Conditions Of Excess Demand Research Articles

Milton Friedman and the Road to Monetarism: A Review Essay

Milton Friedman and the Road to Monetarism: A Review Essay

Стратегические приоритеты развития горнолыжного туризма в миреи России

The article provides a strategic analysis of ski tourism development at the national and global level. The identified global, national and regional trends form new opportunities for the tourism industry, significantly changing its functioning model, strategic priorities, goals and objectives. Tourism industry enterprises should realize the planned shifts and build a new or adjust existing development strategies to ensure long-term functioning in the market. The strategic initiatives proposed in the article are based on the theoretical foundations of the Russian school of strategizing developed by V.L. Kvint, an academician of the Russian Academy of Science, a practical scientist with extensive experience in the field of strategizing big domestic and international companies. The purpose of study ‒ to determine the strategic priorities for ski tourism development in the world and in Russia based on the theory of strategy and methodology of strategizing academician V.L. Kvint. The definition of strategic priorities for the national sky industry should also be based on the resource potential of the industry (natural, recreational, infrastructural, financial, personnel and etc.) and take into account the historical features of the national tourism industry development. For today the consumption model in ski tourism is undergoing essential changes from the primacy of the sports component in it, to an increase in attention to entertainment and après-ski, when skiing is not the main motive for traveling to the mountains, but one of the great variety of attractions on the mountain. In the conditions of excess demand over supply of services, the strategic task is to retain the existing client base and attract the younger generation to the ski culture, as well as the collaboration of ski leisure with other types of pastime within the city (construction of indoor ski centers within the city). Digitalization of all aspects of society’s life has formed a new standard for providing of travel services - a comprehensive customized service of high quality and the seamlessness of its provision to the consumer, which modern ski complexes should also meet.

Phillips curve relationship in an emerging economy: Evidence from India

This paper revisits the issue of determinants of inflation in a major emerging economy in a Phillips curve framework against the backdrop of an intense global debate on the weakening inflation-output relationship, and makes two key contributions in relation to existing studies. First, with the Indian central bank moving towards a flexible inflation targeting framework based on the consumer price index (CPI) inflation, this paper is the first attempt in the Indian context to model dynamics of the CPI inflation. Second, in view of the recent international evidence that the observed flattening of the Phillips curve might more be an artefact of the national inflation rates being the target of monetary policy, and limited data span for the new CPI inflation series, this paper explores the Phillips curve relationship in India using sub-national data in a panel framework. The estimates in this paper confirm the presence of a conventional Phillips curve specification. Excess demand conditions have the expected hardening effect on inflation. Exchange rate movements are also found to impact inflation.

Phillips Curve Relationship in India: Evidence from State-Level Analysis

This paper revisits the issue of determinants of inflation in India in a Phillips curve framework and makes two key contributions in relation to existing studies. First, in the context of the Reserve Bank moving towards a flexible inflation targeting framework based on consumer price index (CPI) inflation, this paper attempts to model dynamics of the CPI inflation. Second, this paper explores the Phillips curve relationship using sub-national data in a panel-approach. The estimates in this paper confirm the presence of a conventional Phillips curve specification, both for core inflation and headline inflation. Excess demand conditions have the expected hardening effect on inflation, with the impact being more on core inflation. Exchange rate movements are also found to have a significant impact on inflation. Overall, the paper’s findings provide support for the role of a countercyclical monetary policy to stabilise inflation and inflation expectations.

When Rationing Plays a Role: Selection Criteria in the Italian Early Childcare System*

Our study analyses the costs and benefits of early child care for mothers’ labour supply and child development in Italy, exploring the role of the selection criteria used by local governments to assign child care slots. In Italy, only around 13% of the demand for public child care coverage is met, and the number of applications exceeds the number of places in child care services in all regions. In conditions of excess demand, municipalities introduce selection criteria to give priority to families for whom access to public child care appears to be more valuable. We analyse, through simulations, the consequences of introducing different selection criteria for children, for their mothers, and also for municipalities, using a sample of households with children under three years of age (EU-SILC), and the selection criteria used by six representative Italian municipalities. Our results have some potentially interesting policy implications. The benefits in terms of child outcomes and mothers’ labour supply are stronger in contexts where selection criteria give priority to more disadvantaged households. However, in these contexts the selected households contribute less to the costs of child care, which reduces the municipalities’ monetary revenues.

