Price Response Research Articles

Increasing Impact of Spain on the Equity Markets of Brazil, Chile and Mexico During the Neoliberal Reforms of the 1990s

Purpose: The article examines stock index price responses in Brazil, Chile, and Mexico to those in the US, Spain, and four European countries during three sub-periods surrounding the neoliberal reforms of the 1990s: 1988 to 1994, 1995 to 1998, and 1999 to 2004. Design/methodology/approach: The methodology is empirical and uses time series analysis, in particular impulse response functions (IRFs) derived using vector autoregression (VAR) models. Main Findings: It finds that equity markets became more interconnected as countries opened to international trade and capital flows and that there was an increasing impact of Spain on Latin American equity markets. Stronger economic linkages (more trade and foreign direct investment) between Spain and these countries, especially in Brazil, seem to explain increased equity market interconnectedness. Research limitations/implications: The study limitations are, in general, the same that apply to the VAR methodology, and in particular, to missing control variables or to possible bias in the selection of the subsample periods used as historical benchmarks. Originality/value: To our knowledge, no other work showed that there was an increasing impact of Spain on Latin American equity markets during the neoliberal reform period by using IRFs and VAR models.

Socioeconomic differences in the impact of prices and taxes on tobacco use in low- and middle-income countries-A systematic review.

There is indisputable evidence that increases in taxes that raise tobacco prices reduce tobacco use. Consumption taxes on manufactured tobacco products, however, can be regressive in socioeconomic status (e.g., when the ratio of tax paid to income is lower for higher-income groups than for lower-income groups). Nevertheless, if the poor or less educated are more price responsive, a change in tobacco tax may be progressive in socioeconomic status. Existing reviews clearly indicate that populations with lower income or education are more responsive to tobacco tax and price changes than higher-income and more educated populations in high-income countries. Research pertaining to low- and middle-income countries was, however, limited and inconclusive. We conducted a review of quantitative studies that examined if socioeconomic status modified the association between prices and taxes and tobacco use in low- and middle-income countries. We searched two electronic databases, two search engines, and two working paper repositories. At least two reviewers independently screened articles for inclusion, extracted detailed characteristics, and assessed the risk of bias of each included study. Thirty-two studies met our inclusion criteria. Overall, we found that the evidence in low- and middle-income countries was too limited and methodologically weak to make any conclusive statements. Our review highlights a number of data and methodological limitations in existing studies. The most important limitation was the lack of formal assessment of socioeconomic differences in price responsiveness. Only seven of 32 studies assessed statistically whether own-price effects were modified by socioeconomic status. Many modelling studies have examined the distributional effect of a tax increase on tobacco use, while assuming a strong own-price elasticity gradient in income. The poor were generally assumed to be more responsive to price by a factor of two to five, relative to the wealthy. Although there are theoretical reasons to expect poorer individuals to be more responsive to monetary prices than wealthy ones in low- and middle-income countries, our review provides little empirical support.

Commercial electricity demand modeling: Do regional differences matter for Saudi Arabia?

This paper estimates the responses of drivers of electricity demand for commercial consumers in Saudi Arabia at a regional level. We demonstrate that the regional variation of response to changes in income and prices reflects the level of development of the commercial sector per region. The Southern region’s commercial electricity demand is sensitive to income, a 1% increase in income levels generates a ∼3% increase in demand for electricity, and the income elasticity is lowest for the Eastern region, 0.5%. Compared with residential and industrial consumers, electricity prices for the commercial sector play a significantly more prominent role in driving demand in all regions except the Eastern one. For a 10% increase in commercial electricity price, we estimate that demand will decrease by 12.5% in the Western region, 6% in the Southern region, and 8% in the Central region. In comparison, the price elasticity is much less impactful for the Eastern region, with a decrease of 1.8% for a 10% price increase. The paper makes region-specific policy suggestions based on the diverse income and price responses to the electricity demand of commercial consumers across regions.

