Nonuniform Staggered Prices and Output Persistence

Staggered prices are a fundamental building block of New Keynesian dynamic stochastic general equilibrium models. In the standard model, prices are uniformly staggered, but recent empirical evidence suggests that deviations from uniform staggering are common. This paper analyzes how synchronization of price changes affects the response to monetary policy shocks. I find that even large deviations from uniform staggering have small effects on the response of output. Aggregate dynamics in a model of uniform staggering may serve well as an approximation to a more complicated model with some degree of synchronization in price setting.     

Estimating the recreational value of Pakistan's largest freshwater lake to support sustainable tourism management using a travel cost model

Keenjhar Lake, Pakistan's largest freshwater lake and an important Ramsar site, provides habitat for internationally important water birds. Annually, 385,000 people visit the lake. The lake is threatened by a variety of causes, including industrial and agricultural pollution. To support its sustainable management and conservation, the lake's recreational value is estimated using an individual travel cost model. Randomly selected visitors are interviewed during peak season about their recreational travel behavior and perception of lake conditions. Key issues in travel cost modeling are addressed, including the opportunity cost of time, group travel, substitution and income effects, and endogenous stratification and truncation due to on-site sampling. Poisson and negative binomial regression models produce similar results. We find significant over-dispersion, and therefore, use the more conservative truncated negative binomial model results to estimate consumer surplus. The value of this assessment method for resource managers is illustrated by comparing the consumer surplus with existing pricing and budgeting mechanisms. The annual flow of benefits from lake recreation appears to be almost 50 times higher than the average entrance fee paid by the predominantly higher-income segments visiting the lake, suggesting scope for increasing fees and reallocating government budgets to finance the necessary lake protection measures.     

Do Low Wages Stimulate Investment? An analysis of the relationship between distribution and investment in Turkish private manufacturing industry

This study analyses the relative impact of profitability and demand on accumulation in Turkish private manufacturing industry on the basis of the theoretical framework outlined by Marglin & Bhaduri (1990). The main motivation behind this analysis is to shed light on the demand aspects of the slowdown in accumulation in the manufacturing industry despite the increase in profitability during the structural adjustment episode. For this purpose, the ratio of investment to value-added is estimated as a function of the profit share and an accelerator term, namely the growth rate of value-added, using panel data for the 26 industries of the private manufacturing sector. The results show that investment is not responsive to the profit share, whereas growth has a consistent positive impact. This result is significant in explaining the inability of pro-capital income policies to stimulate manufacturing investments throughout the export-promotion era. The export boom maintained by the use of the existing capacity rather than by new investments shows the limits of export demand to compensate for the fall in domestic consumption out of wages. The results make a strong case against the argument that profitability enhances accumulation. Evidence shows that it is not possible to enhance accumulation and long-term potential for growth simply based on promoting profitability, without paying attention to the demand aspects.     

Hidden Overhang of Domestic Debt and Its Role in the This-Time-Is-Different Syndrome: An Empirical Contingent Liabilities Model

The recent studies in public finance literature open an exciting research area on hidden overhang of domestic public debt and creative accounting. In this study, I identify hidden public debts in Turkey. I then develop a dynamical model that takes as given the stock of contingent liabilities generated by lending/borrowing relationships among public entities and looks for the debt (in)tolerance of government to liquidate it in finite periods. Last, I introduce a general empirical methodology to analyze the role of overborrowing in the this-time-is-different syndrome and test model outcome against data for hidden debts in Turkey's postliberalization period (1989-2010).     

Medición,estructura y efectos de la informalidad en una microeconomía

En este artículo se mide el alcance del empleo informal y los ingresos no registrados que genera en una microeconomía caracterizada por una gobernanza deficiente. Se utilizan datos censales y de encuestas para estimar el número de trabajadores informales en Chipre Septentrional y analizar sus características durante el periodo 2004–2011. En su mayoría son nacionales no registrados en el régimen de seguridad social, inmigrantes ilegales o pluriempleados que no han declarado su segundo empleo. En términos de valor añadido, el tamaño estimado de la economía informal era del 9,1 y del 12,2 por ciento del PIB en 2006 y 2011, respectivamente.     

