Consumption Goods Market Research Articles

Consumer Industry in this Turn’s Monetary Policy: Evidence from Necessity and Non-Necessity Goods in US

The US Federal Reserve's interest rates have been acting as main factors that influence the economy, especially the consumers' consumption aspect of the market, since its very beginning. This paper researches the impact of Federal Reserve's interest rates hike on the consumption goods market. While the scale of the consumption goods market as a whole has too many niche industries that does not necessarily affect the common consumers, and there are too many factors to control for. Necessity goods market and non-necessity goods market data from the S&P 500 Index are chosen to be the dependent variables to represent the research purpose. On the other hand, Federal Reserve’s interest rates consists multiple variables and they all have different effects on the economy, the exchange rate between US dollars and Chinese RMB is chosen to be the independent variable in this research for its stability and strong link to the interest rates change. This paper uses VAR model and ARMA-GARCH Model to estimate such impact. The result shows that the effects of Federal Reserve's interest rates hike on necessity goods and non-necessity goods are overall negative effects. In particular, the interest rates hike affects non-necessity goods market way more than it affects the necessity goods market.

The Role of (De-)Centralized Wage Setting for Industry Dynamics and Economic Growth: An Agent-Based Analysis with the Eurace@Unibi Model

In this paper, we employ the agent-based macroeconomic Eurace@Unibi model to study the economic implications of different degrees of de-centralization in the wage setting. We think of de-centralization as wages being a weighted average of an economy-wide ‘union wage’ and a firm-specific component depending on the firm’s productivity and the experienced tightness of the labor market. Starting from a baseline scenario, corresponding to a high degree of unionization, in which wages are fully centralized and indexed on economy-wide productivity gains and inflation, we investigate how an increasing level of de-centralization affects the dynamics of output, employment, inequality, and market concentration. Our findings suggest that stronger centralization of the wage-setting process induces lower wage inequality and stronger concentration on the consumption goods market. Furthermore, due to more physical investments, an economy with more centralized wage setting is characterized by higher productivity and faster economic growth.

OUTPUT‐INFLATION TRADEOFF IN CHINA

High growth and wide fluctuations in fixed investment are the main driving forces causing inflation in China during its economic reform period. Investment expansion generates strong demand pressures in the consumption goods market. Its inflationary impact is magnified further as it brings about higher wage costs during economic booms. In the paper, an implied short‐run tradeoff has been derived from the dynamic simulation of a small macroeconomic model. In a given year, each additional percentage point of aggregate output growth or investment growth will bring about a 2.6 or a 0.9 per cent increase, respectively, in the rate of inflation for that year. These estimates suggest that the surge in fixed investment accounts almost fully for the 1993–95 inflationary spell.

OUTPUT-INFLATION TRADEOFF IN CHINA

High growth and wide fluctuations in fixed investment are the main driving forces causing inflation in China during its economic reform period. Investment expansion generates strong demand pressures in the consumption goods market. Its inflationary impact is magnified further as it brings about higher wage costs during economic booms. In the paper, an implied short-run tradeoff has been derived from the dynamic simulation of a small macroeconomic model. In a given year, each additional percentage point of aggregate output growth or investment growth will bring about a 2.6 or a 0.9 per cent increase, respectively, in the rate of inflation for that year. These estimates suggest that the surge in fixed investment accounts almost fully for the 1993–95 inflationary spell.

