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1 – 10 of over 70000Sartaj Rasool Rather and Salah Abosedra
The study investigates the impact of inflation on the variability of relative prices in the context of Lebanon.
Abstract
Purpose
The study investigates the impact of inflation on the variability of relative prices in the context of Lebanon.
Design/methodology/approach
Unlike the traditional method, which relies on the variance of cross-sectional price changes measured at specific points in time to gauge the variability in relative prices, we employ a more appropriate approach. Under this approach, we capture the dispersion in relative prices by estimating how widely (or closely) a set of commodity prices drift apart over a span of time, offering a more comprehensive assessment. Firstly, we employ Johansen’s cointegration test on rolling subsamples to determine the number of statistically significant cointegrating vectors among the prices of 12 major commodity groups. Under this approach, an increase in the number of significant cointegrating vectors indicates a reduction in relative price variability, while a decrease suggests the opposite. Subsequently, we employ ordinary least squares regression to analyze how the fluctuations in inflation affect the variability in relative prices. The sample period ranges from December 2007 to April 2021.
Findings
The empirical results indicate that there exists a certain threshold inflation rate corresponding to which the variability in relative prices is minimized. More importantly, consistent with the theoretical predictions, the results suggest that it is not inflation per se, but the deviation of inflation from the 3% threshold level in either direction that causes higher dispersion in relative prices.
Research limitations/implications
The empirical findings from this study have crucial implications for the operation of monetary and fiscal policy. In particular, these findings suggest that stabilizing long-term inflation around a certain threshold rate will not only help to anchor inflation expectations effectively but will also minimize the welfare costs associated with inflation.
Originality/value
Given the rising inflationary pressure in the recent past and its welfare costs, the study assumes crucial importance in understating how fluctuations in inflation distort the relative price structure and eventually cause resource misallocations and economic inefficiency.
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The literature concerning the subject of inflation and relative prices has been growing so fast in the last few years that a review in chronological order allows for a greater…
Abstract
The literature concerning the subject of inflation and relative prices has been growing so fast in the last few years that a review in chronological order allows for a greater understanding of the subject. This approach is taken here.
Using quarterly data for a sample of 17 industrial countries, the purpose of this paper is to study asymmetry in the face of monetary shocks compared to government spending shocks.
Abstract
Purpose
Using quarterly data for a sample of 17 industrial countries, the purpose of this paper is to study asymmetry in the face of monetary shocks compared to government spending shocks.
Design/methodology/approach
The paper outlines demand and supply channels determining the asymmetric effects of monetary and fiscal policies. The time‐series model is presented and an analysis of the difference in the asymmetric effects of monetary and fiscal shocks within countries is presented. There then follows an investigation of the relevance of demand and supply conditions to the asymmetric effects of monetary and fiscal shocks. The implications of asymmetry are contrasted across countries.
Findings
Fluctuations in real output growth, price inflation, wage inflation, and real wage growth vary with respect to anticipated and unanticipated shifts to the money supply, government spending, and the energy price. The asymmetric flexibility of prices appears a major factor in differentiating the expansionary and contractionary effects of fiscal and monetary shocks. Higher price inflation, relative to deflation, exacerbates output contraction, relative to expansion, in the face of monetary shocks. In contrast, larger price deflation, relative to inflation, moderates output contraction, relative to expansion in the face of government spending shocks. The growth of output and the real wage decreases, on average, in the face of monetary variability in many countries. Moreover, the growth of real output and the real wage increases, on average, in the face of government spending variability in many countries. Asymmetry differentiates the effects of monetary and government spending shocks within and across countries. The degree and direction of asymmetry provide a new dimension to differentiate between monetary and fiscal tools in the design of stabilization policies.
Originality/value
The paper's evidence sheds light on the validity of theoretical models explaining asymmetry in the effects of demand‐side stabilization policies. Moreover, the evidence should alert policy makers to the need to relax structural and institutional constraints to maximize the benefits of stabilization policies and minimize the adverse effects on economic variables.
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Sweta Chaturvedi Thota and Ritwik Kinra
Research demonstrates that individuals display relative thinking – the tendency to consider relative savings rather than just absolute savings in their decisions to search for a…
Abstract
Purpose
Research demonstrates that individuals display relative thinking – the tendency to consider relative savings rather than just absolute savings in their decisions to search for a deal or purchase an item. This paper aims to review empirical and analytical literature on relative thinking, perceived search costs and price savings to propose and test a conceptual model of relative thinking.
Design/methodology/approach
Through two studies, the paper tests whether individuals display relative thinking when shopping across stores vs online and how they perceive search and time spent in pursuing savings. Both studies are adaptations of the classic jacket-and-calculator scenario study (Tversky and Kahneman, 1981).
Findings
Results show attenuation of the robust relative thinking phenomenon over the internet compared to shopping across stores. Individuals exhibit increased price sensitivity for both low and high relative savings conditions on the internet but demonstrate price sensitivity only in the high relative savings condition in the store shopping contexts. Diagnostic measures pertaining to the attractiveness of savings and the perceptions of search costs corroborate the support for relative thinking across stores but not over the internet.
