Imputed Prices Research Articles

Missing growth measurement in Germany

Abstract Using detailed establishment-level micro data, this paper analyzes for the German case the hypothesis by Aghion et al. (2019), stating that officially published figures for real output growth would be systematically understated. The effect rests on overstated inflation estimates due to imputed prices for disappearing goods and services varieties, where measurable plant entry and exit dynamics play a crucial rule. Our main results regarding understated real output growth lie in the range of 0.39 to 0.54 average annual percentage points for 1998–2016, which is quite closely in line with existing findings for France, the USA, and Japan (in different periods). We also find that services sectors appear most affected, and that the effect in East Germany is somewhat larger. We investigate different market share proxies, provide additional robustness analysis and also discuss limitations of the approach.

Regional Analysis of U.S. Lumber Exports for Important Hardwood Species from 1990 to 2020

Abstract In 1990, Europe, North America, and the Asian democracies of Japan, Taiwan, and South Korea (JTK) were the major export markets for U.S. hardwood lumber and oak species accounted for 59 percent of total exports. In the 1990s, shipments to Europe and North America increased, while shipments to JTK declined. During the early 2000s, exports to China and Vietnam (CHV) increased. The worldwide recession of 2009 caused exports to decline in all regions, and oak species accounted for 37 percent of total shipments that year. Since 2010, CHV has become the most important export market for all species except maple. In 2020, oak species accounted for 43 percent of total export volume, and walnut ranked third in value of shipments. An examination of imputed prices found that exports tend to be composed of mid- to higher-quality hardwood lumber. Since 1997, real prices of exported lumber have declined for most species, and this decline occurred concurrently with increased U.S. sawtimber volume. In the 1990s, increased exports expanded the market for domestically produced hardwood lumber. Since the early 2000s, increased lumber exports have partially countered reduced domestic demand and have acted as a hedge against greater declines in overall demand for U.S. hardwood lumber.

Inflation and the Gig Economy: Have the Rise of Online Retailing and Self-Employment Disrupted the Phillips Curve?

During the recovery from the Great Recession, inflation did not reach the central bank’s 2 percent objective as quickly as many models had predicted. This coincided with increases in online shopping, which arguably made retail markets more contestable and damped retail inflation. This hypothesis is tested using data on the online share of retail sales, which are incorporated into an econometric model. Results imply that the rise of online retail has flattened the Phillips Curve, reducing the sensitivity of inflation to unemployment rate changes. Improvement in fit from just including the online share is tiny—so far. Other results indicate that market-based price indexes are more sensitive to unemployment than measures such as core PCE, which puts a sizable weight on items with imputed prices that may slowly adjust to market conditions. Further, measures of online sales that internalize substitution between online and traditional mail order sales better help track the impact of online sales on inflation dynamics. {{p}} A complementary factor is the “gig� economy and the rise of self-employment, which by reducing the bargaining power of labor, could lower the natural rate of unemployment. Model performance and fits are improved using a hybrid approach in which the rise of online sales can flatten the slope of the Phillips Curve by reducing retail pricing power and the prevalence of gig or self-employment can lower the natural rate of unemployment. {{p}} By omitting important structural changes in both goods and labor markets, conventional Phillips Curve models have failed to track how the rise of online retailing has flattened the Phillips Curve and how the rise of the gig economy (self-employment) has lowered the natural rate of unemployment. One notable difference between the price-price and wage-price results is that the combined effects of online shopping and self-employment are more notable on wage inflation than on price inflation. This could plausibly reflect that improvements in information technology may have undermined the pricing power of workers in labor markets to a greater degree than they have affected the pricing power of producers in goods markets.

Optimality Criteria of Economic Growth as Examples of Optimal Resource Allocation Over Time

This is my PhD dissertation defended in 1966 at the University of Minnesota and it was never published. It has been cited and used in other researchers work so I now make it available. The problem of optimal resource allocation over time is formulated as an optimal control problem. This is where the existence of optimal programs is investigated (and sufficient conditions are provided) for the first time in economics. When earlier authors spoke of existence, they spoke of convergence of the integral defining the optimality criterion. Optimal programs were characterized in terms of market equilibria at each point in time as well as imputed prices for stocks of capital.One of the propositions in the paper establishes the principle of centralization of planning and decentralization of implementation (this closely relates to polycenterism advocated by European socialist parties in the late 1950s. If one uses a measure space of traders instead of the basic time interval and assume pure exchange then the existence theorem of this paper can greatly simplify the proof of existence of equilibrium in a or a much more flexible model of exchange with continuum of traders.

