Search results

1 – 10 of over 52000
To view the access options for this content please click here
Article
Publication date: 4 March 2019

Khandokar Istiak and Md Rafayet Alam

The purpose of this paper is to investigate the possible asymmetric response of inflation expectations to oil price and policy uncertainty shocks.

Abstract

Purpose

The purpose of this paper is to investigate the possible asymmetric response of inflation expectations to oil price and policy uncertainty shocks.

Design/methodology/approach

The authors used the test of asymmetric impulse responses proposed by Kilian and Vigfusson (2011) to explore the issue of asymmetry.

Findings

Unlike other studies that assume symmetric effects, this study finds asymmetric effects of oil price and policy uncertainty on inflation expectations for positive and negative shocks and for pre- and post-financial-crisis periods. In particular other things being same, a same magnitude oil price shock has greater effect on inflation expectations in post-crisis period than in pre-crisis period. Moreover, in post-crisis period a positive increasing oil price shock has greater effect on inflation expectations than a negative decreasing oil price shock.

Practical implications

The paper concludes that FED’s greater focus on output stabilization since financial crisis has made inflation expectations less anchored and a sudden surge in oil price may quickly trigger inflation through inflation expectations.

Originality/value

Exploring the issue of the possible asymmetric effects of oil price and economic policy uncertainty on inflation expectations is a relatively new topic (as other studies only assumed symmetry and did not investigate the possible asymmetry in this regard).

Details

Journal of Economic Studies, vol. 46 no. 2
Type: Research Article
ISSN: 0144-3585

Keywords

To view the access options for this content please click here
Article
Publication date: 7 February 2020

Yang Yang, Mingquan Zhou and Michael Rehm

The purpose of this paper is twofold. First, the study aims to test whether expectations are adaptive in the Auckland housing market. The second purpose is to examine the…

Abstract

Purpose

The purpose of this paper is twofold. First, the study aims to test whether expectations are adaptive in the Auckland housing market. The second purpose is to examine the interplay between expectations and Auckland housing prices.

Design/methodology/approach

In this study, two vector error correction models (VECM) are built: one VECM includes survey-based expectations and another one encompasses model-based expectations with the assumption that property investors’ expectations are adaptive. The paper goes on by comparing and examining the results of Granger causality tests and impulse response analyses.

Findings

The findings reveal that Auckland property buyers’ expectations are adaptive. In addition, this study provides some evidence of a feedback cycle between Auckland housing prices and expectations.

Research limitations/implications

This study posits that Auckland property buyers’ expectations in the next 12 months are based on three-year price movements with more emphasis being placed on recent price history. This assumption may not be an accurate reflection of true expectations.

Practical implications

This paper helps policymakers to deepen their understanding of Auckland property buyers by showing that their expectations form through the extrapolation of the past price trend.

Originality/value

The study possibly marks the first attempt to test and compare the relationship between housing prices and two forms of expectations: survey-based and model-based. Additionally, this study is probably the first one that empirically examines whether there is a feedback cycle between expectations and property prices in the Auckland housing market.

Details

International Journal of Housing Markets and Analysis, vol. 13 no. 4
Type: Research Article
ISSN: 1753-8270

Keywords

To view the access options for this content please click here
Article
Publication date: 23 August 2011

Rajesh Chandrashekaran

This paper aims to investigate how consumers adjust their price expectations for brands in response to previously encountered prices. The effects of two distinct…

Abstract

Purpose

This paper aims to investigate how consumers adjust their price expectations for brands in response to previously encountered prices. The effects of two distinct components of price history, focal and contextual, are examined. The focal component represents the role of a brand's own previous price(s) in determining future price expectations. In contrast, the contextual component represents the impact of the prices of previously considered competing brands.

Design/methodology/approach

A total of 60 subjects were enrolled to participate in a longitudinal, quantitative, survey‐based study that required them to provide information on brand perceptions, price expectations, brand consideration and choice.

Findings

Empirical comparison of several model formulations confirms that both components are crucial in explaining how consumers adjust their price expectations in response to the prices of considered brands. Consistent with a wide body of research, a brand's own previous price exerts the greatest influence on price expectations. However, the extent to which contextual prices are assimilated depends on the composition of consumers' consideration sets. Avenues for future research and implications for brand pricing and positioning are discussed.

Originality/value

The results offer several unique perspectives that stand out from (and build further on) previous research. First, although previous research has examined the effects of competing brands' current prices on brand choices, it has not incorporated the prices of competing brands that may have been observed on previous shopping occasions. Second, measures and assesses the perceived variability within the consumers' consideration sets influences the impact of the contextual component on a brand's current reference price.