Nonlinear responses of crude oil prices to the US dollar exchange rates: the role of inventories

Nonlinear responses of crude oil prices to the US dollar exchange rates: the role of inventories

Economic Analysis of Factors Affecting Sugarcane Production in Major Sugarcane Producing States of India

"Sugarcane (Saccharum sp.) is one of the most significant commercial crops in the world due to its strategic position, extensive uses in every nation’s everyday life, and industrial uses for sustaining economic and nutritional needs. The present study, an economic analysis of factors affecting sugarcane production and policy implications in major sugarcane-producing states of India, centers on the objective to analyse the variables influencing sugarcane production. A secondary time series data for 14 states namely: Uttar Pradesh, Maharashtra, Karnataka, Tamil Nadu, Bihar, Gujarat, Haryana, Punjab, Andhra Pradesh, Madhya Pradesh, Uttarakhand, Telangana, Chhattisgarh, and Jharkhand, for the period 1998-99 to 2018-19 have been utilized for the present study. The variables considered in this study were area, yield, rainfall, and price (FRP). The findings imply that there was a significant linear relationship between the area and sugarcane production. The linear association of yield with production was positive but weaker than the area. Rainfall and FRP (Fair and Remunerative Prices) had a weakly positive association with production,as observed there was the insensitivity of sugarcane production to FRP and rainfall thus, efforts should be made to increase price responsiveness by reducing the sugarcane cane reservation area."

ANALISIS PEMILIHAN SUPPLIER BERAS DI TOKO SEMBAKO GABE

In the face of increasingly rapid market developments, every company must be able to compete globally. This is a challenge for every company, to be able to compete in providing the best for its consumers. In order to produce products that are in accordance with the wishes of consumers and can increase the competitiveness of companies, it is necessary to pay attention to how to procure products and select the right suppliers. Toko Sembako Gabe is one of the SMEs that does not yet have the right supplier to become a rice supplier. This research aims to assist business owners in determining the right rice supplier at Gabe Grocery Stores. This research uses the Analytical Hierarchy Process (AHP) method. The criteria used in this study are quality, price, delivery, flexible and fast response. Based on the criteria and sub-criteria in supplier selection, supplier 1 is the first priority with a weight of 1.080, supplier 3 is the second choice with a weight of 0.695 and supplier 2 is the last choice with a weight of 0.288. Based on the results of this study, the best supplier to be chosen by Toko Sembako Gabe is supplier 1 (Grosir Tiga Brother)

When China strikes: Quantifying Australian companies' stock price responses to China's trade restrictions

AbstractIn early 2020, China, Australia's top export market, unilaterally imposed trade restrictions on Australian barley, beef, coal, cotton, timber, copper and wine. However, convincing evidence regarding the effects of such trade restrictions on firms is scarce. Leveraging data on daily stock returns from 20 listed Australian and 32 listed Chinese firms that produce the restricted commodities, we provide the first systematic analysis of the firm‐level economic impacts of China's trade restrictions on Australian and Chinese firms. We find significant adverse effects on Australian firms' stock returns, leading to almost 20% loss within 10 trading days; however, most firms' stock returns immediately rebounded. In contrast, Chinese firms usually saw significant positive stock returns, leading to almost 30% gains, and the positive abnormal returns continuously increased within 10 trading days. Media coverage and trade dependence substantially impact Australian and Chinese firms' stock returns—industries with stronger trade dependence on China saw greater losses in Australian firms' stock returns. Our results suggest that trade reallocation and deflection are two effective mitigation mechanisms for Australian exporters facing China's trade restrictions.

Retraction: Carbon pricing and environmental response: a way forward for China’s carbon and energy market

Retraction: Carbon pricing and environmental response: a way forward for China’s carbon and energy market

Numerical Analysis of Inductive Proximity Sensors for Non-Ferrous Targets

Abstract Proximity sensors are devices found in many fields of activity from the automotive area to robotics and beyond. Among them, proximity sensors occupy an important place due to their low price and reliable response. They are found in a wide range of sizes and detection distances. In this work, a comparative study was carried out on two constructive solutions - one shielded and one unshielded. The response provided by the sensor was followed through a 2D FEMM analysis varying a series of parameters: the material from which the target is made, the distance between the target and the sensor, as well as its operating frequency. The results highlight the influence of these parameters by changing some quantities of a magnetic nature such as the spectrum of the magnetic flux density, the magnetic energy stored by the target, respectively the inductance of the sensor coil.

A novel scheduling strategy for virtual power plant based on power market dynamic triggers

For the scheduling problem of virtual power plants (VPPs), this paper aims to propose a dynamic trigger scheduling strategy that integrates objective grid information and subjective judgment factors affecting VPP scheduling. The strategy design involves setting initial incentive electricity prices and optimizing price adjustment efficiency. Firstly, this paper establishes a reference incentive electricity price model to derive the initial reference electricity price for the dispatching process. Then, a response willingness model is proposed to establish the relationship between electricity price and VPP response, improving the accuracy of the initial reference electricity price and reducing the frequency of subsequent price adjustments in the actual trigger. Finally, this paper utilizes the groundbreaking dynamic trigger method to adjust the price based on the actual VPP response, obtaining the optimal VPP incentive electricity price. We use Matlab to verify this strategy, and the experimental results show that the average response error using this strategy is reduced by 3.33 kW compared to the contrastive literature. Moreover, scheduling task non-completion does not occur in this method. Thus, the accuracy and reliability of the method are verified.

