A tale of two cities and a Giffen good

Abstract.  A scenario is provided in which a house in Eden Mills, Ontario, is a Giffen good. The conditions derived in the example apply to other indivisible goods as well. JEL classification: D11     

Fabian Schär and Aleksander Berentsen: Bitcoin,Blockchain, and Cryptoassets: A Comprehensive Introduction

Business Economics -     

Is real GDP per capita a stationary process? Smooth transitions,nonlinear trends and unit root testing

The aim of this article is to provide additional evidence about the order of integration of constant price GDP per capita in a selection of countries. It does so by taking into account the possibility of non-linear deterministic trends and of asymmetric adjustment towards equilibrium. We find evidence of a global stationary ESTAR process around a nonlinear deterministic trend in almost half of the selected countries. These results show that nonlinearities affect real GDP series. By neglecting them, one can draw misleading conclusions from unit root tests. Specifically, the article questions the so-called stylised fact of a near unit root which has so influenced macroeconomic thought over the past two decades.     

Market Segmentation Research: Beyond Within and Across Group Differences

Market segmentation research is currently focused too narrowly on the task of segment identification as opposed to its strategic relevance within a firm. In this paper we distinguish an ex ante approach to market segmentation research, which begins with studying the motivating conditions that lead people to the tasks and interests in their lives, from an ex post approach which begins with an individual's reaction to marketplace offerings. We argue that the marketing task of guiding managements to make what people will want to buy will be more successful in light of a deep understanding of behavior in the context of everyday life and work, rather than a detailed understanding of preferences in the marketplace. Directions for future research are discussed.     

Exchange Rates and Prices: Sources of Sterling Real Exchange Rate Fluctuations 1973–94

We attempt to identify the sources of UK exchange rate and relative consumer price fluctuations by applying the Clarida and Gali (1994) extension of the Blanchard and Quah (1989) structural VAR method to UK data. We (r)nd that IS shocks underlay the majority of the variance of sterling real and nominal exchange rates. Aggregate supply (AS) shocks were the second most important source of such variations, while LM shocks played an extremely limited role. In contrast, the variance of UK relative consumer prices primarily reflected LM shocks.     

On Market Games When Agents Cannot Be in Two Places at Once

We consider markets in which agents supply their time or the services of a capital good and the duration of the market is limited. We show that a coalitional game can be generated by such a market if and only if the characteristic function of the game is superadditive. Journal of Economic Literature Classification Numbers: C71, D51.     

Exclusions and the Demand for Property Insurance

The paper examines property insurance contracts in which consumers choose the upper limit on coverage. Exclusions are of two types, and both reduce the demand for insurance of the included perils. A practical implication is that an insurer can raise the demand for fire insurance by offering an earthquake rider, and profit from the rider even when the premia are ceded in such a way that the rider does not raise profit directly. The results do not require assumptions about correlations between included and excluded losses, which is interesting because correlations are decisive in most of the other literature on background risk.