Manufacturing Firms’ Demand for Water Recirculation

Relatively little is known about the factors that influence firms’ water recirculation decisions. This paper estimates an econometric model that jointly considers two facets of firms’ recirculation behavior: first, the discrete decision of whether to recirculate and, second, the decision of how much to recirculate. The model is estimated by applying the Heckman two‐stage estimation procedure to cross‐sectional data from Environment Canada's 1996 Industrial Water Use Survey. In the first stage, long‐run factors, such as relative water scarcity and production technologies, are found to influence the decision whether to recirculate water. In the second stage, the imputed prices of intake water and water recirculation as well as the scale of operations are found to influence the choice of the optimal quantity of water to recirculate. Les facteurs qui influencent les décisions des entreprises concernant le recyclage de l’eau sont assez peu connus. Dans le présent article, nous avons estimé un modèle économétrique qui tient compte de deux aspects du comportement des entreprises envers le recyclage de l’eau : le choix de recycler l’eau ou non et le choix de la quantité d’eau à recycler. Nous avons estimé le modèle à l’aide de la procédure en deux étapes de Heckman que nous avons appliquée à des données transversales tirées de l’Enquête sur l’utilisation industrielle de l’eau, réalisée par Environnement Canada en 1996. À la première étape, des facteurs à long terme tels que la rareté relative de l’eau et les technologies de production influent sur la décision de recycler l’eau ou non. À la deuxième étape, les prix imputés du captage et du recyclage de l’eau ainsi que l’envergure des opérations influent sur le choix de la quantité optimale d’eau à recycler.

Impacts of Sample Size and Quality-Adjusted Imputed Prices on Own-Price Elasticities Estimated Using Cross-Sectional Data

Cross-sectional data sets containing expenditure and quantity information are typically used to calculate quality-adjusted imputed prices. Do sample size and quality adjustment of price statistically alter estimates for own-price elasticities? This paper employs a data set pertaining to three food categories—pork, cheese, and food away from home—with four sample sizes for each food category. Twelve sample sizes were used for both adjusted and unadjusted prices to derive elasticities. No statistical differences were found between own-price elasticities among sample sizes. However, elasticities that were based on adjusted price imputations were significantly different from those that were based on unadjusted prices.

Optimal Investment in Knowledge Within a Firm Using a Market Mechanism

There has been an extensive research literature on auctions, but recent developments in technology have resulted in new interest in auction mechanisms as a practical way of allocating resources. This paper presents a new double-auction mechanism to handle resource allocation for public goods when complementarity exists. The mechanism is placed in the context of an organization's internal knowledge investment. Knowledge goods have two distinct characteristics. First, knowledge within an organization can be considered a public good, so it is subject to the free-rider problem. Second, knowledge is interrelated and interdependent; that is, there is complementarity among knowledge components. The value of knowledge often derives from a bundle of knowledge components, rather than from its individual pieces. These two characteristics present a serious challenge to allocating organizational resources for knowledge goods. We introduce an internal market in which knowledge providers offer knowledge projects and knowledge consumers place bids to acquire them. The mechanism is a Groves-Clarke-type double auction that allows bundled knowledge goods to be traded so as to recognize complementarities between knowledge projects. The market mechanism we propose is incentive compatible; i.e., it induces people to reveal their true valuation. In addition, it allows trades of knowledge bundles to determine which knowledge components are most valuable from the organization's viewpoint. Under mild assumptions, the mechanism is a computationally tractable solution to operating a market of bundled public goods. We further show how “imputed prices” can be calculated for subsets of knowledge components and prove that a market mechanism that does not allow bundle orders or does not address the free-rider problem yields a systematic underinvestment in knowledge.