Network defense and behavioral biases: an experimental study

Experimental Economics - How do people distribute defenses over a directed network attack graph, where they must defend a critical node? This question is of interest to computer scientists,...     

The use of electronic media for advertising and selling: A consumer policy outline

The purpose of the article is to summarize the use of the electronic media for advertising and selling, to identify the present or potential problems of this use for consumers, and to outline national and international consumer policies on the use of the electronic media for advertising and selling.The main suggestions for consumer policy are that consumer organizations and authorities should: (a) set aside resources for the preparation of a code of standards for the use of data media for advertising and selling, (b) follow closely what we have identified as the most urgent consumer problem, namely the use of the visual media for new ways of advertising and selling, (c) carry out detailed studies of the necessity of adjusting legislation in light of the expected developments in the field of visual media, and (d) in view of the international range of both data media and visual media investigate the possibility of international co-operation concerning the detailed consumer policy elements proposed in this article.

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Elektronische Medien in Werbung und Verkauf: ein verbraucherpolitischer Überblick

Zusammenfassung Der Beitrag schildert zunächst den Einsatz elektronischer Medien in der Werbung und im Verkauf, wie er sich in den USA und den westeuropäischen Ländern beobachten läßt. Er untersheidet dabei Daten-Medien und visuelle Medien. Anschließend versucht er, bestehende und potentiell auftretende Probleme dieses Medien-Einsatzes zu benennen, und geht dabei im Bereich der Werbung vor allem auf Fragen der Identifizierbarkeit, des Informationsgehaltes und der Strukturierung, im Bereich des Verkaufs auf Fragen der Information über Verkaufskonditionen, des Rücktrittsrechts und des Datenschutzes ein.Schließlich entwirft der Beitrag einen Vorschlag für nationale und internationale verbraucherpolitische Maßnahmen. Nach diesem Vorschlag sollten die Verbraucherorganisationen (a) Mittel für die Erarbeitung von Richtlinien für den Einsatz elektronischer Daten-Medien in Werbung und Verkauf bereitstellen, (b) dem wichtigen Problem des Einsatzes visueller Medien für neue Formen von Werbung und Verkauf auf der Spur bleiben, (c) genau prüfen, inwieweit die Gesetzgebung der zu erwartenden Entwicklung im Bereich der visuellen Medien angepaßt werden muß, und (d) angesichts der übernationalen Reichweite der behandelten Medien die Möglichkeit internationaler verbraucherpolitischer Zusammenarbeit fördern.

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Folke Ölander is Professor and Preben Sepstrup Associate Professor at the Aarhus School of Business Administration and Economics, Ryhavevej 8, DK-8210 Aarhus V, Denmark.The project has been conducted with financial support from the Nordic Council of Ministers.     

Determining the Best Sales Time Period for Dried Figs: A Game Theory Application

Variations in producer prices over time cause constant fluctuations in farm incomes. In this study, the author uses a game theory approach to determine the economically optimal time to sell dried figs for the agricultural firms that produce them. Based on the price producers received in the period between August 2003 and July 2010, dried fig prices were converted into 2003 real price levels. According to a linear programming model based on these assumptions, it was determined that the best time for producers to sell dried figs, with the rate of 26.63%, was November and December.     

Currency substitution,inflation, and welfare

Currency substitution affects the mapping between social welfare and inflation by altering the underlying money demand function and influencing interest rates. In order to explore the essence of this effect, I build a model with working capital under which foreign currency is substituted with the less liquid components of domestic money. The framework closely mimics the actual pattern of currency substitution across varying rates of inflation and enables the study of an additional channel that works through the impact of currency substitution on interest rates. It is found that there is a threshold inflation rate, which turns out to be 44% under baseline calibration, below which currency substitution decreases welfare and vice versa. A practical implication is that, at inflation rates lower (greater) than the threshold, the potential welfare gains from disinflation to a near-zero inflation rate are higher (lower) if there is currency substitution than otherwise.