The Role of Two Frictions in Geographic Price Dispersion PDF Download
Are you looking for read ebook online? Search for your book and save it on your Kindle device, PC, phones or tablets. Download The Role of Two Frictions in Geographic Price Dispersion PDF full book. Access full book title The Role of Two Frictions in Geographic Price Dispersion by C. Y. Choi. Download full books in PDF and EPUB format.
Author: C. Y. Choi
Publisher:
ISBN:
Category :
Languages : en
Pages :
Get Book Here
Book Description
This paper empirically investigates and theoretically derives the implications of two frictions, market friction and nominal rigidity, on the dynamic properties of intra-national relative prices, with an emphasis on the interaction of the two frictions. By analyzing a panel of retail prices of 45 products for 48 U.S. cities over the period 1985-2009, we make two major arguments. First, the effect of each type of friction on the dynamics of intercity price gaps is quite different. While market frictions arising from physical distance and transportation costs have a positive impact on volatility and persistence of intercity price dispersion, nominal rigidities have a positive impact on persistence but a negative impact on volatility. This empirical evidence is different from what is predicted by standard theoretical cross-country models based on price stickiness. Second, complementarities exist between market frictions and nominal rigidities such that the marginal effect of a market friction dwindles as nominal rigidities increase. We provide an alternative theoretical explanation for this finding by extending the state-dependent pricing (SDP) model of Dotsey et al. (1999) and show that our two-city model with nominal rigidity and market frictions can successfully explain the salient features of the dynamic behavior of intercity price differences that have not been captured in previous analysis.
Author: C. Y. Choi
Publisher:
ISBN:
Category :
Languages : en
Pages :
Get Book Here
Book Description
This paper empirically investigates and theoretically derives the implications of two frictions, market friction and nominal rigidity, on the dynamic properties of intra-national relative prices, with an emphasis on the interaction of the two frictions. By analyzing a panel of retail prices of 45 products for 48 U.S. cities over the period 1985-2009, we make two major arguments. First, the effect of each type of friction on the dynamics of intercity price gaps is quite different. While market frictions arising from physical distance and transportation costs have a positive impact on volatility and persistence of intercity price dispersion, nominal rigidities have a positive impact on persistence but a negative impact on volatility. This empirical evidence is different from what is predicted by standard theoretical cross-country models based on price stickiness. Second, complementarities exist between market frictions and nominal rigidities such that the marginal effect of a market friction dwindles as nominal rigidities increase. We provide an alternative theoretical explanation for this finding by extending the state-dependent pricing (SDP) model of Dotsey et al. (1999) and show that our two-city model with nominal rigidity and market frictions can successfully explain the salient features of the dynamic behavior of intercity price differences that have not been captured in previous analysis.
Author: Federal Reserve Bank of Dallas
Publisher:
ISBN:
Category : Banks and banking
Languages : en
Pages : 56
Get Book Here
Book Description
Author: Jacques Lesourne
Publisher: Springer Science & Business Media
ISBN: 3540285377
Category : Business & Economics
Languages : en
Pages : 296
Get Book Here
Book Description
Classical microeconomics is intended to explain how a price system is able to coordinate the economic agents. But even if it can be extended to incomplete information and externalities, it remains grounded on very heroic assumptions. Agents are endowed with a very strong rationality, equilibrium is stated without a concrete process to achieve it, market is the unique institution considered. Evolutionary microeconomics is aimed at bypassing these limitations by considering a dynamic approach, however not biologically oriented. Agents have local information and bounded rationality, they are involved in explicit processes of interactions through time, various institutions sustain the market or substitute to it. It explains then some phenomena hardly explained by classical microeconomics: dispersion of prices, variety of industrial structures, financial bubbles.
