Long-term impacts of import prices on domestic prices and wages

Zusammenfassung Anhand österreichischer Quartalsdaten wurde untersucht, ob zwischen Preisen, Reallöhnen, Importpreisen und anderen Variablen kointegrierende Beziehungen bestehen. Da für die untersuchten Zeitreihen mehrere Kointegrationsvektoren gefunden wurden, ergab sich ein Interpretationsproblem. In dieser Arbeit wurde der Kointegrationsraum auf eine Weise transformiert, die es ermöglichte, die Kointegrationsvektoren als Long-run-Multiplikatoren zu interpretieren und daher die langfristigen Auswirkungen einer Importpreiserhöhung auf das heimische Lohn- und Preisniveau zu untersuchen. (Der Anhang beschäftigt sich mit der Frage, unter welchen Voraussetzungen solch eine kausale Interpretation möglich ist.) Die geschätzten Effekte erwiesen sich als numerisch sehr bedeutend — sie liegen etwas höher als in anderen vergleichbaren empirischen Studien — und gegenüber einer Änderung der Auswahl der Variablen als sehr robust.

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I wish to thank H. Abele, E. Dockner, H. Klausinger, K. Neusser and three anonymous referees for many helpful comments and suggestions.     

Adjustment costs and factor demands in Canadian manufacturing industries

This paper examines whether there is a relationship between the commodity terms of trade (the price of primary commodities relative to the price of manufactures) and the net barter terms of trade of 42 Sub-Saharan African countries. For most countries, there is little evidence of a stable, long-run relationship between the two terms of trade series. Accordingly, the practice in the literature of proxying for movements in any given country's terms of trade by using an aggregate index of relative commodity prices is inappropriate, and is likely to engender misleading policy conclusions.     

Link between innovation and productivity in Canadian manufacturing industries

Empirical studies commonly use research and development (R&D) to measure innovation and often find, especially in Canada, no strong link between productivity and innovation. In this article, we model innovation as an unobservable latent variable that underlies four indicators: R&D, patents, technology adoption, and skills. We find that these indicators are reasonably good measures of innovation for aggregate manufacturing. However, except for skills, the reliability of the indicators for innovation differs among individual industries. Our innovation indexes, based on the latent variable model, show that most manufacturing industries became more innovative over the 1980–1997 period. The pace of innovation in the electrical and electronic products industry accelerated during the 1990s. In addition, we show that the new measure of innovation has a positive and statistically significant impact on productivity. It takes from 1 to 3 years, depending on the industry, for innovation to generate an impact on productivity.     

Determinants of investment and innovation expenditure in Polish manufacturing industries

This article analyses determinants of sectoral R&D and innovation expenditure as well as investment in Polish manufacturing industries in 1994–2004. The estimated coefficients for user cost of capital are generally in line with the neoclassical model of investment, except for R&D intensity. The latter are primarily discouraged by systemic uncertainty. The rate of growth of sales is not a prominent determinant of investment and innovation expenditure. Market concentration coupled with uncertainty has a damaging effect on physical capital investment but it promotes R&D expenditure and leaves innovation intensity unaltered.     

Exchange rate pass-through and its determinants in Canadian manufacturing industries

In this paper the pass-through of exchange rate changes into the real prices of domestically produced and imported goods in Canadian manufacturing industries is examined through industry estimates of the pass-through elasticities and a cross-section analysis of their determinants. We find that the domestic pass-through elasticity increases with the effect of the exchange rate on domestic costs of production, the export share, the elasticity of substitution between imports and domestic goods, and the domestic advertising intensity. The import elasticity increases with the elasticity of substitution and the rate of price protection and decreases with advertising intensity. JEL Classification: L60, F14
Les effets de changements dans le taux de change sur les prix réels dans les industries manufacturières canadiennes. Ce mémoire examine les effets des changements dans le taux de change sur les prix réels des biens produits au Canada ou importés pour les industries manufacturières canadiennes en construisant des estimés par secteur des élasticités de transfert et en examinant leurs déterminants dans une analyse trasnversale. On montre que l'élasticité de transfert domestique s'accroît à proportion que l'effet du taux de change sur les coûts internes de production, la part des exportations, l'élasticité de substitution entre importations et biens domestiques, et l'intensité de publicité au plan interne sont importants. L'élasticité des importations s'accroît avec l'élasticité de substitution et le taux de protection des prix, et décroît avec le niveau d'intensité de la publicité.     