Nursing home spending patterns in the 1990s: the role of nursing home competition and excess demand.

To examine nursing home expenditures on clinical, hotel, and administrative activities during the 1990s and to determine the association between nursing home competition and excess demand on expenditures. Secondary data sources for 1991, 1996, and 1999 for 500 free-standing nursing homes in New York State. A retrospective statistical analysis of nursing homes' expenditures. The dependent variables were clinical, hotel, and administrative costs in each year. Independent variables included outputs (inpatient and outpatient), wages, ownership, New York City location, and measures of competition and excess demand. Variables were constructed from annual financial reports submitted by the nursing homes, the Patient Review Instrument and Medicare enrollment data. Clinical and administrative costs have increased over the decade, while hotel expenditures have declined. Increased competition was associated with higher clinical and administrative costs while excess demand was associated with lower clinical and hotel expenditures. Nursing home expenditures are sensitive to competition and excess demand conditions. Policies that influence competition in nursing home markets are therefore likely to have an impact on expenditures as well.

The economic implications of case-mix Medicaid reimbursement for nursing home care.

In recent years, there has been large growth in the nursing home industry in the use of case-mix adjusted Medicaid payment systems that employ resident characteristics to predict the relative use of resources in setting payment levels. Little attention has been paid to the access and quality incentives that these systems provide in the presence of excess demand conditions due to certificate-of-need (CON) and construction moratoria. Using 1991 to 1998 panel data for all certified U.S. nursing homes, a fixed-effects model indicates that adoption of a case-mix payment system led to increased access for more dependent residents, but the effect was modified in excess demand markets. Quality remained relatively stable with the introduction of case-mix reimbursement, regardless of the presence of excess demand conditions. These results suggest that CON and construction moratoria are still important barriers within the nursing home market, and recent quality assurance activities related to the introduction of case-mix payment systems may have been effective.

Asymmetry in the U.S. Output-Inflation Nexus: Issues and Evidence

This paper presents empirical evidence supporting the proposition that there is a significant asymmetry in the U.S. output-inflation process, which implies that excess demand conditions are much more inflationary than excess supply conditions are disinflationary. The important policy implication of this asymmetry is that it can be very costly if the economy overheats because this will necessitate a severe tightening in monetary conditions in order to reestablish inflation control. The small model of the U.S. outputinflation process developed in the paper shows that the seeds of large recessions, such as that in 1981-82, are planted by allowing the economy to overheat. This type of asymmetry implies that the measure of excess demand which is appropriate in estimating the Phillips curve cannot have a zero mean; instead, this mean must be negative if inflation is to be stationary. The paper also shows that a failure to account for this important implication of asymmetry can explain why some other researchers may have been misled into falsely accepting the linear model. The empirical results presented in the paper show that the conclusions regarding asymmetry are robust to a number of tests for sensitivity to changes in the method used to estimate potential output and in the specification of the Phillips curve.

Asymmetry in the U.S. Output-Inflation Nexus: Issues and Evidence

This paper presents empirical evidence supporting the proposition that there is a significant asymmetry in the U.S. output-inflation process, which implies that excess demand conditions are much more inflationary than excess supply conditions are disinflationary. The important policy implication of this asymmetry is that it can be very costly if the economy overheats because this will necessitate a severe tightening in monetary conditions in order to reestablish inflation control. The small model of the U.S. output-inflation process developed in the paper shows that the seeds of large recessions, such as that in 1981-82, are planted by allowing the economy to overheat. This type of asymmetry implies that the measure of excess demand which is appropriate in estimating the Phillips curve cannot have a zero mean; instead, this mean must be negative if inflation is to be stationary. The paper also shows that a failure to account for this important implication of asymmetry can explain why some other researchers may have been misled into falsely accepting the linear model. The empirical results presented in the paper show that the conclusions regarding asymmetry are robust to a number of tests for sensitivity to changes in the method used to estimate potential output and in the specification of the Phillips curve.