Details

Journal of Product & Brand Management, vol. 20 no. 5
Type: Research Article
ISSN: 1061-0421

Keywords

To view the access options for this content please click here
Article
Publication date: 20 July 2010

Mark F. Toncar, Ilan Alon and Everlyne Misati

The purpose of this research paper is to investigate the role of price and price expectations in service quality evaluations based on a study of the US hotel sector.

Abstract

Purpose

The purpose of this research paper is to investigate the role of price and price expectations in service quality evaluations based on a study of the US hotel sector.

Design/methodology/approach

The paper is based on an experimental study to test service quality and price congruency through randomly assigned treatments to a quota sample of 120 students.

Findings

The research shows that the degree to which subjects' price expectations are met influences their evaluations of service quality. This is especially true in the case of a price loss; when the actual price exceeds the expected price. However, when there is a price gain, subjects' evaluations of service quality were not affected.

Research limitations/implications

The experiment sacrificed external validity for internal control; an artificial stimulus was used in a carefully controlled experimental setting to control the subjects' exposure to price and service manipulations. A small sample size of student subjects was used; only 20 subjects in each treatment group. The results obtained were based on subjects' evaluation of a written script, and not an actual service encounter. By virtue of using an experimental design, the experiment did not consider a broad range of potential factors.

Originality/value

The paper uses an experiment to test the effects of price gains and price losses on consumers' perceptions of the quality of a service encounter.

Details

Journal of Product & Brand Management, vol. 19 no. 4
Type: Research Article
ISSN: 1061-0421

Keywords

To view the access options for this content please click here
Article
Publication date: 17 July 2009

Paloma Taltavull and Stanley McGreal

The purpose of this paper is to estimate the expectations component contained in the asking price of residential property, in order to assess whether expectation plays a…

Abstract

Purpose

The purpose of this paper is to estimate the expectations component contained in the asking price of residential property, in order to assess whether expectation plays a relevant role in house price appreciation. The paper tests the role of housing characteristics and value perception on asking price.

Design/methodology/approach

The hypothesis tested in this paper is that asking price of residential properties includes an element of price expectation. The analysis utilises a valuation database of about 1,900,000 records for the Spanish housing market, each record contains information on the price that owners expect to obtain on the sale of their property and housing and neighbourhood characteristics. There are three stages to the analysis. Regression analysis is used to estimate the hedonic models and separate that part of the price arising from housing heterogeneity, a two‐stage least squares model estimates the role of expectations and a metadata approach measures those characteristics that explain the change in the explanatory power of the hedonic models over time.

Findings

The results show that the explanatory power of hedonic models change with time suggesting that the point in the market cycle modifies the perception of price. The results indicate that the theoretical variables which explain expectations account for about 8 per cent of price, with most of the unexplained element of asking prices due to reasons related with local market conditions.

Originality/value

This paper offers two original insights. First, the paper presents analysis based on asking prices and shows how this could be used as a tool to measure house price expectations. Second, the paper provides further perspectives of the Spanish housing market based on a major database of observations.

Details

Journal of European Real Estate Research, vol. 2 no. 2
Type: Research Article
ISSN: 1753-9269

Keywords

To view the access options for this content please click here
Article
Publication date: 1 December 1995

E. Douglas Beach, Jorge Fernandez‐Cornej and Noel D. Uri

Survey data on expected and actual prices received by individualvegetable growers in Florida, Michigan and Texas in 1990 are used totest the rational expectations

Abstract

Survey data on expected and actual prices received by individual vegetable growers in Florida, Michigan and Texas in 1990 are used to test the rational expectations hypothesis. The use of individual grower data overcomes many of the issues that have limited previous tests of this hypothesis in agriculture. Overall, finds that price expectations of vegetable growers are inconsistent with the rational expectations hypothesis for the majority of vegetable/state combinations studied.

Details

Journal of Economic Studies, vol. 22 no. 6
Type: Research Article
ISSN: 0144-3585

Keywords

To view the access options for this content please click here
Article
Publication date: 1 October 2006

Joe T.Y. Wong and Eddie C.M. Hui

The objective of this paper is to demonstrate that the Pygmalion hypothesis is supported in the housing market and the hypothesis that investors are, all too frequently…

Abstract

Purpose

The objective of this paper is to demonstrate that the Pygmalion hypothesis is supported in the housing market and the hypothesis that investors are, all too frequently, unrealistically over‐optimistic cannot be rejected.

Design/methodology/approach

The methodology in the paper relies on a cross‐sectional questionnaire survey and a longitudinal telephone survey.

