The relationship between oil prices,the stock market and the exchange rate: Evidence from Mexico

This paper analyzes the variables of oil price, exchange rate and stock market index to explain how they interact with each other in the Mexican economy. The examined period includes monthly data from January 1992 to June 2017. A Vector Autoregressive Model (VAR) is implemented that includes oil prices, the nominal exchange rate, the Mexican stock market index, and the consumer price index. Results indicate that the exchange rate has a negative and statistically significant effect on the stock market index; this indicates that an appreciation of the exchange rate is related to an increase in the stock market index. It is also found that the consumer price index has a positive effect on the exchange rate and a negative effect on the stock market index. The results also indicate that oil prices are statistically significant against the exchange rate, concluding that an increase in oil prices creates an appreciation of the exchange rate. In addition, the impulse-response functions show that the effects found tend to disappear over time.     

Consumer Information and Pharmaceutical Prices: Theory and Evidence*

The impact of a reform that increased consumer information on brand name and generic pharmaceutical prices is analysed both theoretically and empirically. The theoretical results show that an increase in information likely reduces the price of brand name pharmaceuticals, while the results regarding generics are less clear. In the empirical part of the article, the introduction of the substitution reform in the Swedish pharmaceuticals market in October 2002 is used as a natural experiment regarding the effects of increased consumer information. The results clearly show that the reform has lowered the price of both brand name and generic pharmaceuticals.     

How does competition among lodging sharing platforms affect welfare and profits?

We investigate the likely effect on prices, consumer surplus, and profits of intensified competition among peer‐to‐peer lodging platforms. We find that intensified competition in the sharing economy may give rise to some surprising results. For instance, intensified competition may allow platforms to charge higher fees from peer suppliers and lead, therefore, to a decline in consumer surplus. Only if the market of professional hoteliers is highly competitive, intensified competition among platforms leads to the traditional outcome that the entry of more platforms leads to lower fees charged from consumers and to enhanced consumer surplus. We also find that platforms may actually earn higher profits when there is intensified competition among professional hoteliers. In addition, while intensified competition among professional hoteliers leads to a decline in the fees that platforms can charge customers, it may actually result in higher lodging prices. We explain these counterintuitive results by the dual role that the lodging price plays in affecting the welfare of individuals active in the sharing economy. While a higher price has an adverse effect on the welfare of demanders of lodging it benefits peer suppliers of lodging because a higher lodging price raises the compensation they receive when offering lodging capacity to a platform.     

Endogenous search,price dispersion,and welfare

This paper studies the welfare cost of inflation in a frictional monetary economy with endogenous consumer search. Equilibrium entails price dispersion, where sellers compete for buyers by posting prices. We identify three channels through which inflation affects welfare. The real balance channel is the source of welfare loss. Its interaction with the price posting channel generates a welfare cost larger than Lucas (2000). The search channel reduces the welfare cost by more than one half through general equilibrium effect. The aggregate effect of these three channels on welfare is non-monotonic. Additionally, the welfare cost of inflation fluctuations is negligible.     

The London Business School with Gower Publishing

Output has stagnated in the main industrialised countries this year but we expect the benefits of lower oil prices to show up in rapid growth from now on. The present weakness in the world economy stems from tighter US fiscal policy and the oil price shock itself. These have combined to reduce domestic demand in the United States, and hence to cut the market for Japanese exports in particular, and also to reduce expenditure by energydependent countries and companies. A further factor is that, with prices of oil-based products falling, there is an incentive to delay expenditure. We expect this impact effect of OPEC III to be short-lived and to give way to its positive effects in the second half of this year. Specifically, we expect consumer spending to lead the recovery as real incomes will be boosted by the terms of trade gain from lower oil prices - equivalent to 3 per cent of GNP in the OECD area as a whole. On the basis of oil prices holding at $15. we forecast OECD output growth of 3 per cent this year, rising to 41/2 per cent in 1987. Additionally, we expect lower oil prices to produce a significant reduction in world inflation. Zero growth of producer prices is forecast on average this year arid consumer price inflation is expected to fall to wards 2 per cent in the course of the year.     

Housing and the Korean economy

This paper explores the nexus between housing and the Korean economy. It starts with an overview of the size, growth, and volatility of residential investment in conjunction with long-term resource allocation and short-term macroeconomic fluctuations. Then, the evolution of housing finance and its implications for recent house price run-up are discussed. The relationships among housing price, consumer spending, and inflation are also investigated. Particular attention is paid to the debate over house price bubbles, housing wealth effects on consumption, and the causality between house price and inflation. The paper concludes with a brief assessment of government intervention to stabilize house prices.     

