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Cheap Talk, Gullibility, and Welfare in an Environmental Taxation Game

Deissenberg, Christophe; Dawid, Herbert; Sevcik, Pavel - 2004

We consider a simple dynamic model of environmental taxation that exhibits time inconsistency. There are two categories of firms, Believers, who take the tax announcements made by the Regulator to face value, and Non-Believers, who perfectly anticipate the Regulator's decisions, albeit at a...

Persistent link: https://www.econbiz.de/10011325007

Near-rational exuberance

Bullard, James; Evans, George W.; Honkapohja, Seppo - 2005

We study how the use of judgement or “add-factors” in macroeconomic forecasting may disturb the set of equilibrium outcomes when agents learn using recursive methods. We isolate conditions under which new phenomena, which we call exuberance equilibria, can exist in standard macroeconomic...

Persistent link: https://www.econbiz.de/10011604601

A Theory of Price Adjustment under Loss Aversion

Ahrens, Steffen; Pirschel, Inske; Snower, Dennis J. - 2014

We present a new partial equilibrium theory of price adjustment, based on consumer loss aversion. In line with prospect … theory, the consumers' perceived utility losses from price increases are weighted more heavily than the perceived utility … an otherwise standard dynamic neoclassical model of monopolistic competition. The resulting theory of price adjustment is …

Persistent link: https://www.econbiz.de/10010398564

Menu Costs and Inflation Asymmetries Some Micro Data Evidence

Karádi, Péter; Reiff, Àdám - 2007

The paper explains the observed asymmetric inflation response to value-added tax (VAT) changes in Hungary by calibrating a standard sectoral menu cost model on a new micro-level CPI data set. The model is able to reproduce important moments of the data, and finds that the asymmetry can be...

Persistent link: https://www.econbiz.de/10010494360

On implications of micro price data for macro models

Maćkowiak, Bartosz; Smets, Frank - 2008

We review the recent literature that studies new, detailed micro data on prices. We discuss implications of the new micro data for macro models. We argue that the new micro data are helpful for macro models, but not decisive. There is no simple mapping from the frequency of price changes in...

Persistent link: https://www.econbiz.de/10011605006

Do Menu Costs Make Prices Sticky?

Eife, Thomas A. - 2008

This paper studies whether menu costs are large enough to explain why firms are so reluctant to change their prices. Without actually estimating menu costs, we can infer their relevance for firms' price setting decisions from observed pricing behavior around a currency changeover. At a currency...

Persistent link: https://www.econbiz.de/10011422183

The price setting behaviour of Spanish firms: evidence from survey data

Álvarez, Luis J.; Hernando, Ignacio - 2005

This paper reports the results of a survey carried out by the Banco de España on a sample of around 2000 spanish firms to deepen the understanding of firms’ price setting behaviour. The main findings may be summarised as follows. Most Spanish firms are price setters that use predominantly...

Persistent link: https://www.econbiz.de/10011604584

Sticky prices in the euro area: a summary of new micro evidence

Álvarez, Luis J.; Dhyne, Emmanuel; Hoeberichts, Marco M.; … - 2005

This paper presents original evidence on price setting in the euro area at the individual level. We use micro data on consumer (CPI) and producer (PPI) prices, as well as survey information. Our main findings are: (i) prices in the euro area are sticky and more so than in the US; (ii) there is...

Persistent link: https://www.econbiz.de/10011604609

Costs, demand, and producer price changes

Loupias, Claire; Sevestre, Patrick - 2010

We estimate an ordered probit model in order to explain the occurrence and magnitude of producer price changes in the French manufacturing sector. We use data consisting essentially of the Banque de France monthly business surveys, pooled over the years 1998-2005. Our results show that changes...

Persistent link: https://www.econbiz.de/10011605230

Social Conformity and Bounded Rationality in Arbitrary Games with Incomplete Information: Some First Results

Cartwright, Edward; Wooders, Myrna - 2003

In has been frequently observed, in both economics and psychology, that individuals tend to conform to the choices of other individuals with whom thy identify. Can such conformity be consistent with self-interested behaviour? To address this question we use the framework of games with incomplete...

Persistent link: https://www.econbiz.de/10011325147