which supports the postulate that these two monetary variables are independent our results reinforce the bulk of previous evidence which suggests a positive correlation between the variation in inflation rate and the dispersion in relative prices during inflationary episodes

bad karma or discrimination male female wage gaps among salaried workers in india summary we use nationally representative data from the employment unemployment surveys in 1999 2000 and 2009 10 to explore gender wage gaps among regular wage salaried rws workers in india both at the mean as well as along the entire wage distribution to see what happens where the gender log wage gap at the mean is 55 in 1999 2000 and 49 in 2009 10 but this change is not statistically significant the blinder oaxaca and the machado mata melly decompositions indicate that in both years the bulk of the gender wage gap is unexplained i e possibly discriminatory they also reveal that over the decade while the wage earning characteristics of women improved relative to men the discriminatory component of the gender wage gap also increased in fact in 2009 10 if women were paid like men they would have earned more than men on account of their characteristics in both years we see the existence of the sticky floor in that gender wage gaps are higher among low wage earners and lower for high wage earners over the ten year period we find that the sticky floor became stickier for rws women machado mata melly decompositions reveal that in both years women at the lower end of the wage distribution face higher discriminatory gaps compared to women at the upper end

divisionalization franchising and divestiture incentives in oligopoly a two stage game is used to model firms strategic incentives to divide production among autonomous competing units through divisionalization franchising or divestiture firms simultaneously choose their number of competing units which then engage in cournot competition while it is costly to form autonomous units each firm does so in equilibrium thus reducing firm profits and increasing social welfare relative to the case where firms cannot form competing units with linear demand and costs duopolists choose the socially optimal number of competing units oligopolies with larger numbers of firms choose too many the case of nonlinear demand is also examined copyright 1996 by american economic association

changes in wage structure in urban india 1983 2004 a quantile regression decomposition summary this paper utilizes individual level earnings data from urban india to examine the evolution of wages during 1983 2004 across the entire wage distribution quantile regression analysis reveals that the effects of many covariates are not constant across distribution returns to secondary and tertiary education not only increased in the 1990s but also became more heterogeneous suggesting wage inequality may increase further in near future as more workers get higher education moreover the quantile regression decomposition suggests that the increase in returns has been the driving force behind the increase in wages in both the 1980s and 1990s

internal decision making rules and collusion we study the impact of internal decision making structures on the stability of collusive agreements to this end we use a three firm spatial competition model where two firms belong to the same holding company the holding company can decide to set prices itself or to delegate this decision to its local units it is shown that when transportation costs are high collusion is more stable under delegation furthermore collusion with maximum prices is more profitable if price setting is delegated to the local units profitability is reversed for low discount factors

a proposition on short run departures from the law of one price unanticipated inflation relative price dispersion and commodity arbitrage abstract this paper proposes an explanation of short run departures from the law of one price based on the characteristics of the inflationary process and changes in the distribution of relative prices unexpected inflation gives rise to volatility of relative prices the more unexpected and hence uneven the rate of inflation the greater the difficulty in discerning from a given structure of relative prices commodity arbitrage opportunities which may be expected to persist and those transient opportunities which do not warrant a firm s incurring fixed costs of arbitrage an illustration portrays a risk averse firm confronting an international arbitrage opportunity

optimal cartel equilibria with imperfect monitoring abstract there exist optimal symmetric equilibria in the green porter model 4 8 having an elementary intertemporal structure such an equilibrium is described entirely by two subsets of price space and two quantities the only production levels used by firms in any contingency the central technique employed in the analysis is the reduction of the repeated game to a family of static games

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

market structure and price flexibility abstract the relationship between market form and price adjustment patterns is examined by using disaggregated price data for mexico over the 1940 1984 period frequency of price adjustment and characteristics of goods and industries appear to be related as predicted by menu cost and customer market models the pattern of response followed by individual prices to inflationary shocks is related to their frequency of price adjustment the typical pattern of response to small and large shocks may differ contrary to predictions based on models with overlapping contracts in addition the empirical results have implications for the relationship between inflation and relative price variability

intercountry differences in the relationship between relative price variability and average prices this paper provides new evidence on the relationship between relative price variability and inflation the model uses a consistently defined data set for nine european countries it benefits from the inclusion and testing of the effects of macroeconomic variables and the incorporation into the measures of inflation and dispersion adjustments for timeliness appropriate formulas and proximity the general findings of an effect on relative price variability by the macroeconomic environment and negative coefficients on unexpected inflation are supported by their occurrence in models estimated by seemingly unrelated regression and a robust systems estimator