Exchange rate fluctuations and labour market adjustments in Canadian manufacturing industries

We estimate the link between exchange rate fluctuations and the labour input of Canadian manufacturing industries. The analysis is based on a dynamic model of labour demand and the econometric strategy employs a panel two‐step approach for cointegrating regressions. Our data are drawn from a panel of 20 manufacturing industries from the KLEMS database and cover a long sample period that includes all cycles of appreciation and depreciation of the Canadian dollar over the last 50 years. Our results indicate that exchange rate fluctuations have significant long‐term effects on the labour input of Canada's manufacturing industries, especially for trade‐oriented industries, but that these long‐term impacts materialize very gradually following shocks.     

Determinants of cyclical properties of the price-cost margin in US manufacturing industries

Supergame theoretical predictions tell that oligopoly pricing may be procyclical or counter-cyclical. Industry by industry analysis shows that the speed of industry growth and the size of fixed cost are crucial in distinguishing characteristically counter-cyclical industries from procyclical industries. Counter-cyclical industries are characterized by high growth of demand and low fixed costs. Procyclical industries are characterized by low growth of demand and high fixed costs.     

International trade,secondary output and concentration in Canadian manufacturing industries, 1979

Census concentration measures do not account for either secondary output or imports. Taking these into account, for Canada in 1979, shows that measured concentration substantially overstates the degree to which a small number of firms controls a large proportion of industry output. Correcting for imports has a much greater effect than correcting for secondary output. These results are much more apparent in national than regional industries. On the other hand, taking into account exports has virtually no effect on estimates of concentration. These findings strengthen, as well as throw additional light on earlier work for the UK and Canada, which made ad hoc corrections to census concentration measures.     

A simultaneous analysis of exchange-rate passthrough into prices of imperfectly substitutable domestic and import goods

For the most part, the relationship between import and domestic prices, and their common linkages to currency movements, has been ignored, especially at the industry level. This paper examines the direct and indirect impacts of exchange rates on prices, analyzing a panel of 26 4-digit SIC industries over the 1978–1987 period. The results are consistent with the view that the indirect influence of exchange rates on domestic prices through import competition clearly dominates any direct impact, and that import prices are motivated largely by pricing-to-market. We find some evidence of a limiting effect of market concentration on passthrough into both domestic and import prices, while an increased reliance on imported inputs and increased substitutability between domestic and foreign goods each enhances the passthrough into domestic prices.     

Interrelationship among foreign presence,domestic sales and export intensity in Chinese manufacturing industries

Using panel data on six Chinese manufacturing industries over the period 2005–2007, this article explores the interrelationship among foreign presence, domestic sales and export intensity of local firms. We find that the domestic sales and exports are complementary for local firms in China’s pharmaceutical industry, whereas in the case of the textile, transportation equipment, beverage, communication equipment and general equipment manufacturing industries, domestic sales and exports are substitutes. An increase in the average domestic sales increases foreign presence in all industries. The same applies to an increase in the average export intensity. An increase in the level of competition in China’s textile industry increases the export intensity as well as domestic sales of local textile firms. However, an increase in the level of competition in the pharmaceutical industry leads to a very large decrease in export intensity of local pharmaceutical firms. In the case of China’s transportation equipment manufacturing industry, an increase in the level of competition decreases domestic sales of local firms. Furthermore, an increase in the firm size increases domestic sales of Chinese firms in all six manufacturing industries.     

Effects of trade liberalization on domestic prices: Some evidence from Tunisian manufacturing

This paper presents estimates of the competitive effects of trade liberalization on domestic pricing behaviour of Tunisian manufacturing industries. The theoretical framework is based on a dynamic flexible adjustment model of price determination in a small open economy. It investigates the process of adjustment in price level toward a desired level. The adjustment process is both industrial and time-specific. The empirical results show that, in the long run, domestic price responds greatly to import penetration, followed by demand pressure. There was a negative effect from import competition on domestic price. Trade policy is a viable policy option to promote competitiveness. (JEL: C33, E31, F14, L60)     

Determinants of commodity prices

A panel of annual information between 1960 and 2006 for approximately 50 different commodity prices and some other variables and sources is used to tests the determinants of commodity prices. According to the evidence, interest rates seem to maintain a negative relationship with commodity prices.     

Relative prices,investment incentives,cash flow,and vintage investment functions for UK manufacturing industries

This paper has two objectives: First, to calculate the present value of all investment incentives for ten 2-digit manufacturing industries and for total manufacturing over the period 1951–1974, by using actual rates of return as measures of the discount rate. Second, to estimate industry investment functions based on a vintage production model whose speed of adjustment is made a function of cash flow. The parameter estimates are used in a simulation analysis in order to estimate the effects on manufacturing investment of the various incentive systems adopted in the UK over the period 1951–1974 and to assess the potential impact of alternative policies.     

