scholarly journals Relative Prices and Relative Prosperity

2007 ◽  
Vol 97 (3) ◽  
pp. 562-585 ◽  
Author(s):  
Chang-Tai Hsieh ◽  
Peter J Klenow
Keyword(s):  
Real Income ◽  
Relative Price ◽  
Relative Prices ◽  
Income Levels ◽  
Poor Countries ◽  
Investment Rates ◽  
Tariff Rates ◽  
Low Efficiency ◽  
Investment Goods ◽  
Real Investment

The positive correlation between real investment rates and real income levels across countries is driven largely by differences in the price of investment relative to output. The high relative price of investment in poor countries is due to the low price of consumption goods in those countries. Investment prices are no higher in poor countries. Thus, the low real investment rates in poor countries are not driven by high tax or tariff rates on investment. Poor countries, instead, appear to be plagued by low efficiency in producing investment goods and in producing consumer goods to trade for them. (JEL E22, E23, O16, O47)

scholarly journals EXPLORING CROSS-COUNTRY VARIATION IN GOVERNMENT SHARES: WHAT CAN WE LEARN FROM RELATIVE PRODUCTIVITIES?

2012 ◽  
Vol 17 (2) ◽  
pp. 356-372 ◽  
Author(s):  
Maksym Obrizan
Keyword(s):  
Relative Price ◽  
Total Output ◽  
Government Consumption ◽  
Strong Negative Correlation ◽  
Empirical Observation ◽  
Relative Prices ◽  
Neoclassical Growth Model ◽  
Poor Countries ◽  
Cross Country ◽  
Neoclassical Growth

Government shares in total output are characterized by significant variation across countries. I noticed a strong negative correlation between government consumption shares and the price of government services in terms of private consumption. Motivated by this empirical observation, I developed a neoclassical growth model with added government that is capable of matching the variation in government shares very closely using only relative prices. In addition, I provide empirical evidence showing that the relative price of government consumption increases with income, which is consistent with distortions prevailing in poor countries. These two observations combined imply that government shares tend to be higher in poorer countries.

Structural Breaks and Exports in the Philippines

2009 ◽  
Vol 9 (2) ◽  
pp. 1850168 ◽  
Author(s):  
Saten Kumar
Keyword(s):  
Price Elasticity ◽  
Structural Breaks ◽  
Income Elasticity ◽  
Real Income ◽  
The Philippines ◽  
Relative Price ◽  
Level Shift ◽  
Export Demand ◽  
Demand Equation ◽  
Relative Prices

This paper estimates the export demand equation for the Philippines using the Gregory and Hansen procedure. We allowed for structural breaks within the Gregory and Hansen framework and obtained a cointegrating relationship between real exports, real income and relative prices. Our preferred model is the level shift where all the coefficients are significant and plausible. The income elasticity of export demand is around unity and the relative price elasticity is around -1.2.

scholarly journals Are Capital Goods Tariffs Different?

2020 ◽  
Vol 20 (61) ◽  
Author(s):  
Sergii Meleshchuk ◽  
Yannick Timmer
Keyword(s):  
Natural Experiment ◽  
Rate Increase ◽  
Relative Price ◽  
Capital Goods ◽  
Trade Reform ◽  
Labor Share ◽  
Investment Rate ◽  
Investment Rates ◽  
Tariff Rates

In this paper we demonstrate the importance of distinguishing capital goods tariffs from other tariffs. Using exposure to a quasi-natural experiment induced by a trade reform in Colombia, we find that firms that have been more exposed to a reduction in intermediate and consumption input or output tariffs do not significantly increase their investment rates. However, firms’ investment rate increase strongly in response to a reduction in capital goods input tariffs. Firms do not substitute capital with labor, but instead also increase employment, especially for production workers. Reduction in other tariff rates do not increase investment and employment. Our results suggest that a reduction in the relative price of capital goods can significantly boost investment and employment and does not seem to lead to a decline in the labor share.