managerial incentives and collusive behavior abstract i characterize the effects of empirically observed managerial incentives on long run oligopolistic competition when managers have a preference for smooth time paths of profits as revealed by the empirical literature on income smoothing manager led firms can sustain collusive agreements at lower discount factors capped bonus plans and incumbency rents with termination threats make collusion supportable at any discount factor independent of contracts duration when managers have these preferences incentives and demand fluctuates price wars during booms need not occur the most collusive price may then be pro cyclical

inflation and relative price variability short run vs long run abstract this paper uses recent developments in measuring correlation to examine the relationship between inflation and relative price variability rpv the results suggest that the positive correlation holds not only in the short run but also in the long run this finding has important implications for theoretical models that purport to explain this relationship such models must incorporate features that generate positive relationships that hold even in the long run

neutrality of inflation in the agricultural sector abstract the paper considers the effect of inflation on the relative prices of products traded in auction markets prices of us agricultural products are used for the period 1951 1981 since agricultural products are widely traded the real forces of supply and demand specific to agriculture are represented by foreign agricultural prices the exchange rate is entered as a separate variable influencing domestic agricultural prices trade between the usa and the ten countries included in the federal reserve board s trade weighted dollar is considered the empirical results are consistent with the hypothesis that inflation did not alter relative agricultural prices when the real forces of supply and demand and the exchange rate are held constant

on the decomposition of wage differentials the often used method for decomposing wage differentials into human capital and discrimination components is reformulated so that both t he disadvantage or cost discrimination it imposes on a black or minority wage earner and the advantage or benefit it bestows on a white or majority wage earner can be estimated copyright 1988 by mit press

relative price dispersion aggregate price movement and the natural rate of unemployment this paper develops a model of relative price stickiness and examines its implications for the relationship between relative prices inflation and the natural rate of unemployment estimation of the model demonstrates that causality in the relationship between relative and aggregate prices runs in both directions however microeconomic disturbances have been the primary source of relative price change variance over the postwar period and these micro disturbances have exerted a strong effect on inflation in the short run it also is shown that micro relative price change dispersion has had a significant influence on the natural rate of unemployment

nominal contracting in a world of uncertainty abstract this paper evaluates corporate sensitivity to relative price risk and inflation risk and suggests how the existence of various nominal contracts particularly debt and forward contracts may modify firm behavior under uncertainty by differentiating between the two types of price risk this paper demonstrates the distinct risk reduction functions served by forward contracts and debt debt primarily protects against inflation risk whereas forward contracts can be used to protect against relative price risk complications arise however because forward contracts which are denominated in nominal terms also have an impact on the firm s degree of inflation risk

the determination of price and output quotas in a heterogeneous cartel applying a selection criterion that uses both subgame perfection and the nash bargaining solution this paper investigates the relationship between firms cost functions and collusive behavior it is found that the optimal collusive price exceeds the price that the low cost firm would set if it was a monopolist comparative statics reveal that the optimal collusive price is increasing in the low cost firm s unit cost but is decreasing in the high cost firm s unit cost when the cost differential between firms is sufficiently large copyright 1991 by economics department of the university of pennsylvania and the osaka university institute of social and economic research association

the effects of product differentiation on collusive pricing abstract using the spatial competition framework of hotelling 1929 this paper explores the relationship between the degree of product differentiation and the ability of firms to collude with respect to price we show that the minimum discount factor required to support the joint profit maximum as an equilibrium outcome monotonically increases as products become better substitutes when the joint profit maximum cannot be supported the optimal collusive price is shown to decline as products become more substitutable these findings suggest that firms producing stronger substitutes tend to find it tougher to collude in terms of their product price

price or quantity in tacit collusion abstract we investigate the choice of market variable price or quantity of an optimal implicit cartel if the discount factor is high the cartel can realize the monopoly profit in both cases otherwise it is optimal for the cartel to rely on quantities in the collusive phase if goods are substitutes and prices if goods are complements the reason is that this minimizes the gains from deviations from collusive play

delegation and firms ability to collude abstract in a model of repeated cournot competition under complete information we show that delegation has no effect on cartel stability if managers collude while it may hinder cartel stability when owners collude in setting the incentive schemes if owners can choose whether to delegate or keep control of their respective firms and both groups of individuals collude or play non cooperatively in their respective variables according to the level of intertemporal discount factor then if managers are not able to collude in output levels owners delegation decision is non monotone in the discount factor