Analysis of a dynamic, decentralized exchange economy

A model of a dynamic exchange economy is presented. Similarly to the Walrasian equilibrium problem, each consumer is characterized by a feasible set and by an instantaneous demand function, that depends on the price vector, time, and the commodity holding. The commodity holding of each consumer varies, at each moment, according to this instantaneous demand function. We show that the market can choose prices that keep the commodity holding of each consumer within his consumption set, while ensuring that the aggregate commodity holding satisfies the scarcity constraints of the market.     

Capital,credit constraints and the comovement between consumer durables and nondurables

Evidence indicates that consumer durables are more flexibly priced than nondurable goods and services. In otherwise standard two-sector neoclassical sticky-price models with flexible durable prices, following monetary tightening, nondurables decrease but consumer durables increase. Friction in lending between households can resolve the comovement problem if durable prices are sticky. However, if durable prices are flexible, friction in lending fails to generate joint decline. This paper resolves the co-movement problem by adding capital into a model with flexible durable prices and friction in lending. When capital is needed in production, monetary tightening reduces the relative price of durables which induces investment and decreases firms' real profits in the short run. Due to fewer profits remitted from firms, savers have a lower disposable income and cannot increase expenditures on consumer durables as much as otherwise. As a consequence, aggregate consumer durables decrease and there is a joint decline of nondurables and consumer durables.     

旁地产价格增长是否阻碍城镇化进程——基于我国31个省级单位面板数据的经验分析

通过对我国31个省级单位面板数据进行实证研究，发现从全国整体来看，房地产价格上涨对城镇化进程体现出正向促进作用，但是根据地区层级上的分析，在中西部地区房地产价格增长对城镇化具有显著的负向抑制作用。可见，现阶段房地产价格显然在阻碍城乡间劳动力要素流动方面扮演了重要角色。不断增长的房价增加了城镇化成本，对于农村劳动力转移起到阻碍作用。因此，为了保障新型城镇化的实现，必须通过土地、财政、金融等制度变革与其他市场化手段相结合，遏制房地产价格继续过快上涨，从而实现房地产市场与新型城镇化的协调发展。     

Resale price maintenance in a model of consumer search

A retail search model of Salop and Stiglitz (1977) is adapted to analyze manufacturer incentives for resale price maintenance. For some retailer cost functions and distributions of consumer search costs, imposition of a minimum price for retailers causes a price distribution to collapse to an intermediate price. Manufacturers may benefit from price floors when sales to high-search-cost consumers that have obtained lower prices increase sufficiently so as to offset decreased sales to other consumers facing higher prices. In contrast to previous work, no free-riding problem with respect to dealer services is necessary for manufacturers to prefer banning discounting of their products.     

The impact of rising EU Allowance prices on core inflation in the Eurozone

This article examines the impact of EU Allowance (EUA) prices on core inflation in the Eurozone between 2005 and 2022. The empirical results suggest that a positive shock to the EUA price led to higher long-run inflation expectations and core inflation. This implies that the rise in EUA prices can be passed on to consumers and enterprises, leading to an increase in production costs and consumer prices. And, while a positive shock to EUA prices may promote investment in renewable energy in the short term, the impact is not statistically significant and does not last long. The results suggest considerable potential for European policymakers to re-examine policy mechanisms to accelerate renewable energy investment and maintain price stability in the medium term.     

The effects of monetary policy in Russia: A factor-augmented VAR approach

Using factor-augmented vector autoregressive (FAVAR) models, this study examines the effects of the Central Bank of Russia’s (CBR) monetary policy on economic indicators. The sample includes 39 monthly macroeconomic series and covers the period 2004 through 2019. The analysis revealed counter-intuitive results, with consumer prices often responding positively to a contractionary monetary policy shock, and vice versa; this is related to the impossible trinity. The ruble exchange devaluation was accompanied by price increases through an import price pass-through, so the CBR chose exchange stability and free capital flows out of the impossible trinity, temporarily subordinating monetary policy independence. Such independence was limited, possibly due to Russia’s high dependence on energy exports and the link between energy prices and the exchange rate. The findings indicate no direct evidence of an effect of monetary policy tightening on the decrease in consumer prices; rather, the attenuation of ruble depreciation may have helped to stabilize prices, even after the CBR adopted inflation targeting.     

Dynamic competition with consumer inertia

We study a framework where two duopolists compete repeatedly in prices and where chosen prices potentially affect future market shares, but certainly do not affect current sales. This assumption of consumer inertia causes (noncooperative) coordination on high prices only to be possible as an equilibrium for low values of the discount factor. High discount factors increase opportunism and aggressiveness of competition to such an extent that high prices are no longer sustainable as an equilibrium outcome. Moreover, we find that both monopolization and enduring market share and price fluctuations (price wars) can be equilibrium path phenomena without requiring exogenous shocks in market or firm characteristics.     

