The cost of inflation: A mechanism design approach

I apply mechanism design to quantify the cost of inflation that can be attributed to monetary frictions alone. In an environment with pairwise meetings, the money demand that is consistent with an optimal, incentive feasible allocation takes the form of a continuous correspondence that can fit the data over the period 1900–2006. For such parameterizations, the cost of moderate inflation is zero. This result is robust to the introduction of match-specific heterogeneity and endogenous participation decisions.     

Re-imagining the marketplace: addressing race in academic marketing research

Race is a marketplace icon. How so? By holding true to an icon’s defining characteristics: high visibility, divisiveness, and uncritical devotion. In this brief musing, we describe how despite its centrality to market activities, race is uncritically addressed in academic marketing research. We next introduce the Race in the Marketplace (RIM) Research Network, a newly-formed interdisciplinary collective of scholars and scholar-activists that seek to break race of its iconic standing and bring greater equity to markets by disseminating critical, collaborative, and transdisciplinary race-based market research that supports liberatory public policies and community actions. We close with a call to join our effort to reimagine the marketplace through the critical examination of what has been a perpetually overlooked icon in marketing academia.     

Causality in the Social Sciences: a structural modelling framework

Quality & Quantity - There is no unified theory of causality in the sciences and in philosophy. In this paper, we focus on a particular framework, called structural causal modelling (SCM), as...     

A preliminary comparison of the retail level effects of genetically modified food labelling policies in Canada and France

Most developed countries have adopted labelling policies for genetically modified (GM) food. In April 2004, Canada implemented a voluntary labelling policy for GM and non-GM food, while France adopted the European Union’s new extended mandatory labelling of GM food. I present the result of a qualitative survey of GM and non-GM food labels in supermarkets in Canada and France, five months after the introduction of the new policies. I find that there are almost no GM labelled products in France and non-GM labelled products in Canada. Each policy tends to crowd out the targeted label attribute. However, Canadian consumers can choose between GM and non-GM organic products, whereas there are only non-GM products in French supermarkets. Recent political developments in Quebec suggest that the labelling landscape may change in Canada, either with an increase in the number of non-GM products at the retail level or a transition towards a mandatory labelling policy like in France.     

Inference in models with adaptive learning

Identification of structural parameters in models with adaptive learning can be weak, causing standard inference procedures to become unreliable. Learning also induces persistent dynamics, and this makes the distribution of estimators and test statistics non-standard. Valid inference can be conducted using the Anderson-Rubin statistic with appropriate choice of instruments. Application of this method to a typical new Keynesian sticky-price model with perpetual learning demonstrates its usefulness in practice.     

Stochastic modelling of herd behaviour indices

This paper proposes different diffusion processes to model herd behaviour indices such as the Herd Behaviour Index (HIX). These models arise by combining popular mean-reverting processes with simple algebraic functions mapping the definition domain of the underlying mean-reverting process to the unit interval. The so obtained Itô processes preserve, to some extent, the mean-reverting trend of the underlying process while satisfying the fundamental properties of the so-called herd behaviour indices. In a numerical study, we calibrate the different model settings to time series data for a period spanning from January 2000 until October 2009 and investigate their ability to predict the future behaviour of herd behaviour indices.     

Banking crises,labor reforms,and unemployment

Using a sample of 97 countries spanning the period 1980–2008, we estimate that banking crises have, on average, a large negative impact on unemployment. This effect, however, largely depends on the flexibility of labor market institutions: while in countries with more flexible labor markets the impact of banking crises is sharper but short-lived, in countries with more rigid labor markets the effect is initially more subdued but highly persistent. These effects are even larger for youth unemployment in the short term, and long-term unemployment in the medium term. Conversely, large upfront, or gradual but significant, comprehensive market reforms have a positive impact on unemployment, albeit only in the medium term.     

More strategies, more Nash equilibria

We show in this paper that for the class of two-player games with compact real intervals as strategy spaces and continuous and strictly quasi-concave payoff functions there exists a monotone relation between the size of strategy spaces and the number of Nash equilibria. These sufficient conditions for our theorem to hold are shown to be tight.     

EU Anti‐dumping Measures against ASEAN Countries: Impact on Trade Flows*

In the present paper, anti‐dumping (AD) duties levied by the European Commission against products from ASEAN countries in the period 1991–2001 have been considered. The ASEAN countries were among the countries most targeted by AD measures imposed by the EU in the 1990s. A panel regression has been applied to estimate the impact of AD duties on trade in some 12 products that have been subject to AD duties targeting ASEAN countries in the period considered. A significant negative impact of AD duties is found, on both the value and the quantity of imports from ASEAN countries. Our estimation provides some (although not overwhelming) indications of trade diversion in favor of EU countries, but no evidence of trade diversion in favor of non‐targeted non‐EU countries.     

Minimum Distance Estimation and Testing of DSGE Models from Structural VARs*

The aim of this paper is to complement the minimum distance estimation–structural vector autoregression approach when the weighting matrix is not optimal. In empirical studies, this choice is motivated by stochastic singularity or collinearity problems associated with the covariance matrix of impulse response functions. Consequently, the asymptotic distribution cannot be used to test the economic model's fit. To circumvent this difficulty, we propose a simple simulation method to construct critical values for the test statistics. An empirical application with US data illustrates the proposed method.