Author: Jeffrey A. Frankel
Publisher: University of Chicago Press
ISBN: 0226260224
Category : Business & Economics
Languages : en
Pages : 295
Get Book Here
Book Description
Regional economic arrangements such as free trade areas (FTAs), customs unions, and currency blocs, have become increasingly prevalent in the world economy. Both pervasive and controversial, regionalization has some economists optimistic about the opportunities it creates and others fearful that it may corrupt fragile efforts to encourage global free trade. Including both empirical and theoretical studies, this volume addresses several important questions: Why do countries adopt FTAs and other regional trading arrangements? To what extent have existing regional arrangements actually affected patterns of trade? What are the welfare effects of such arrangements? Several chapters explore the economic effects of regional arrangements on patterns of trade, either on price differentials or via the gravity model on bilateral trade flows. In addition, this book examines the theoretical foundation of the gravity model. Making extensive use of the gravity model of bilateral trade, several chapters explore the economic effects of regional arrangements. In addition, this book examines the theoretical foundation of the gravity model.
Author: Richard Baldwin
Publisher: Princeton University Press
ISBN: 1400841232
Category : Business & Economics
Languages : en
Pages : 500
Get Book Here
Book Description
Research on the spatial aspects of economic activity has flourished over the past decade due to the emergence of new theory, new data, and an intense interest on the part of policymakers, especially in Europe but increasingly in North America and elsewhere as well. However, these efforts--collectively known as the "new economic geography"--have devoted little attention to the policy implications of the new theory. Economic Geography and Public Policy fills the gap by illustrating many new policy insights economic geography models can offer to the realm of theoretical policy analysis. Focusing primarily on trade policy, tax policy, and regional policy, Richard Baldwin and coauthors show how these models can be used to make sense of real-world situations. The book not only provides much fresh analysis but also synthesizes insights from the existing literature. The authors begin by presenting and analyzing the widest range of new economic geography models to date. From there they proceed to examine previously unaddressed welfare and policy issues including, in separate sections, trade policy (unilateral, reciprocal, and preferential), tax policy (agglomeration with taxes and public goods, tax competition and agglomeration), and regional policy (infrastructure policies and the political economy of regional subsidies). A well-organized, engaging narrative that progresses smoothly from fundamentals to more complex material, Economic Geography and Public Policy is essential reading for graduate students, researchers, and policymakers seeking new approaches to spatial policy issues.
Author: Jacques Lesourne
Publisher: Oxford University Press
ISBN: 9780198287391
Category : Business & Economics
Languages : en
Pages : 236
Get Book Here
Book Description
Jacques Lesourne uses rigorous modelling to analyse the emergentc, working, and dissolution of institutions in economics.
Author: United States. President
Publisher:
ISBN:
Category : United States
Languages : en
Pages : 432
Get Book Here
Book Description
Author:
Publisher: Elsevier
ISBN: 0323915140
Category : Business & Economics
Languages : en
Pages : 788
Get Book Here
Book Description
Handbook of Industrial Organization, Volume Four highlights new advances in the field, with this new volume presenting interesting chapters written by an international board of expert authors. Presents authoritative surveys and reviews of advances in theory and econometrics Reviews recent research on capital raising methods and institutions Includes discussions on developing countries
Author:
Publisher:
ISBN:
Category : Dissertations, Academic
Languages : en
Pages : 642
Get Book Here
Book Description
Author: Daniel A Dias
Publisher: International Monetary Fund
ISBN: 147555379X
Category : Business & Economics
Languages : en
Pages : 50
Get Book Here
Book Description
Recent empirical studies document that the level of resource misallocation in the service sector is significantly higher than in the manufacturing sector. We quantify the importance of this difference and study its sources. Conservative estimates for Portugal (2008) show that closing this gap, by reducing misallocation in the service sector to manufacturing levels, would boost aggregate gross output by around 12 percent and aggregate value added by around 31 percent. Differences in the effect and size of productivity shocks explain most of the gap in misallocation between manufacturing and services, while the remainder is explained by differences in firm productivity and age distribution. We interpret these results as stemming mainly from higher output price rigidity, greater labor adjustment costs and more informality in the service sector.
