Lumpy Price Adjustments: A Microeconometric Analysis

This paper presents a simple model of state-dependent pricing that allows identification of the relative importance of the degree of price rigidity that is inherent to the price setting mechanism (intrinsic) and that which is due to the price’s driving variables (extrinsic). Using two data sets consisting of a large fraction of the price quotes used to compute the Belgian and French CPI, we are able to assess the role of intrinsic and extrinsic price stickiness in explaining the occurrence and magnitude of price changes at the outlet level. We find that infrequent price changes are not necessarily associated with large adjustment costs. Indeed, extrinsic rigidity appears to be significant in many cases. We also find that asymmetry in the price adjustment could be due to trends in marginal costs and/or desired mark-ups rather than asymmetric cost of adjustment bands

Lessons of the Wage Dynamics Network

The Wage Dynamics Network (WDN) is a temporary research network with the main objective of identifying the characteristics of wage dynamics and drawing conclusions from them in monetary policy terms. The paper presents the main findings of this research work. Notably, the intersectoral wage differential can be partly attributed to differences in profitability and the degree of competition to which the sectors are exposed. Nominal wages are adjusted less frequently than prices and adjustments generally tend to be made at regular intervals rather than in response to the economic climate. Wage rigidity not only affects existing workers, but also new recruits. The euro area, and Belgium in particular, is marked more by rigid real wages than nominal wages. Real wage rigidity implies a low optimal inflation rate and tends to complicate the conduct of monetary policy since it triggers greater fluctuations in output and employment and makes inflation more persistent. Furthermore, in a monetary union, countries with higher real wage rigidity suffer a loss of competitiveness in the event of negative productivity shocks. Institutions underlying wagesetting generally play an important role in the way in which firms and economies react to shocks. The heterogeneity of these institutions within the euro area therefore presents a real challenge for monetary policy.firms’ behavior, wage rigidity, employment, monetary policy, labour market flexibility, labour market institutions, economic shocks

Optimal forest management with stochastic prices & endogenous fire risk

Earth observations are one way to reduce the risk to standing forests from damages caused by wild fires, since they enable early warning systems, preventive actions and faster extinguishing of fires, before they spread out. Another channel through which fire hazard can be reduced is the thinning of the forest, so the risk of a fire occurring becomes partially endogenous. In order to shed more light on optimal forest management under such endogenous fire risk, we develop a real options model, where the price of biomass is stochastic and the harvesting decision needs to be timed optimally in the face of these uncertainties. We find that there is a positive value of information. In other words, there is a positive willingness to pay for Earth observations by forest managers

Lumpy Price Adjustments: A Microeconometric Analysis

This paper presents a simple model of state-dependent pricing that allows identification of the relative importance of the degree of price rigidity that is inherent to the price setting mechanism (intrinsic) and that which is due to the price’s driving variables (extrinsic). Using two data sets consisting of a large fraction of the price quotes used to compute the Belgian and French CPI, we are able to assess the role of intrinsic and extrinsic price stickiness in explaining the occurrence and magnitude of price changes at the outlet level. We find that infrequent price changes are not necessarily associated with large adjustment costs. Indeed, extrinsic rigidity appears to be significant in many cases. We also find that asymmetry in the price adjustment could be due to trends in marginal costs and/or desired mark-ups rather than asymmetric cost of adjustment bands.sticky prices, nominal intrinsic and extrinsic rigidities, micro non-linear panels

Human health impacts for renewable energy scenarios from the EnerGEO Platform of Integrated Assessment (PIA)

This article reports impact results from running the EnerGEO Platform of Integrated Assessment (PIA) related to human health for different scenarios in Europe. The scenarios were prepared within the EnerGEO project. The idea of this European project is to determine how low carbon scenarios, and in particular scenarios with a high share of renewable energy, affect concentrations of air pollutants and as a consequence affect human health. PM2.5 concentrations were estimated with the IIASA Greenhouse Gas and Air Pollution Interactions and Synergies (GAINS) model on a time horizon up to the year 2050 for different scenarios. We analyse here the estimation of the Loss of Life Expectancy due to PM2.5 concentrations for the Baseline scenario taken as a reference and the Maximum renewable power scenario

Thorium nanochemistry: The solution structure of the Th(iv)-hydroxo pentamer

Tetravalent thorium exhibits a strong tendency towards hydrolysis and subsequent polymerization. Polymeric species play a crucial role in understanding thorium solution chemistry, since their presence causes apparent solubility several orders of magnitude higher than predicted by thermodynamic data bases. Although electrospray mass spectrometry (ESI MS) identifies Th(iv) dimers and pentamers unequivocally as dominant species close to the solubility limit, the molecular structure of Th 5(OH) y polymers was hitherto unknown. In the present study, X-ray absorption fine structure (XAFS) spectroscopy, high energy X-ray scattering (HEXS) measurements, and quantum chemical calculations are combined to solve the pentamer structure. The most favourable structure is represented by two Th(iv) dimers linked by a central Th(iv) cation through hydroxide bridges. © 2012 The Royal Society of Chemistry

The benefits of investing into improved carbon flux monitoring

Operationalizing a Global Carbon Observing and Analysis System (www.geocarbon.net) would provide a sound basis for monitoring actual carbon fluxes and thus getting quantities right when pricing carbon – be it in a cap-and-trade scheme or under a tax regime. However, such monitoring systems are expensive and—especially in times of economic weakness—budgets for science and environmental policy are under particular scrutiny. In this study, we attempt to demonstrate the magnitude of benefits of improved information about actual carbon fluxes. Such information enables better-informed policy-making and thus paves the way for a more secure investment environment when decarbonizing the energy sector. The numerical results provide a robust indication of a positive social value of improving carbon monitoring systems when compared to their cost, especially for the more ambitious climate policies