Estimating Distortions in the Chinese Economy: A General Equilibrium Approach

A computable general equilibrium model is constructed to simulate the Chinese economy under a system of free markets, and is estimated using a calibration procedure coupled with econometric estimation for key parameters. The equilibrium solution of the model indicates substantial distortions in prices and resource allocation in the 1983 Chinese economy. Labour was found to be overpaid and capital underpaid in most non-agricultural sectors. Two-fifths of the agricultural labour force would have been employed by the non-agricultural sectors had China been a market economy. The elimination of these distortions would imply a significant improvement in allocative efficiency and a redistribution of income from labour to capital, from households to the state, and from urban to rural households. China embarked upon its economic reform programme in the late 1970s. Over the period 1979-83 there were dramatic reforms in the rural agricultural sector, including the dismantling of the 'three-level' ownership of communes, the dis- tribution of land to peasant households and the relaxation of controls over labour transfer from the agricultural sector to the rural non-agricultural sector. In contrast, in the urban economy, and especially in the state industrial sector, reforms were confined to modest improvements in incentives for enterprises and workers, notably through the introduction of profit retention schemes and bonus systems. In 1983, much of the traditional mechanism of resource alloca- tion remained essentially intact. The problem of distortions in the price system and in resource allocation in centrally planned economies (CPEs) has long been a concern of economists, and there has been a considerable interest in empirical modelling of distortions in CPEs. Thornton (1971) estimated potential efficiency gains from equalizing the return to capital for different branches of Soviet industry in the early 1960s. Desai and Martin (1983) provided similar estimates using econometrically esti- mated production functions. Portes and Winter (1980) estimated excess demand in the aggregated consumption goods market for a number of pre- reform Eastern European economies using the technique of econometric dis- equilibrium modelling. Podkamine (1988) calculated free market demands and prices in the absence of rationing for consumption goods markets in Poland during 1965-86 by transplanting demand systems estimated for market econ- omies into the quantity-constrained Polish economy. Chow (1985) investigated the efficiency of labour allocation in Chinese state industry by comparing the average wage rate with the value of the marginal product of labour. All these studies, however, involve 'partial equilibrium analysis', in the sense that they are concerned only with examining the distortion in a specific market and therefore have tended to ignore distortions in the rest of the economy and a

EXPLAINING CHINA'S BUSINESS CYCLES

The Developing EconomiesVolume 34, Issue 2 p. 154-185 Free Access EXPLAINING CHINA'S BUSINESS CYCLES Hiroyuki IMAI, Hiroyuki IMAISearch for more papers by this author Hiroyuki IMAI, Hiroyuki IMAISearch for more papers by this author First published: June 1996 https://doi.org/10.1111/j.1746-1049.1996.tb00735.xCitations: 4AboutPDF ToolsRequest permissionExport citationAdd to favoritesTrack citation ShareShare Give accessShare full text accessShare full-text accessPlease review our Terms and Conditions of Use and check box below to share full-text version of article.I have read and accept the Wiley Online Library Terms and Conditions of UseShareable LinkUse the link below to share a full-text version of this article with your friends and colleagues. Learn more.Copy URL REFERENCES 1 Central Committee of the Chinese Communist Party. “Decision of the CPC Central Committee on Some Issues concerning the Establishment of the Socialist Market Economic Structure,” Beijing Review, Vol. 36, No. 47 (November 1993). 2 Chen Jidong, Li Ruoyu, and Gao Hongfang, eds. Zhonghua renmin gongheguo jingji dashiji, 1949--1980 [Major economic events of the People's Republic of China, 1949--1980] ( Beijing : Zhongguo-shehui-kexue-chubanshe, 1984). 3 Chen Jinhua Report on the Implementation of the 1994 Plan for National Economic and Social Development and the Draft 1995 Plan for National Economic and Social Development,” Beijing Review, Vol. 38, Nos. 14--15 (April 1995). 4 China Daily. 5 Ding Hengjiang and Liu Xiaoqi “ Guanyu difang zhengfu ganyu yinhang jingying huodong di shenceng sikao” [Deep thoughts on intervention by local governments in the operational activities of banks], Jingji yanjiu, No. 12 (1993). 6 Eckstein, A. Economic Fluctuations in Communist China's Domestic Development,” in China's Heritage and Communist Political System, ed. Ho Ping-ti and Tang Tsou, Vol. 2 ( Chicago : University of Chicago Press, 1968). 7 Fan Gang, Zhang Shuguang and Wang Limin. “ Shuanggui guodu yu shuanggui diaokong (I)” [Dual-track transition and dual-track macroeconomic management (I)], Jingji yanjiu, No. 10 (1993). 8 Imai, H. Inflationary Pressure in China's Consumption Goods Market: Estimation and Analysis,” Developing Economies, Vol. 32, No. 2 (June 1994). 9 Imai, H. Growth-Inflation Tradeoff in China,” Lingnan College, Centre for Asian Pacific Studies, Working Paper Series No. 25 (Hong Kong, 1995). 10 Kornai, J. The Socialist System ( Oxford : Clarendon Press, 1992). 11 Kornai, J., and Daniel, Z. The Chinese Economic Reform---As Seen by Hungarian Economists,” Acta Oeconomica, Vol. 36, Nos. 3--4 (1986). 12 Ma Hong, ed. Modern China's Economy and Management ( Beijing : Foreign Language Press, 1990). 13 Naughton, B. Saving and Investment in China: A Macroeconomic Analysis”. (Ph.D. diss., Yale University, 1986). 14 Naughton, B. Macroeconomic Policy and Response in the Chinese Economy: The Impact of the Reform Process,” Journal of Comparative Economics, Vol. 14, No. 3 (September 1987). 15 Naughton, B. Inflation in China: Patterns, Causes, and Cures,” in China's Economic Dilemmas in the 1990s: The Problems of Reforms, Modernization, and Interdependence, ed. Joint Economic Committee, U.S. Congress, Vol. 1, Compendium of Papers ( Washington , D.C. : U.S. Government Printing Office, 1991). 16 Nihon keizai shimbun. 17 Renmin ribao. 18 State Statistical Bureau, ed. Zhongguo maoyi wujia tongji ziliao, 1952--1983 [Trade and price statistics in China, 1952--1983] ( Beijing : Zhongguo-tongji-chubanshe, 1984). 19 State Statistical Bureau, ed. Zhongguo tongji nianjian [Statistical yearbook of China] ( Beijing : Zhongguo-tongji-chubanshe, various years from 1984 to 1995). 20 Wall Street Journal. 21 Wong, C. The Economics of Shortages and Problems of Reform in Chinese Industry,” Journal of Comparative Economics, Vol. 10, No. 4 (December 1986). 22 Wu Naitao Risk Investment System to Be Established,” Beijing Review, Vol. 37, No. 15 (April 1994). 23 Xu Kanghua and Wang Yaping Zhongguo shehui zhuyi jianshe xinshiqui jingji jianshi [Short history of the new period of China's socialist construction] ( Beijing : Zhongguo-wuzi-chubanshe, 1993). 24 Zhongguo caizheng tongji (1950--1991). [China finance statistics (1950--1991). ( Beijing : Kexue-chubanshe, 1992). 25 Zhongguo jingji nianjian, 1991 [ Almanac of the China's economy, 1991] ( Beijing : Jingji-guanli-chubanshe, 1991). 26 Zhongguo jinrong nianjian, 1993 [ Almanac of China's finance and banking, 1993] ( Beijing : Zhongguo-jinrong-nianjian-bianjibu, 1993). Citing Literature Volume34, Issue2June 1996Pages 154-185 ReferencesRelatedInformation