THE COST-COMPETITIVENESS OF MAJOR EXPORTING COUNTRIES OF MAIZE, WHEAT AND SOYBEANS I: PRODUCTION AND MARKETING COSTS

ABSTRACT U.S. competitiveness with regard to agricultural commodities has been of major interest recently because of the declining U.S. share in world agricultural trade. Competitiveness, defined as the ability of a country to achieve a market share, is determined by a number of factors which affect the excess supply and excess demand conditions of exporters and importers, respectively. On the supply side, this study deals with the costs involved in producing and marketing maize, wheat and soybeans by various middle-income and high-income countries. Private economic costs are used as reported by each country and reflect natural endowments and technology levels as well as specific government policies. Production costs, representing farmer experience over several years, and costs of marketing are adjusted for inflation and converted to dollar equivalents at mid-1986 exchange rates.

Further Evidence from Survey Data on Australian Manufacturing Price Changes*

Three data sets from two different quarterly surveys have been used in estimating six standard models of price change behaviour. Results for Total Manufacturing Industry, for all three data sets, show prices respond to both actual cost movements and commodity market excess demand conditions. For most ASIC two‐digit industries, prices respond rapidly to actual cost movements, and for many industries they also respond directly to excess demand conditions. No single excess demand measure is appropriate for all industries. The magnitude of orders and inventories influences is very small, but capacity utilization contributions seem far from trivial. Industry results are frequently sensitive to the survey used and/or to the method used to weight individual firm's responses.

Congestion and Willingness to Pay for Expansion of Skiing Capacity

Under conditions of excess demand for downhill skiing at some sites in Colorado, new or expanded skiing capacity in the Rocky Mountain region may enhance opportunities to substitute and reduce congestion at existing sites. Since this would be a consequence of ski area expansion, increased willingness to pay by those who continue to use existing sites on peak days should be considered an external benefit of the new or expanded areas. This paper provides an empirical test and confirmation of the economic significance of this external benefit to the valuation of new or expanded ski areas. It is proposed that the benefitestimating procedures of federal agencies be enlarged to include the effects of excess demand for existing recreation sites. In the absence of information on the potential benefits of reduced congestion at some existing sites, insufficient public land and private capital would be allocated to ski area development. In the past, the recreation benefits of those who chose to use a new or expanded site were correctly based on estimates of consumer surplus, as recommended by the U.S. Water Resources Council (1979) guidelines. Net benefits of recreation use have been measured as the area under the demand curve above the price of recreation at a new or expanded site, which represents users' maximum willingness to pay, given the existence of other sites in the region, as demonstrated by Knetsch (1977). In the absence of guidelines to estimate the presence of excess demand, changes in the value of

Inflation and Unemployment in an Open Economy: A Monetarist View

The notion of an inverse relationship between inflation and unemployment was a commonplace of macroeconomic policy discussions even before Brown (1955), Phillips (1958) and Lipsey (1960) presented evidence of the existence of an apparently empirically stable functional relationship between the two variables, and provided us with theoretical arguments about why we should expect it to exist.1 The theory in question was extremely simple. It amounted to the proposition that, in conditions of excess demand for labour, the price of labour might be expected to rise, and in conditions of excess supply, to fall. The relevant price was identified as some index or other of money wages, while the unemployment rate was treated as an inverse proxy for the excess demand for labour. This theory of the interaction of wage inflation and unemployment was transformed into one dealing with price inflation by postulating that prices were closely related to money wages, either by way of some form or other of a mark-up pricing, or by mechanisms associated with the pricing behaviour of profit maximising competitive firms. This model of inflation-unemployment interaction has long been discredited, not just by empirical evidence but also by theoretical arguments: instead of the Phillips curve we now have the 'expectations augmented' Phillips curve. There are a number of not always mutually compatible ways of deriving the latter relationship, but for present purposes differences of opinion on the underlying microeconomics of the function are of secondary importance, in comparison with widespread agreement about its empirical nature.2 Instead of predicting money wage inflation to be zero in a 'fully employed' economy, with prices therefore falling at the rate of growth of labour productivity, we now predict that real wages will grow at the rate of productivity change, but profess ourselves unable to say anything about the rates of money wage and price inflation that will rule in such a circumstance; we now expect excess supply to be associated, not with falling money wages and prices, but with rates of wage and price inflation that are low relative to expectations, and excess demand to lead, not necessarily

THREE-AND-A-HALF MILLION WORKERS NEVER WERE LOST

The proper measurement of unemployment during the 1930's with respect to the classification of relief workers has recently been questioned. This study explores that issue, leading to a number of substantive issues about the operation of the U.S. economy in the Great Depression. Both historical and econometric evidence are utilized. The notion of full displacement of private-sector and other public employment by relief work is rejected. The conditions of excess demand for jobs, numerous “look-alike” unemployed, sticky wage adjustment, and sales-constrained firms are found to undermine the validity of the anticipations-search model and the natural-rate hypothesis for this period.