Robust optimal energy management with dynamic price response: A non-cooperative multi-community aggregative game perspective

Energy management system gradually becomes an effective means in smart grid for paving the way to low carbon economy. However, information privacy, a large population of users, and the uncertainties of renewable energy sources and consumers’ behaviors have led to significant challenges for energy management system operation in terms of security and robustness. To conquer such difficulties, a bilevel energy management scheme for the day-ahead optimal scheduling of multi-community system combined with distributed energy sources is first proposed. Meanwhile, uncertainties induced by renewable energy sources generation and load consumption are handled through adjustable robust optimization. Secondly, a non-cooperative multi-community aggregative game is formulated to describe the interaction of numerous residential users which are coupled through the dynamic electricity price. Then, to seek the ɛ-Nash Equilibrium of the proposed game, an improved decentralized iterative algorithm based on Mean-Field control and consensus is presented which is benchmarked with centralized algorithm and a decentralized optimization method based on quadratic programming. Since each player in the proposed algorithm does not need to exchange information directly with other players, the information privacy is fully preserved. Also, the convergence of the proposed algorithm is provided. Case studies of a five-community system are conducted and the comparison results show that our proposed approach has better performance in terms of computational time and electricity cost.

Optimal monetary policy in developing countries: The role of informality

In this paper, I analyze optimal monetary policy in developing countries whose labor markets are characterized by the presence of a large informal sector. I develop a closed economy model with nominal price and wage rigidities, search and matching frictions, and a dual labor market: a formal one characterized by matching frictions and nominal wage rigidities, and an informal one where wages are fully flexible. Under this framework, a trade-off between price and wage inflation emerges. I find that informality increases the response of price and wage inflation to aggregate productivity shocks. As a result, the presence of an informal sector increases the inefficient fluctuations of labor market variables, such as unemployment, labor market tightness, and formal hiring rate. I find that optimal policy with informality features significant deviations from price stability in response to aggregate productivity shocks.

Additions to and deletions from the S&P 500 index: A resolution to the asymmetric price response puzzle

We resolve the asymmetric price response puzzle for additions to and deletions from the S&P 500 documented in Chen, Noronha, and Singal (2004) by using a more appropriate methodology to measure abnormal returns and correctly adjusting for outliers. In contrast to their findings, our results show a permanent price response for both additions and deletions. We further distinguish between firms transferred into other S&P indices and true additions/deletions (firms not added from or placed into other S&P indices). We find a permanent price increase for true additions and a permanent decline in price for true deletions from the S&P 500.

Economic policy uncertainty, geopolitical risks, and the heterogeneity of commodity price fluctuations in China ——an empirical study based on TVP-SV-VAR model

The combination of geopolitical conflicts and economic shocks could cause severe volatility in the global commodity market. Based on the monthly data from June 2006 to March 2023, this paper employs the TVP-SV-VAR model to investigate the time-varying impacts of economic policy uncertainty (EPU) and China's geopolitical risk (GPRC) on China's commodities prices (CCPI). The findings reveal that: (1) CCPI can be collectively influenced by EPU and GPRC shocks, with time-varying impulse responses showing notable fluctuations with alternating positive and negative values. The response of CCPI to EPU is more intense than that to GPRC shock after 2019; (2) Under the financial crisis, GPRC has a significantly positive impact on CCPI, while positive responses to global EPU and China's EPU are more pronounced under the Russia-Ukraine conflict. Under the Sino-US trade friction, the responses of CCPI to various shocks are mostly positive, with a continuing positive impact of EPU; (3) The responses of energy prices, agricultural product prices, and non-ferrous metal prices align with that of overall commodity prices. However, under the Russia-Ukraine conflict, the positive impulse responses of non-ferrous metal prices to EPU and GRPC shocks are persistent.