INFLATIONARY PRESSURE IN CHINA'S CONSUMPTION GOODS MARKET: ESTIMATION AND ANALYSIS

The Developing EconomiesVolume 32, Issue 2 p. 127-154 Free Access INFLATIONARY PRESSURE IN CHINA'S CONSUMPTION GOODS MARKET: ESTIMATION AND ANALYSIS Hiroyuki IMAI, Hiroyuki IMAISearch for more papers by this author Hiroyuki IMAI, Hiroyuki IMAISearch for more papers by this author First published: June 1994 https://doi.org/10.1111/j.1746-1049.1994.tb00045.xCitations: 5 I am grateful to Dr. Carl Christ and the late Dr. Bela Balassa for helpful comments on earlier drafts. Any views expressed here are solely those of the author. AboutPDF ToolsRequest permissionExport citationAdd to favoritesTrack citation ShareShare Give accessShare full text accessShare full-text accessPlease review our Terms and Conditions of Use and check box below to share full-text version of article.I have read and accept the Wiley Online Library Terms and Conditions of UseShareable LinkUse the link below to share a full-text version of this article with your friends and colleagues. Learn more.Copy URL Share a linkShare onFacebookTwitterLinked InRedditWechat Citing Literature Volume32, Issue2June 1994Pages 127-154 ReferencesRelatedInformation

Repressed inflation on the consumption goods market: Disequilibrium estimates for the German Democratic Republic, 1957–1985

Disequilibrium estimates within the Portes and Winter (PW) tradition are given of probabilities of repressed inflation on the consumption goods market of the GDR for 1957–1985. The official CPI as well as Keren's alternative CPI are used to deflate the monetary series. The results suggest that there has not been sustained repressed inflation on the GDR consumption goods market. The dominant regime was one of macroeconomic excess supply. Though this confirms the general finding of PW, the estimated probabilities of excess demand for the GDR in PW, showing more excess demand than excess supply, are not confirmed in this study.

