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Are Price Countercyclical
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Book Synopsis Are Prices Countercyclical? by : Mr.Bankim Chadha
Download or read book Are Prices Countercyclical? written by Mr.Bankim Chadha and published by International Monetary Fund. This book was released on 1992-10-01 with total page 44 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper examines the comovement of prices with the cyclical component of output. It argues that determining the cyclical behavior of prices by applying the same stationarity-inducing transformation to the levels of both output and prices, and examining the correlations of the resulting series, can be misleading. A more appropriate procedure is to examine the correlations between the rate of inflation and the level of the cyclical component of output. In post-war U.S. data the correlations between similarly transformed price and output data are consistently and often strongly negative, as reported recently by a number of authors as evidence of countercyclical price behavior. The rate of inflation, however, is consistently and usually strongly positively correlated with various measures of the cyclical component of output.
Book Synopsis Are Prices Countercyclical? Evidence From the G-7 by : Mr.Bankim Chadha
Download or read book Are Prices Countercyclical? Evidence From the G-7 written by Mr.Bankim Chadha and published by International Monetary Fund. This book was released on 1994-08-01 with total page 28 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper re-examines the cyclical behavior of prices using postwar quarterly data for the G-7. We confirm recent evidence that the price level is countercyclical. However, we find strong evidence that the inflation rate is procyclical in our sample. Our results show the importance of making a clear distinction between inflation and the cyclical component of the price level when reporting and interpreting stylized facts regarding business cycles.
Book Synopsis Countercyclical Pricing by : Umut Guler
Download or read book Countercyclical Pricing written by Umut Guler and published by . This book was released on 2019 with total page 14 pages. Available in PDF, EPUB and Kindle. Book excerpt: The well documented phenomenon of countercyclical prices goes against intuition as basic economic theory predicts a price increase when there is an outward shift in the demand curve. In this research, we provide a consumer heterogeneity based explanation for why the prices of seasonal products might be falling during their peak demand periods. We derive conditions under which the optimal pricing scheme could be countercyclical due to the heterogeneous seasonal shifts in consumer valuations. The firm exploits this heterogeneity and price discriminates so that only the higher valuation customers are served during the off-season. We consider two product categories (canned soup and tuna) studied in the literature and provide empirical support for this explanation.
Book Synopsis Are Prices Countercyclical? by : Bankim Chadha
Download or read book Are Prices Countercyclical? written by Bankim Chadha and published by . This book was released on 1993 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Countercyclical Pricing in Customer Markets by : Kyle Bagwell
Download or read book Countercyclical Pricing in Customer Markets written by Kyle Bagwell and published by . This book was released on 2004 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: I present a dynamic model of price determination in customer markets that are subject to exogenous business cycle fluctuations. The business cycle is described in terms of a Markov process, in which market demand alternates stochastically between fast growth (boom) and slow growth (recession) phases. In the consumers' preferred equilibrium outcome, (1) prices are below the monopoly level, and (2) prices are countercyclical when demand growth rates are positively correlated through time. A firm faces a dynamic trade-off when making its current price selection. While a higher price may raise a firm's profit in the short term, it also may diminish the firm's reputation for low prices, leading to lower profits in the future.
Book Synopsis Are prices countercyclical? evidence from the G-7 by : Fondo Monetario Internacional
Download or read book Are prices countercyclical? evidence from the G-7 written by Fondo Monetario Internacional and published by . This book was released on 1994 with total page 19 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Cyclical Pricing of Durable Goods by : Mark Bils
Download or read book Cyclical Pricing of Durable Goods written by Mark Bils and published by . This book was released on 1989 with total page 76 pages. Available in PDF, EPUB and Kindle. Book excerpt: I examine price markups in monopolisticly-competitive markets that experience fluctuations in demand because the economy experiences cyclical fluctuations in productivity. Markups depend positively on the average income of purchasers in the market. For a nondurable good average income of purchasers is procyclical; so the markup is procyclical. For a durable good. however. the average income of purchasers is likely to decrease in booms because low income consumers of the good concentrate their purchases in boom periods; so the markup is likely countercyclical. This is particularly true for growing markets. I find markups make the aggregate economy fluctuate more in response to productivity if goods are sufficiently durable.
Book Synopsis ARE PRICE COUNTERCYCLICAL? by : Bankim Chadha
Download or read book ARE PRICE COUNTERCYCLICAL? written by Bankim Chadha and published by . This book was released on 1992 with total page 31 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Investigating a Countercyclical Price Level with Procyclical Inflation by : Edward A. Roeger
Download or read book Investigating a Countercyclical Price Level with Procyclical Inflation written by Edward A. Roeger and published by . This book was released on 2007 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: Recent work of the last 15 years has sought to revaluate what are often thought of as consistent business cycle facts, and one of these in particular is that of procyclical prices. Several publications have found empirical evidence that, counter to widespread acceptance, this cycle fact is not always true, and in the post World War II era prices have indeed been countercyclical. It is the goal of this work to replicate this finding in a set of simulated time series while also keeping inflation procyclical. Furthermore, the simulations show that this occurrence can be produced by moving the simulated time series of the price level out of phase with the output time series. This resulting phase difference can then be adapted to an empirical time frame as a number of quarters that the price level leads output. This process involves calibrating the representative output cycle length in the simulation with a representative output cycle length in empirical data. The conclusion of this study provides a link between the correlation of output and the price level with the phase difference between the cycles of the two variables. Future models could seek to explain this phase difference or operate within the partition suggested in these results.