Estimating net benefits of recreation under conditions of excess demand

The public provision of outdoor recreation necessitates the development of nonmarket measures of the value of resources in recreational use. Such values can be used as surrogates for market values in the decision-making process. Another aspect of recreation as a publicly provided good is the absence of a mechanism to eliminate automatically excess demand. The absence of such a mechanism has resulted in conditions of excess demand at many recreation sites. This paper deduces the implications of excess demand for the travel cost method of benefit estimation. We show that when excess demand results in rationing at a particular site, the travel cost method will underestimate the true benefits of the site. The results are important because they help identify the direction of bias of one measure of the benefits from the use of a natural resource.

A Labor Supply Model for Secondary Workers

T HE purpose of this paper is to estimate a labor supply or participation rate function for period 1948 through 1968, for various age-sex groups that comprise secondary labor force.' There are three major findings of paper. First, participation behavior is primarily explained by real wages. There are, however, two hypotheses, relative and permanent wage models that may underlie wage variables. The relative wage variable is adapted from recent research in demography and is found to predominate over more traditional permanent wage effect for a number of female age groups. (As will be seen, in labor force equations, permanent and relative wage theories predict opposite signs for a wage variable so that a test of two hypotheses is possible.) Secondly, supply of labor responds positively to a variable that reflects rate of inflation. The inclusion of this variable follows a formulation proposed by Friedman (1968). He conjectures that a form of money illusion in supply function of labor is foundation of an empirically observable, short-run Phillips curve. Thirdly, labor supply is found to respond to changes in excess demand conditions in labor market only during period of chronic, high 1958-1966 and even during that period, effect observed is considerably smaller than that noted in earlier studies. The model is compared with more traditional labor force equation that contains rate and a time trend. Both equations are fitted for period 1948-1968 and are then used to forecast most recent data for quarters 1969.1 through 1970.3. The equation presented in this paper dominates alternative model in terms of adjusted R 2's and Durbin-Watson statistics (in estimated period) and it uniformly forecasts better. Finally, implications of labor force equation are explored. It is suggested that recently adopted concepts such as unemployment, the labor force, and potential need redefinition in light of findings presented here. There are, at present, two basic approaches to study of labor force participation. The first is generally associated with Tella (1965) and Dernburg and Strand (1966) (and will hereafter be referred to as unemployment model). They found that labor force participation rate varied inversely with rate. This finding was identified with worker effect. The model may be estimated in form (LIP)i = a( + a, U + a9T'a1 < 0 (1) where (LFP)i is labor force participation rate of subgroup i, and U is aggregate rate. The time trend, T, may be interpreted as representing gradual, sociological change of preferences which is sending women from home into labor force and older workers from labor force into home. This equation has gained wide acceptance in literature, and its results have had an important impact on public policy discussions. Thus finding that discouraged workers leave labor force when (measured) is high is used to adjust rate and level of output to take account of hidden unemployed. The adjusted series has become an independent variable in empirical wage equations since work of Simler and Tella (1968). The adjusted output series and resulting measure of GNP gap are used in planning fiscal and monetary policy. Clearly to extent, however, that equation (1) does not describe labor force behavior and overstates Received for publication May 17, 1971. Revision accepted for publication July 23, 1971. * The author thanks Richard A. Easterlin, Benjamin M. Friedman, Robert J. Gordon, Lawrence R. Klein, Thomas Sargent and Susan M. Wachter for helpful suggestions. ' The secondary labor force is defined here to include males 16-19 and 65+ and females 16 through 65+. The dependent variable is a form of participation rate and hours worked are not included. 2See, for example, Tella (1965), Dernburg and Strand (1966) and Bowen and Finegan (1969). Models of Barth (1968) and Vroman (1970) also found a low elasticity for labor force in terms of participation rate.

Unemployment, Vacancies and Conditions of Excess Demand for Labor in Canada

(1970). Unemployment, Vacancies and Conditions of Excess Demand for Labor in Canada. Applied Economics: Vol. 2, No. 2, pp. 101-112.