A model of spatial flows and growth of capital and labor stocks

This article deals with optimal spatio-temporal development of capital and labour stocks in a production economy with spatial extension. Current stocks of capital and labour are used to produce a commodity, partly invested to replace worn capital, partly consumed. These stocks can be relocated in space, but relocation uses up some of the inputs themselves. Under these constraints the objective is to maximize a utility measure derived from per capita consumption and aggregated over individuals, space and time. The necessary conditions for optimum are derived as Euler equations of a continuous variational problem. They concern choice of production scale and technology, rate of reinvestment, and optimal flows of labour and produced commodities through space. The Lagrangian multipliers of the constraints are interpreted as imputed wages and commodity prices. The whole structure of optimum depends on these imputed wages and prices, and their solution can be derived from a pair of dependent non-linear partial differential equations. The spatial flow portrait at each moment depends on the time parameter and on the parameters of the model (net reproduction and capital depreciation rates). It can undergo sudden changes described by the elliptic and hyperbolic umbilic catastrophes.

Racial discrimination in the Boston housing market

Recent studies suggest that price differentials between what whites and blacks pay for housing are largely a function of changes in supply and demand in the two submarkets. These studies, however, estimate models that assume a unified housing market. As a result, imputed prices of housing attributes cannot vary with location, and the analyses obscure important racial price differentials. Based on a more realistic and complex housing market theory, the model described in this paper indicates that housing prices are substantially higher in the ghetto and transition areas than in white areas, and that within the same area blacks must pay more than whites for equivalent housing.

Optimal Advertising Signals in the Florida Citrus Industry: A Research Application

AbstractA sales response to advertising for the Florida citrus industry is estimated and used to explore optimal levels of advertising. Results of an optimal control model show the gains that can be realized through inter‐ and intraseasonal changes in the level of advertising expenditures. These gains are generated by using imputed prices that take into account future gains of current advertising. An optimal path of adjustment in both advertising and sales over time is obtained which provides signals for an effective advertising policy.

An Optimal Growth Model with Time Lags

The paper discusses the allocation of output among consumption and two types of capital with different gestation periods. Along an optimal path, we show that the imputed prices of capital goods, from the time they start production, do not exceed the prices of output, which are not less than the marginal instantaneous utility of consumption. A simple numerical example helps to illustrate some further implications of the model. RECENT PAPERS on optimal growth consider models of allocation of resources between consumption and investment. It is invariably assumed that investment results in an instantaneous increase in the stock of capital. Such assumptions obscure differences in the gestation periods among various capital goods. In [1] we discuss how a growth problem with time lags can be formulated and interpreted and explain the derivation of the necessary conditions for optimization. In this note we study the effects of differences in gestation periods on optimal investment plans for a growth problem including depreciation and population growth. Consider an economy where two capital goods and labor are used in the production of a single commodity. The per capita output at time t is given by the production function: f (kl, k2), where k, is the per capita stock of capital of type one, and k2 is the per capita stock of capital of type two. From now on, all variables will be per capita and we drop the designation. We assume the following:

Regional location of cattle feeding — A spatial equilibrium analysis

This study focuses on factors affecting the regional location of cattle feeding. Briefly stated, these factors include the regional demand for beef, transfer costs for carcass beef and for the intermediate products of feeds and feeder cattle, feed conversion efficiency by region, and regional supplies of the intermediate products of concentrate feed, hay, and feeder cattle. The study is a partial equilibrium approach to the location of feedlots, taking as given the location of production of other livestock products. A competitive equilibrium model was developed for analyzing the location of cattle feeding for a 20-region breakdown of the United States for the 1957-58 feeding year. A linear programming technique was utilized to quantify the model. The solution generated provides the spatial distribution of cattle feeding by region, the pattern of interregional shipments of intermediate products and of carcass beef, a set of equilibrium prices for beef, and imputed prices for intermediate products by region. Four models were quantified to test alternative model specifications as to feedlot nonfeed costs, regional feed conversion efficiency, and regional demand for beef. Results indicate no simple rules for location of cattle feeding, but rather stress the importance of considering the interrelationships among the major variables such as the regional demand for beef, regional intermediate product supply, regional feed conversion efficiency, and transfer costs for the intermediate products and for carcass beef.