Book Synopsis Are Prices Countercyclical? by : Weshah Razzak
Download or read book Are Prices Countercyclical? written by Weshah Razzak and published by . This book was released on 1995 with total page 69 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Asset Pricing with Countercyclical Household Consumption Risk by : George M. Constantinides
Download or read book Asset Pricing with Countercyclical Household Consumption Risk written by George M. Constantinides and published by . This book was released on 2014 with total page 49 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper presents evidence that shocks to household consumption growth are negatively skewed, persistent, and countercyclical and play a major role in driving asset prices. We construct a parsimonious model in which heterogeneous households have recursive preferences and a single state variable drives the conditional cross-sectional moments of household consumption growth. We demonstrate, under certain conditions, the existence of equilibrium in such a heterogeneous-household economy. The estimated model provides a good fit for the moments of the cross-sectional distribution of household consumption growth and the unconditional moments of the risk free rate, equity premium, market price-dividend ratio, and aggregate dividend and consumption growth. The explanatory power of the model does not derive from possible predictability of aggregate dividend and consumption growth as these are intentionally modeled as i.i.d. processes. Consistent with empirical evidence, the model implies that the risk free rate and price-dividend ratio are pro-cyclical while the expected market return and the variance of the market return and risk free rate are countercyclical. Household consumption risk also explains the cross-section of excess returns.
Book Synopsis Achieving Price, Financial and Macro-Economic Stability in South Africa by : Nombulelo Gumata
Download or read book Achieving Price, Financial and Macro-Economic Stability in South Africa written by Nombulelo Gumata and published by Springer Nature. This book was released on 2021-05-27 with total page 556 pages. Available in PDF, EPUB and Kindle. Book excerpt: This book explores the macro-financial effects of central bank balance sheets, macro-prudential tools, and financial regulation in South Africa. How employment can be maximised while keeping inflation low and stable is examined in relation to the structural changes required to alter the composition of South African bank balance sheets. Quantitative methods and approaches are utilised to highlight the impact of suggested policies. This book aims to outline strategies and policy interventions that can help achieve the National Development Plan in South Africa. It will be of interest to researchers and policymakers working within development economics, African economics, development finance, and financial policy.
Book Synopsis Mitigating the Deadly Embrace in Financial Cycles by : Mr.Jaromir Benes
Download or read book Mitigating the Deadly Embrace in Financial Cycles written by Mr.Jaromir Benes and published by International Monetary Fund. This book was released on 2016-04-08 with total page 26 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper presents a new version of MAPMOD (Mark II) to study the effectiveness of macroprudential regulations. We extend the original model by explicitly modeling the housing market. We show how household demand for housing, house prices, and bank mortgages are intertwined in what we call a deadly embrace. Without macroprudential policies, this deadly embrace naturally leads to housing boom and bust cycles, which can be very costly for the economy, as shown by the Global Financial Crisis of 2008-09.
Book Synopsis Countercyclical Taxation and Price Dispersion by :
Download or read book Countercyclical Taxation and Price Dispersion written by and published by . This book was released on 2008 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Causal Effects of Countercyclical Interest Rates by : Kris James Mitchener
Download or read book Causal Effects of Countercyclical Interest Rates written by Kris James Mitchener and published by . This book was released on 2022 with total page 51 pages. Available in PDF, EPUB and Kindle. Book excerpt: We estimate the causal impact of countercyclical interest rates on macroeconomic outcomes in open economies. To identify countercyclical interest rates, we construct a new database of short- term interest rates, principal exports, and international commodity prices for 40 economies from 1870 to 1913. This era of capital mobility, nominal anchors, specialization and trade integration, exposed economies to multiple exogenous demand-side shocks. Specialization and trade integration subjected economies to a "commodity lottery" in the form of price fluctuations in world markets. Capital mobility and a currency peg exposed them to interest-rate movements originating in the U.K., the largest economy and linchpin of the classical gold standard. We identify (i) positive effects of commodity-export prices on real GDP and the domestic price level and (ii) negative effects of exogenous changes in short-term interest rates on the same variables. We then show that countercyclical interest rates, defined relative to export-price shocks, stabilized both output and the domestic price level. This stabilization was more effective for the price level than for output.
Book Synopsis The Cyclical Behavior of the Price-Cost Markup by : Christopher J. Nekarda
Download or read book The Cyclical Behavior of the Price-Cost Markup written by Christopher J. Nekarda and published by . This book was released on 2013 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: A countercyclical markup of price over marginal cost is the key transmission mechanism for demand shocks in textbook New Keynesian (NK) models. This paper re-examines the foundation of those models. We study the cyclicality of markups in the private economy as well as in detailed manufacturing industries. First, we show that frameworks for measuring markups that have produced the strongest evidence for countercyclicality produce the opposite result when we substitute new methods and data. Second, because the NK model's predictions differ by the nature of the shock, we present evidence on the cyclicality of the markup conditional on various types of shocks. Consistent with the NK model, we find that markups are procyclical conditional on a technology shock. However, we find that they are either procyclical or acyclical conditional on demand shocks. Thus, the textbook NK explanation for the effects of government spending or monetary policy is not supported by the behavior of the markup.
Book Synopsis Reexamining the Cyclical Behavior of the Relative Price of Investment by : Paul Beaudry
Download or read book Reexamining the Cyclical Behavior of the Relative Price of Investment written by Paul Beaudry and published by . This book was released on 2014 with total page 31 pages. Available in PDF, EPUB and Kindle. Book excerpt: We document the cyclical behavior of several measures of the relative price of investment goods for the U.S. economy over the last fifty years. Our main result is that there is no robust evidence that this relative price is countercyclical in the data. Furthermore, for the recent (post-Volcker) period, the relative price of investment appears predominantly procyclical. When looking at more disaggregated series, most measures are procyclical, a few acyclical, and only the price of equipment is countercyclical for some periods and measures. The procyclical behavior of the relative price of aggregate investment is also found for the six other countries of the G7.