Findings

The findings in the paper demonstrate that self‐fulfilling prophecies occur in property markets. The effect of self‐fulfilling expectations is common and more powerful than rational real estate fundamentals. The consistent pattern of significant over‐forecasting of housing prices suggest that the hypothesis that investors are, most of the time, over‐confident cannot be rejected.

Research limitations/implications

In the longitudinal survey in this paper, only limited samples were secured. The developmental change of attitudes and buying behaviors over time was not observed. People's price expectations might be different from those reported in the first three waves of survey, as real estate fundamentals change from time to time.

Practical implications

In the paper a forward looking approach is used to solicit people's views on current and future housing prices, investment considerations and sentiment over time. An increase in property price being simply the outcome of self‐fulfilling expectations – the Pygmalion Effect will be signaled to housing participants. Studying people's confidence and sentiments helps understand speculative enthusiasm or ‘bubble”.

Originality/value

The longitudinal survey in the paper on people's price expectations is the first of its kind in Hong Kong. The results are beneficial to policy makers, homeowners, potential homebuyers and investors. Housing decisions of potential homebuyers can be made more rationally and Government officials can have more reliable property information and data for policy formulation.

Details

Property Management, vol. 24 no. 5
Type: Research Article
ISSN: 0263-7472

Keywords

To view the access options for this content please click here
Book part
Publication date: 4 March 2008

T.J. O’Neill, J. Penm and R.D. Terrell

The primary aim of this chapter is to examine whether the recent increase in world oil prices has affected inflation expectations and stock market returns in major OECD…

Abstract

The primary aim of this chapter is to examine whether the recent increase in world oil prices has affected inflation expectations and stock market returns in major OECD countries. The key findings are as follows. First, we found no evidence to support the presence of a long term relationship between oil prices and inflation expectations – measured by the difference between yields of inflation indexed and non-inflation indexed government bonds – over the sample between early 2003 and late 2006. Second, higher oil prices are found to lead to expectations of higher inflation. This evidence is stronger over the period where oil prices had been higher and signs of capacity constraints in the economy were emerging. Third, the impact of higher oil prices on stock market returns differs among countries. While higher oil prices are found to adversely affect stock market returns in the United States, the United Kingdom and France, the effects are positive in Canada and Australia as these countries are significant exporters of energy resources.

Details

Research in Finance
Type: Book
ISBN: 978-1-84950-549-9

To view the access options for this content please click here
Article
Publication date: 1 September 1993

Shaun Hargreaves Heap

Incorrect inflationary expectations affect the unemployment rate,hence the question of how expectations are formed is crucial. Examinestwo hypotheses which have dominated…

Abstract

Incorrect inflationary expectations affect the unemployment rate, hence the question of how expectations are formed is crucial. Examines two hypotheses which have dominated the discussion: the adaptive (AEH) and the rational expectations hypothesis (REH). During the 1980s it was assumed that REH was to be preferred to AEH, but various problems with REH have emerged. Focuses on two of these problems: whether participants in the labour market have the requisite information; and the presence of multiple RE equilibria. It may therefore be necessary for agents to co‐ordinate their expectations. Suggests that institutions of the labour market might hold the key to this question of co‐ordination.

Details

International Journal of Manpower, vol. 14 no. 9
Type: Research Article
ISSN: 0143-7720

Keywords

To view the access options for this content please click here
Article
Publication date: 9 November 2015

Luba Petersen

– The purpose of this paper is to explore the ability of monetary policy to generate real effects in laboratory general equilibrium production economies.

Abstract

Purpose

The purpose of this paper is to explore the ability of monetary policy to generate real effects in laboratory general equilibrium production economies.

Design/methodology/approach

To understand why monetary policy is not consistently effective at stabilizing economic activity, the author vary the types of agents interacting in the economy and consider treatments where subjects are playing the role of households (firms) in an economy where automated firms (households) are programmed to behave rationally.

Findings

While the majority of participants’ expectations respond to monetary policy in the direction intended, subjects do form expectations adaptively, relying heavily on past variables and forecasts in forming two-steps-ahead forecasts. Moreover, in the presence of counterparts that are boundedly rational, forecast accuracy worsens significantly. When interacting with automated households, updating firms’ prices respond modestly to monetary policy and significantly to anticipated marginal costs and future prices. The greatest deviations in behavior from theoretical predictions arise from human households (HH). Households persistent oversupply of labor and under-consumption is attributed to precautionary saving and debt aversion. The results provide evidence that the effects of monetary policy on decision making hinge on the distribution of indebtedness of households.

Originality/value

The author present causal evidence of the effects of potential bounded rationality on agents’ consumption and labor decisions.

Details

Journal of Economic Studies, vol. 42 no. 6
Type: Research Article
ISSN: 0144-3585

Keywords

1 – 10 of over 52000