Tests of the Chronic Shortage Hypothesis: The Case of Poland

In the analysis of econometric models, it is common to test the n ull hypothesis of equilibrium against the disequilibrium alternat ive. This paper tests the null hypothesis of all-excess-demand-tha all observations correspond to (positive) excess demand-against the alternative that permits excess demand of either sign. The auth ors use a test due to Rogers (1984), which their Monte Carlo experime nts suggest performs well in small samples, as well as a quasi-like lihood ratio test, which is a suggestive heuristic procedure. The da ta are from the aggregate consumption goods market in Poland 1955-80, and the paper is, thus, a test of J. Kornai's assertion that chroni c shortage characterizes such CPEs. The results conclusively reject the all-excess-demand hypothesis for the Polish case, and the Rogers test promises to be of considerable practical use. Copyright 1988 by MIT Press.

Money and the consumption goods market in China

This paper studies the relations between money and other macroeconomic variables as well as excess demand in the consumption goods market in the case of China 1954–1983. We explicitly recognize the endogeneity of money in the CPE and do not impose (but instead test) some common restrictive assumptions; we assess the extent of aggregate excess demand (supply) in a macroeconomic disequilibrium model; and we allow at the macro level for the possible coexistence of micro markets in different states of excess demand or supply (shortages or slacks). We find bidirectional causality between money and income; that M 0 behaves in a manner more suited to building simple, conventional models than does M 2; and that there has been a mixed pattern of excess supplies and demands over the three decades.

Macroeconomic Planning and Disequilibrium: Estimates for Poland, 1955-1980

This paper specifies and estimates a four-equation disequilibrium model of the consumption goods market in a centrally planned economy(CPE).The data are from Poland for the period 1955-1980, but the analysis is more general and will be applied to other CPEs as soon as the appropriate data sets are complete.This work is based on previous papers of Portes and Winter (P-W) and Charemza and Quandt(C-Q).P-W applied to each of four CPEs a discrete-switching disequilibrium model with a household demand equation for consumption goods, a planners' supply equation, and a min condition stating that the observed quantity transacted is the lesser of the quantities demanded and supplied.C-Q considered how an equation for the adjustment of planned quantities could be integrated into a CPE model with fixed prices and without the usual price adjustment equation.They made plan formation endogenous and permitted the resulting plan variables to enter the equations determining demand and supply.This paper implements the C-Q proposal in the P-W context.It uses a unique new data set of time series for plans for the major macroeconomic variables in Poland and other CPEs.The overall framework is applicable to any large organization which plans economic variables.

A Model of Chinese National Income Determination

A model consisting of a consumption function and an investment function is used to explain Chinese annual data in constant prices from 1953 to 1982. The data confirm Robert Hall's version of the permanent income hypothesis and the accelerations principle. Deviations of the observations from predictions of this model are attributed to political factors, including the Great Leap Forward in 195962, the Cultural Revolution in 1967-68, and the special government policies in 1978 and 1981.

Reply to E. Dirksen, "The Control of Inflation? Errors in the Interpretation of CPE Data"

Mr Dirksen is trying to make a meal out of rather little, in the manner of cuisine minceur. But the raw materials are skimpy and not top quality, and the result is not to my taste. Particularly unpalatable is the thin sauce of not to say disingenuous, language, liberally applied. I simply cannot have made errors in the interpretation of CPE data that were unavailable at the time I wrote (1976). Even had I thought the Holzman index sufficiently important to try myself to extend it beyond the 1971 figure for the USSR given by Garvy, I could at best have gone through 1974, and (pace Dirksen) the conclusion would have been unchanged. My omission of Soviet CFM prices after 1971 could not have been seriously misleading, since they rose at only 2 per cent per annum in 1971-1974. Nor could my of a continuously falling Holzman be wrong for the period since 1971, since I painted no such picture even for the period 1955-1971 (though it would on the whole be correct) and, having no data, I ignored this indicator's behaviour after 1971. reader without my 1977 paper at hand may now be wondering what I did say on this topic and may indeed be surprised to know that its 19 pages contain only one sentence referring to the CFM and Holzman index data: Tables 4 and 5, moreover, need no interpretation at all to be this view (p. 120). What view? The hypothesis that the planners have in fact maintained macroeconomic equilibrium on the consumption goods market for all but a few brief periods during the past two decades (1955-75).. .. I had based this hypothesis on a wide range of arguments and data, then stated that it was also consistent with the econometric evidence that David Winter and I had so far accumulated. Only then did the sentence quoted above cite the CFM prices for Hungary and Poland 1955-1975 and the Holzman index for the USSR 1955-1971, and the following sentence concluded, Thus we must remain agnostic on this issue . . .. Incidentally, I gave such little weight to the evidence from CFM prices because the theoretical basis for using their relation to state retail prices (i.e., the Holzman index) as an indicator of excess aggregate demand is very weak (e.g., see Pickersgill, 1977, cited by Dirksen). It was precisely the intention of my paper, which Mr Dirksen misinterprets, to direct attention towards macroeconomic arguments and evidence. It is also tendentious to say I admit things that one might just as well have said I claimed. So the 4 per cent open inflation and some repressed inflation in Poland in the early 1970s (p. 1 10), the latter being confirmed by our disequilibrium estimates (Portes and Winter, 1980). Again, our 1978 paper didn't admit, but rather argued at some length, that disequilibrium estimation was essential to test properly the hypothesis stated above.