Exchange rate pass-through in Turkish export and import prices

This article investigates the effects of horizontal acquisitions on the performance of target firms in the 1990s. Using French manufacturing firm-level data, we examine two main indicators of performance: the profit and the productive efficiency. We distinguish domestic from cross-border acquisitions. To evaluate the impact of take-overs, we implement appropriate difference-in-difference estimation techniques associated to a matching propensity score procedure. We find that Mergers &?Acquisitions (M&A) do not increase the profit of French target firms, even on the long run. However, they clearly raise the productivity of target firms. These results suggest that firms probably redistribute efficiency gains at the upstream and/or downstream production stage. There is no evidence of an increase in market power. In addition, the consequences of domestic and cross-border M&A significantly differ. Efficiency gains are stronger for cross-border M&A. This conclusion is however true only for extra-European Union operations. The achievement in the European economic integration certainly explains the absence of difference between European and domestic acquisitions. Finally, our results cast some doubt on the frequent discrimination attitude towards foreign takeovers and the fears of their impact on firms’ performance and the host country's welfare.     

Skill premium in Portuguese manufacturing industries

The debate between the skill-biased technological change (SBTC) approach and the international trade (IT) explanation to obtain the best explanation for the wage gap between skilled and unskilled workers continues. In this article, we divide the Portuguese manufacturing industries into high-tech and low-tech and study the approach that best justifies the wage gap, for the period between 2007 and 2014. The results point out that the SBTC approach is the main explanation to the formation the wage gap between the labour force with tertiary education (skilled) and with secondary and primary education (unskilled).     

Exploring the influence of industries and randomness in stock prices

This study explores the behavior of time series of historical prices and makes two additional contributions to the literature. In summarized form, we present an overview of each of the financial theories that discuss the movements of stock prices and their connection with industry trends. Within this theoretical framework, we first propose that prices be distinguished by following stock prices and a random-walk approach, and second, that the analysis of historical prices be broken down by industries. Similarities among price series are extracted through a clustering methodology based on an approach to non-computable Kolmogorov complexity. We model price series by following geometric Brownian motion and compare them to historical series of stock prices. Our first contribution confirms the existence of hidden common patterns in time series of historical prices that are clearly distinguishable from simulated series. The second contribution claims strong connections among firms carrying out similar industrial activities. The results confirm that stock prices belonging to the same industry behave similarly, whereas they behave differently from those of firms in other industries. Our research sheds new light on the stylized feature of the non-randomness of stock prices by pointing at fundamental aspects related to the industry as partial explanatory factors behind price movements.     

Costs,prices and profitablity in UK manufacturing

The 1984 input–output tables make it possible to estimate directly the cost structure of any industrial sector. The results of this calculation are presented for the non-food manufacturing sector for the period 1970–87. This cost estimate is found to be part of a co-integrating set with output prices, in contrast to the specification implied by a Cobb–Douglas production function. The other elements of the equilibrium vector are an index of capacity utilization, positively related to the mark-up, and the variance of inflation (proxying inflation uncertainty), which is negatively related. Import prices have an indirect effect on the mark-up, via demand.     

Exchange rate uncertainty and import prices in the euro area

This paper analyzes the effects of exchange rate uncertainty on the pricing behavior of import firms in the euro area. Uncertainty is measured via the volatility of the structural shocks to the exchange rate in a nonlinear vector‐autoregressive model framework and is an important determinant of import prices. An increase in exchange rate uncertainty is associated with a fall in prices on average, which suggests that the exchange rate risk is borne by the importers. Controlling for the origin of imports (within or outside the euro area) is important for assessing the impact of exchange rate movements on prices.     

Determinants of technological change in the service industries

The Service Industries provide numerous examples of how technological change may be impeded. Either the economic state of the industry or the state of scientific and engineering knowledge can limit inventive activity and productivity advance. Consumer ignorance, lack of producer incentives, complex production interdependencies, and market fragmentation are only a few factors limiting the role of demand in stimulating the discovery and diffusion of new services and production techniques. On the cost side, technical uncertainty, time horizons, and discount rates affect decisions to engage in R & D. In addition, strategic market considerations, such as potential entry, reaction speeds of rivals, and numbers of competitors affect the benefits from early introduction of new technologies. These institutional and economic considerations need to be taken into account for technological forecasting related to the Service Industries.