Competitive and Complementary Relations in International Travel: The Case of British Travel to Cyprus

2019 ◽  
Vol 10 (5) ◽  
pp. 395-420
Author(s):  
Petros Anastasopoulos ◽  
Keyword(s):  
Strong Association ◽  
International Travel ◽  
Relative Price ◽  
Annual Data ◽  
Export Demand ◽  
Relative Prices ◽  
Vector Error Correction ◽  
Vector Error ◽  
The Mediterranean ◽  
Demand Equations

This is an econometric analysis of demand for travel to Cyprus by Britons. We examined the competitive and complementary relations between travel to Cyprus and other well-established travel destinations in the Mediterranean basin. Because many package tours include several countries in their destinations within a given journey, and because individual travelers find it more advantageous to visit more than one country in a single trip, it may be meaningful to examine international travel within the contest of groups of countries rather than a single country competing for international travelers. Specifically, we provide an analysis of the competitive and complementary relations existing between the tourism sectors of Cyprus and that of Greece, Spain and Portugal for British travelers. We provide estimates of income and relative price elasticities based of export demand equations upon annual data from 1980-2016. We tested for the stationarity of the variables and derived estimates of the Vector Error Correction Model (VECM). These tests confirm a strong association between the incomes of Britons and their decision to travel to Cyprus. Furthermore, we show the relative prices between Cyprus and other competing destinations in the Mediterranean to play an important role in determining British travel to Cyprus.

scholarly journals Endogenous Tradability, International Relative Prices, and the International Transmission of Business Cycles

2019 ◽  
Vol 11 (3) ◽  
pp. 111
Author(s):  
Soojae Moon
Keyword(s):  
Business Cycles ◽  
Labor Supply ◽  
Product Differentiation ◽  
Physical Capital ◽  
Dynamic Stochastic General Equilibrium ◽  
Relative Price ◽  
Relative Prices ◽  
Dynamic Stochastic ◽  
Elastic Labor Supply ◽  
Endogenous Tradability

This paper propose a two-country, dynamic, stochastic, general equilibrium (DSGE) model with endogenous tradability, product differentiation, variously determined physical capital, and an elastic labor supply to explore the propagation of business cycles across countries. The model successfully addresses international relative price dynamics (its appreciation with positive home productivity shock, called the ‘Harrod-Balassa-Samuelson Effect’) through the entry of producers and their cut-off productivities of exporting. The use of endogenous physical capital in the model induces a more realistic framework since the simulated model is compared to the U.S. investment data that covers spending on capital equipment, structures and inventories for producers’ entry and exit dynamics. Building the model with endogenous capital and elastic labor supply weakens the volatility of investment compared to conventional international real business cycle (IRBC) models. The model also accounts for several features of the data, such as the volatility of aggregate variables and their correlations with GDP.

scholarly journals Banking Sector Capitalization and Deposit Money Banks’ Profitability in Nigeria

2016 ◽  
Vol 3 (3) ◽  
pp. 203-213 ◽  
Author(s):  
Lambert Ejokor John Konboye ◽  
Alwell Nteegah
Keyword(s):  
Interest Rate ◽  
Inflation Rate ◽  
Banking Sector ◽  
Price Level ◽  
Real Income ◽  
Financial Deepening ◽  
Frontier Analysis ◽  
Low Efficiency ◽  
Frontier Efficiency ◽  
The Impact

The incessant bank distress coupled with the poor financial intermediation capacity of the banking sector has been identified as the main problems of the banking subsector in Nigeria. This underscores the continue quest for increase capital base of banks as possible remedy to these problems. This development makes it imperative for us to examine how capitalization has affected banks profitability in Nigeria. To achieve our objectives, both panel and Partial Frontier efficiency analyses were utilized in this investigation. Using gross profits of 18 DMBs as dependent variable while capital base of DMBs, real income (GDP), financial deepening, interest rate and inflation rate are independent variables, we found that: capitalization has a significant impact on profitability of banks, while financial development, real income level were found to had contributed less to profitability of banks in Nigeria. It was further discovered that, interest rate has less implication on the profitability, while the impact of inflation on profitability of banks was positively but insignificantly. We also found that 58 % of the total variation in profitability is influenced by capital base, financial deepening, interest rate, GDP and price level in Nigeria over the period. The study further revealed that impact of capitalization on profitability of banks is the same across the banks. Finally, using the partial efficiency frontier analysis, we found that Unity Bank and UBA performed better with improved capital base while Union and Heritage Banks performed abysmally with high capital base given the very low efficiency scores. Based on these findings, the study recommends; periodic upward review of capital base of banks, stable macroeconomic policy, and creating enabling environment for investments as ways of enhancing an efficient financial sector and growth of the Nigerian economy. Int. J. Soc. Sc. Manage. Vol. 3, Issue-3: 203-213

scholarly journals The Relative Caloric Prices of Healthy and Unhealthy Foods Differ Systematically across Income Levels and Continents