Human-centered determinants of price and incentive-based residential demand response in Ottawa, Canada

Human-centered determinants of price and incentive-based residential demand response in Ottawa, Canada

Asymmetric price transmission and impulse responses from U.S. crude oil to jet fuel and diesel markets

Despite numerous studies on price interdependencies in petroleum markets, the exploration of price transmission from crude oil to jet fuel and diesel remains surprisingly limited. This knowledge gap is particularly remarkable given the increasing economic significance of these fuels and the emerging biojet and biodiesel industries. Filling this research gap, this study employs a nonlinear time series approach that considers unique features of these markets— ‘stickiness’ of firms' responses, asymmetric price adjustments, and the time-dependent responses to oil price shocks. This approach provides a much-needed understanding of long-term price relationships, short-term dynamic adjustments, and price response mechanisms to crude oil shocks in the context of jet fuel and diesel markets. Key results include: (1) both jet fuel and diesel have long-run equilibrium relationships with oil prices; (2) price adjustments of jet fuel and diesel are asymmetric, in opposite directions, due to distinct differences in industrial characteristics; (3) the responses of the two types of fuel prices to oil shocks show nonlinear dynamic paths, with different amplitudes and decay periods. The findings contribute to a better understanding of the current fuel industries, and provide insights into emerging biofuel markets, with implications for businesses and policymakers.

Multi-product firm price and variety response to firm-specific cost shocks

A large literature studies how prices respond to changes in market conditions. More recent work examines firm adjustments along the product quality and variety channels. We present a theoretical model of heterogeneous, multi-product firms to characterize the response of firms to idiosyncratic cost shocks along the price and variety channels. The model delivers rich implications and interesting trade-offs between the two channels. Large firms respond to a cost increase by raising both prices and scope. Relative to smaller firms, they respond more through scope than prices. Availability of the variety channel eases pressures to absorb cost changes and increases pass-through.

Heterogeneous exchange rate pass-through in Mexico: What drives it?

In this paper, we focus on the pass-through of exchange rate fluctuations into prices of final goods and services and examine whether contrasting pass-through rates are associated with regional and/or product-specific characteristics. Using CPI micro-data from 2002 to 2010, we estimate industry-specific rates of pass-through across regions in Mexico. By looking at within-country price responses, we alleviate shortcomings of cross-country studies that assess pass-through determinants. The results indicate that pass-through rates differ across regions and industries: low pass-through regions exhibit nearly one-quarter of the elasticity shown by high pass-through regions after twelve months. This heterogeneity prevails at longer horizons. The findings suggest that full pass-through is rejected for all regions and industries. Most of these differences in transmission rates are explained by regional and product characteristics: demand conditions, economic development, distance to the US border, import intensity, price change dispersion and expenditure share play a clear role in increasing pass-through, whereas market density dampens pass-through rates. The evidence confirms pricing-to-market theories and has implications for the design of monetary and exchange rate policies.

Can auctions increase competition in the pension funds market? The Chilean experience

This paper analyses the auction policy over enrollees’ monopoly rights introduced in the Chilean pension system. This policy was designed to promote competition in the pension fund market driven by private firms, after 30 years of operation. Since the Chilean pension fund system has inspired dozens of countries in the last forty years, the analysis of the design and performance of its relatively new auction mechanism is of worldwide interest. We present a theoretical and empirical model. Our theoretical model illustrates firms’ incentives to participate in the auction process. Our empirical analysis focuses on the effect of auctions on outcomes, such as fees, mark-ups, demand price elasticity, returns, and risk premiums. Despite the evidence shown for the positive benefits of the auction implementation, the current mechanism design is not considering that the biggest issue is the low individuals’ price response levels. Importantly, the current auction design only incentivizes new entrants to participate. Thus, the design generates low competition in the auction processes. Proper design should incentivize all firms to participate. Besides, we find that consumers’ price elasticity increased after the implementation of auctions, although demand is still generally inelastic. Interestingly, non-winning auction firms did not react in fees but may have reacted in other characteristics, such as returns and risk premiums.

Strategic logistics service procurement in shipping supply chains

This paper develops a game-theoretic model to explore the strategic procurement of logistics services in a shipping supply chain, where a freight forwarder canvasses orders and provides one-stop service to shippers. The forwarder faces a decision between in-house and outsourcing modes for inland logistics services, as well as the choice to purchase ocean shipping services through a forward agreement or in a spot market. The spot prices of inland logistics and ocean shipping services are positively correlated with shipper demand, meaning that changes in shipper demand can affect the spot prices. Our analysis indicates that the responsiveness of spot prices could be beneficial to the carrier but detrimental to the forwarder. Hence, the forwarder would adopt a forward agreement to purchase ocean shipping service even when the forward price is slightly higher than the expected spot price. Moreover, a forward agreement could be reached if the market size is relatively small. Finally, we show that the forwarder should adopt the in-house mode for inland logistics services, even when the in-house mode cost is higher than the expected outsourcing cost. This study contributes the literature by revealing how the correlation between shipper demand and spot prices for two types of logistics services affects the procurement decisions of a freight forwarder.