Originality/value
These results lend weight to the central claim in this paper that the internet marks a new boundary condition for the relative thinking phenomenon in marketing literature. Theoretical and managerial implications of the findings, the limitations of the studies and future research opportunities are discussed.
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This paper investigates the role of the border in Canadian and U.S. prices, based on a sample of highly disaggregated city-level retail prices. It finds substantial short-run…
Abstract
This paper investigates the role of the border in Canadian and U.S. prices, based on a sample of highly disaggregated city-level retail prices. It finds substantial short-run differences in cross-border prices. While most of these are eliminated over time, long-run differences in the cross-border prices remain. These long-run cross-border differences average just over 20%, compared to mean long-run intranational price gaps of 7–9%. Short-run price differences are eliminated at similar rates in the cross-border and intranational data. Evidence from national average prices suggests the gap between cross-border prices has not narrowed during the recent depreciation of the Canadian dollar.
D.K. (Skip) Smith and William Weber
Winning market share in a major market from a deeply‐entrencheddominant competitor is a tough challenge. Uses Nielsen data onchannel‐specific market shares for Brand A and its…
Abstract
Winning market share in a major market from a deeply‐entrenched dominant competitor is a tough challenge. Uses Nielsen data on channel‐specific market shares for Brand A and its leading competitor in a major US market to suggest one strategy a marketing manager might use to accomplish that objective. The dependent variable is relatively market share. The independent variables, based on the reference price and advertising share of voice literatures, relate current levels of price and promotional activity for Brand A and the dominant competitor to historical levels of price and promotional activity for the two competitors. A multiple regression analysis of the data indicates that the independent variables are significantly related to the relative market share dependent variable. Provides examples of the effect as well as heuristics flowing from the analysis.
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Eon van der Merwe Smit and Jhandré Bredenkamp
The purpose of this paper is to examine the effects of generic medicine competition on the market share growth and pricing of originator brand medicine in the South African…
Abstract
Purpose
The purpose of this paper is to examine the effects of generic medicine competition on the market share growth and pricing of originator brand medicine in the South African private pharmaceutical market.
Design/methodology/approach
Regression analysis is applied to market share data of originator brand drugs that have been exposed to competition from generic substitutes, based on an agency model of the prescribing physician, the pharmacist or the medical scheme.
Findings
The results indicate that the price of an originator brand medicine relative to the weighted average price of its generics has a significant negative impact on the change of its market share. Investigations into the prices of the originator brands, in relation to the number of generic equivalents in the market, indicate that the number of generics available in a specific market has a significant positive impact on the relative price of originators, thereby making originators relatively more expensive compared to their generic competitors. At the same time, the results show that the absolute price of the originator brand medicines declines as the number of generic equivalents in the market increases.
Practical implications
The results indicate that, for all modules pooled together, the relative price of the originator product to that of the generic equivalent, is responsible for a significant reduction in the relative change in the market share of the originator medicine. When analysed on the level of anatomical class, or the individual molecule, results are not consistent. For affordable healthcare, the results support the reduction in barriers to entry for generic medicine. Furthermore, the results support education and incentives for doctors, pharmacists and end‐users to develop generic alternatives as trusted brands in their own right.
Originality/value
This study quantitatively assesses the effect that generic medicine competition exerts on the market share of originator medicines in South Africa.
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Shazad Mustapha Mohammed and Paul W. Miniard
The purpose of this paper is to assess the robustness of effects found by Barone et al. that partially comparative pricing enhances consumers' relative price beliefs about its…
Abstract
Purpose
The purpose of this paper is to assess the robustness of effects found by Barone et al. that partially comparative pricing enhances consumers' relative price beliefs about its comparatively priced products, but risks adversely affecting these beliefs about the retailer's non‐comparatively priced products.
Design/methodology/approach
Research uses an experimental methodology in which the presence or absence of a price comparison is manipulated and the effects on relative price beliefs about non‐comparatively priced products are assessed.
Findings
Four studies replicated Barone et al.'s findings that a competitive price comparison enhances consumers' relative price beliefs about comparatively priced products, but did not replicate their findings that these beliefs about the non‐comparatively priced products are affected adversely unless suspicion was induced experimentally. Otherwise, consumer suspicion about the lack of price comparisons, found to be a driver of the adverse effects in Barone et al., did not spontaneously emerge in the current research.
Research limitations/implications
Research examines only university students in a controlled setting devoid of real‐world distractions. Like Barone et al., effects focus on non‐comparatively priced products in categories lacking any price comparison rather than the non‐comparatively priced products residing within the same category as the comparatively priced product. Findings reinforce the value of replication.
Practical implications
The potential risks to retailers of using partially comparative pricing appear far less prevalent than observed previously.
Originality/value
The paper raises questions about the stability of consumer response, particularly those involving consumer suspicion, to pricing tactics.
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Marianne Ward and John Devereux
We provide new measures of relative UK and US GDP per capita and output per worker for the crucial years between 1830 and 1870. Our estimates are current price comparisons that…
Abstract
We provide new measures of relative UK and US GDP per capita and output per worker for the crucial years between 1830 and 1870. Our estimates are current price comparisons that compare expenditure on GDP for five benchmark years using new price data. They show that the US leads in income per capita and output per worker compared to Great Britain and the United Kingdom. We check our estimates against sectoral productivity data and real wages.