The Control of Inflation? Errors in the Interpretation of CPE Data

Conventional wisdom has it that there is in Eastern Europe, especially in the USSR, a significant amount of repressed inflation. Although until recently official price statistics showed hardly open inflation, there are some indicators that are alleged to indicate repressed inflation. In this connection the widespread shortages, the ratio of collective farm market prices (CFM prices) to state retail prices, the volume of personal savings accounts and an indicator developed by Holzman (1960) are often cited.' Using these indicators, Bronson and Severin (1966, p. 516) come to the conclusion that in the USSR during the early 1960s inflationary pressures were growing. In the same vein Schroeder and Severin (1976, p. 631) constructed an alternative price index for the USSR that slowly but steadily rises over the period 1955-1975. This price index, it was assumed, is more accurate than the official Soviet retail price index, whose deficiencies are analysed by Bornstein (1972). Portes (1977) argued that in the centrally planned economies (CPEs) little serious hidden or repressed inflation can be demonstrated. One of his arguments is that savings behaviour is often misinterpreted (Portes and Winter, 1978). Another argument was that many of the phenomena could be explained microeconomically in terms of the disequilibrium relative prices of particular goods. (This argument is supported by Pickersgill, 1977). A third argument was that there was no evidence of suppressed inflation in the behaviour of CFM prices. Although the first two arguments seem fundamentally correct, this third argument is erroneous, at rate for Poland and the USSR since 1971. Portes (1977, p. 121) gives a table for two CPEs, Hungary and Poland, which purports to show that behaviour of CFM food prices and state retail food prices is consistent with macroeconomic equilibrium on the consumption goods market for all but a few brief periods during the years 1955-1975. Examination of the data for Poland, however, gives a widening gap between state retail and free market prices for the years 1971-1975, a fact that must have been noted by Portes, for he admitted (1977, p. 110) that in Poland in the period 1972-1975 there was some evidence of repressed inflation. Portes also uses a table (p. 121), published by Garvy (1977),2 in which Holzman's indicator shows that between 1955 and 1971 repressed inflation in the USSR has fallen. The weakness of Portes' argument is as follows. (a) In his econometric work with Winter (Portes and Winter 1977, 1978) he has to admit that: any final judgment on the question of repressed inflation, that began this investigation, must await the disequilibrium estimation for which this paper and Portes and Winter (1977) provide a basis (Portes and Winter, 1978, p. 17). This disequilibrium estimate having not yet been published, it seems somewhat premature already to draw conclusions from it. (b) His work is based on research on data of Czechoslovakia, GDR, Hungary

The Demand for Money and For Consumption Goods in Centrally Planned Economies

HIS article gives estimates of household demand for money and savings functions for four centrally planned economies (CPEs). The data are post-war annual time series for Czechoslovakia, the GDR, Hungary, and Poland. The estimation of these functions characterizing the demand side of the consumption goods market is a part of the empirical component of our research into macroeconomic equilibrium in CPEs. The supply side of the consumption goods market is analysed in a separate paper (Portes and Winter, 1977), and we are currently carrying out disequilibrium estimation (Goldfeld and Quandt, 1975) in a model using the demand and supply function specifications developed in these papers. It is conventional wisdom that since the early 1950s, the CPEs have suffered chronically from some significant degree of excess demand (repressed inflation), i.e., that buyers have faced quantity constraints (informal or formal rationing) on the markets for goods and labour (e.g., Bush, 1973; Garvy, 1975; Schroeder, 1975). When authors think it necessary to give empirical justification, this is in the form of reference to queues, shortages, hidden price increases, quality deterioration, excess liquidity and forced saving, and some data on prices in the small free market sectors of these