A Framework for Independent Monetary Policy in China

As the Chinese economy becomes more market based and continuesits rapid integration into the global economy, having an independentand effective monetary policy regime oriented to domestic objectiveswill become increasingly important. Employing modern principlesof monetary policy in light of the current state of China'sfinancial institutions, we motivate and present a package ofproposals to guide the operation of a new monetary policy regime.Specifically, we recommend an explicit low long-run inflationobjective, operational independence for the People's Bank ofChina (PBC) with formal strategic guidance from the government,and a minimal set of financial sector reforms (to make the Chinesebanking system robust against interest rate fluctuations). Weargue that anchoring monetary policy with an explicit inflationobjective would be the most reliable way for the PBC to tiedown inflation expectations, and thereby enable monetary policyto make the best contribution to macroeconomic and financialstability, as well as economic growth. The management and monitoringof money (and credit) growth by the PBC would continue to playa useful role in the stabilization of inflation, but a moneytarget would not constitute a good stand-alone nominal anchor.(JEL codes: E5 and P2)     

Product Shape as a Design Innovation Strategy

Product design has become an effective competitive tool in the hands of a number of companies. Marvin Berkowitz discusses the impact of design variations on a proven winner in the marketplace. This article discusses the use of product shape as an element of innovation strategy in food processing. Can this particular design dimension be used to achieve differentiation from competitive products? The article explores how one company is attempting to capitalize on consumer trends for fitness and nutrition by designing its products with natural looking shapes. The research more generally probes how easy to spot design cues, like shape, are used by consumers to infer more important, but less readily accessible attributes like taste, softness, comfort and speed. Good design not only adds sales appeal, but encourages trading up, provides a basis for market segmentation, and for building a larger line from the same engineering investment.     

The Impact of Seasonality on the Launch of Infrequently Purchased Products

Few published articles have dealt with the unique problems associated with the management of new, infrequently purchased products that exhibit seasonal patterns of demand. Marvin Berkowitz demonstrates how seasonality influences the performance of a new consumer durable good, a new brand of battery-operated lights, during a 2-year period following its launch. The data presented support four hypotheses: (I) the newest brands in a product category, when compared to dominant brands, will be subject to higher seasonal variation in consumer awareness, advertising recall, product attribute positioning, and purchase intent; (2) the relationship between seasonal effects and brand share within a product category will not be linear; (3) differences between product attributes for competing brands will be most apparent to consumers during periods of peak seasonal activity; and (4) perceptions of product attributes that are most important in the buying decision are subject to the least seasonal variation. The article also demonstrates how seasonal variations may be charted and discusses how this analysis contributes to the overall management of the new product.     

Country of origin labeling for complex supply chains: the case for labeling the location of different supply chain links

We investigate the value of a country of origin label (COOL) that separately identifies the geographic location of different stages in a food product's supply chain. We estimate the willingness‐to‐pay (WTP) of U.S. consumers for a packaged cereal product where the key grain ingredient may be grown in one country and processed in a second country (multicountry supply chain) and compare it to equivalent products that have both stages located in a single country. We find consumer WTP for products with single‐country and multicountry supply chains are statistically different, meaning that simplifying a multicountry label by listing only the country where the ingredients are grown or only the country where the ingredients are processed can result in different consumer values. We also find that for countries with a poor quality reputation, consumers respond more negatively when that country has the “last touch” than when that country's involvement is limited to upstream supply chain links.     

Music,music videos,and wear out

Repeated exposure to a music video was found to forestall wear out relative to repetitive exposure to the music only. Susceptibility to wear out in the case of the music video was further reduced by eliminating the closure associated with the story told by the video. The level of positive cognitive responses was posited as a mediator to help explain the observed results. © 1993 John Wiley & Sons, Inc.     

Decomposing Local: A Conjoint Analysis of Locally Produced Foods

Increasingly, foods are marketed as "locally grown." We use stated preference data from a choice-based conjoint instrument to address two issues surrounding consumer demand for locally produced goods: (1) what is the geographical extent of "local," and (2) is the value consumers place on "local" production distinct from other factors that are often confounded with locally produced foods such as farm size and product freshness? We find our subjects place similar value on products produced "in state" and "nearby" and that consumers' willingness to pay for local production is independent from values associated with product freshness and farm size.