Consumer Stockpiling and Price Competition in Differentiated Markets

In many storable-goods markets, firms are often aware that consumers may strategically adjust purchase timing in response to expected price dynamics. For example, in periods when prices are low, consumers stockpile for future consumption. This paper investigates the dynamic impact of consumer stockpiling on competing firms' strategic pricing decisions in differentiated markets. The necessity of equilibrium consumer storage for storable products is re-examined. It is shown that preference heterogeneity generates differential consumer stockpiling propensity, thereby intensifying future price competition. As a result, consumer storage may not necessarily arise as an equilibrium outcome. Economic forces are also investigated that may mitigate the competition-intensifying effect of consumer inventories and that, hence, may lead to equilibrium consumer storage.     

IMPACTS OF FOOD PRICES ON THE ECONOMY: SOCIAL ACCOUNTING MATRIX AND MICROSIMULATION APPROACH IN INDONESIA

This study investigated the impacts of increasing the prices of heavily protected food commodities in Indonesia on producer and consumer prices. It also evaluated the changes in household living expenses and poverty. The Indonesian Food Social Accounting Matrix was developed along with a price multiplier matrix–microsimulation approach that was used to analyze problems. Poor rural households were the most negatively affected by the increments in food prices. This result contrasted with the standard political argument stating that high rice prices will decrease poverty, particularly in rural areas where the poor live or work as farmers. Of all the food commodities observed, the changes in the rice prices had the most substantial impact on both producer and consumers price, as well as the households’ living cost, particularly low‐income households. Therefore, an increase of 25% in rice price will raise urban, rural, and national poverty levels by 0.13%, 0.10%, and 0.11%, respectively.     

基于CGE模型天然气价格波动的传导效应

天然气在我国能源结构中有着重要的地位,天然气价格的变化会对我国经济和下游产业链产生重要的影响。论文利用CGE模型研究了我国天然气价格波动对我国宏观经济、居民福利和微观产业部门的影响,对不同的天然气价格冲击进行了情景模拟分析,研究表明:天然气价格波动对宏观经济变量和21个产业有很大的影响;在相同的价格波动下对不同产业的影响是不同的,与天然气产业关联度越大,其影响也就越大。在此基础上,对我国宏观经济政策和天然气价格改革提出了一些建议。     

HOUSE PRICES AND THE ECONOMY

UK house prices more than doubled from 1985 until 1989, with house price inflation over the previous year peaking at 34 per cent in the fourth quarter of 1988. The ratio of house prices to average incomes reached levels which surpassed even those experienced during the 1972-73 house price boom. This sharp increase in housing wealth has been a major factor in the fall in the savings ratio over the past three years. This forecast release examines the prospects for future house price movements, discusses the sources of the recent house price boom and finally considers the possible impact on consumer expenditure.     

Oil prices,economic activity and inflation: evidence for some Asian countries

In this paper we study the oil prices–macroeconomy relationship by means of studying the impact of oil price shocks on both economic activity and consumer price indexes for six Asian countries over the period 1975Q1–2002Q2. The results suggest that oil prices have a significant effect on both economic activity and price indexes, although the impact is limited to the short run and more significant when oil price shocks are defined in local currencies. Moreover, we find evidence of asymmetries in the oil prices–macroeconomy relationship for some of the Asian countries.     

WORLD OUTLOOK

Events in the Gulf have finally brought an end to the world economic boom of the last eight years. The oil price shock itself is only partly responsible for the downturn. The previous tightening of monetary policy in the face of inflationary pressures and the end of a rapid period of credit and asset price expansion had severely weakened the ability of some economies to respond to the shock. This is reflected in the diversity of response, most obviously in the United States where Fed fine tuning and the credit crunch have already weakened the economy. The rise in oil prices has led to a sudden collapse in consumer confidence and a swift cutback in output. Although we do not expect the recession to be deep, the financial problems will delay recovery. The Japanese economy was already in financial difficulties before the shock, although the real economy was stronger and here we expect a sharp deceleration from almost 6 per cent growth last year to around 3.5 per cent. In contrast the German economy, partly shielded by the substantial appreciation of the DM over the last year, has been affected less by the oil price shock and we expect the consumer and investment boom to continue this year as the economies merge. This provides a welcome boost to other European economies.     

CHINESE EXPERIENCE IN THE INTRODUCTION OF A MARKET MECHANISM INTO A PLANNED ECONOMY: THE ROLE OF PRICING

Abstract. A brief review is first presented of the changes in pricing institutions in China since 1949, with particular emphasis on the shift from an equilibrium price system to a distorted price system. The authors argue that distorted prices are harmful to economic growth even in a planned economy, since even an experienced economic planner can never escape from the full implications of a distorted price system. Examples are given showing the detrimental results of such a system. The central point of China's economic reform is the extension of decision-making power to enterprises and the introduction of a market mechanism so as to improve microeconomic efficiency. But such a goal cannot easily be achieved due to the false information provided by the distorted price system. So price adjustment becomes an issue of primary importance, and the authors discuss the difficulties for price adjustment posed by various interest groups.