2019 ◽  
Vol 149 (11) ◽  
pp. 2020-2033 ◽  
Author(s):  
Derek D Headey ◽  
Harold H Alderman
Keyword(s):  
Soft Drink ◽  
Food Group ◽  
Food Composition ◽  
Food Prices ◽  
Future Research ◽  
Food Groups ◽  
Relative Prices ◽  
Income Levels ◽  
Food Composition Tables ◽  
Overweight Prevalence

ABSTRACT Background Relative prices of healthy/unhealthy foods have been implicated in the obesity epidemic, but never extensively quantified across countries or empirically linked to undernutrition. Objectives This study compared relative caloric prices (RCPs) for different food categories across 176 countries and ascertained their associations with dietary indicators and nutrition outcomes. Methods We converted prices for 657 standardized food products from the 2011 International Comparison Program into caloric prices using USDA Food Composition tables. We classified products into 21 specific food groups. We constructed RCPs as the ratio of the 3 cheapest products in each food group, relative to the weighted cost of a basket of starchy staples. We analyzed RCP differences across World Bank income levels and regions and used cross-country regressions to explore associations with Demographic Health Survey dietary indicators for women 15–49 y old and children 12–23 mo old and with WHO indicators of the under-5 stunting prevalence and adult overweight prevalence. Results Most noncereal foods were relatively cheap in high-income countries, including sugar- and fat-rich foods. In lower-income countries, healthy foods were generally expensive, especially most animal-sourced foods and fortified infant cereals (FICs). Higher RCPs for a food predict lower consumption among children for 7 of 9 food groups. Higher milk and FIC prices were positively associated with international child stunting patterns: a 1-SD increase in milk prices was associated with a 2.8 percentage point increase in the stunting prevalence. Similarly, a 1-SD increase in soft drink prices was associated with a reduction in the overweight prevalence of ∼3.6 percentage points. Conclusions Relative food prices vary systematically across countries and partially explain international differences in the prevalences of undernutrition and overweight adults. Future research should focus on how to alter relative prices to achieve better dietary and nutrition outcomes.

scholarly journals Uncertainty shocks and the relative price of investment goods

2018 ◽  
Vol 30 ◽  
pp. 163-178 ◽  
Author(s):  
Munechika Katayama ◽  
Kwang Hwan Kim
Keyword(s):  
Relative Price ◽  
Uncertainty Shocks ◽  
Investment Goods

scholarly journals SOME INTRANATIONAL EVIDENCE ON OUTPUT-INFLATION TRADE-OFFS

1999 ◽  
Vol 3 (2) ◽  
pp. 187-203 ◽  
Author(s):  
Gregory D. Hess ◽  
Kwanho Shin
Keyword(s):  
Aggregate Demand ◽  
Relative Price ◽  
New Keynesian ◽  
Real Output ◽  
Relative Prices ◽  
Trade Offs ◽  
Equilibrium Relationship ◽  
Supply Relationship ◽  
Individual Market ◽  
The Individual

In a seminal paper, Robert E. Lucas, Jr. provided the theoretical relationship between aggregate demand and real output based on relative price confusion at the individual market level. Subsequently, an alternative New Keynesian aggregate supply relationship was derived and it was demonstrated that the two theories can be distinguished on the basis of how both the rate of inflation and the volatility of relative prices affect its slope. By emphasizing the first implication of New Keynesian theory, strong evidence was obtained supporting this model using international data. We also concentrate on the second difference between the two theories. We derive the individual market-level equilibrium relationship for the Lucas model, i.e., the disaggregate supply curve. We estimate the crucial parameters of the relationship between aggregate nominal demand shocks and real output using U.S. intranational state and industry data. We find that the Lucas model omits important New Keynesian features of the data.

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