Inflation asymmetry, menu costs and aggregation bias – A further case for state dependent pricing

Asymmetric inflation response to aggregate shocks is an identifying macro-prediction of state dependent pricing models with trend inflation (Ball and Mankiw, 1994). The paper uses the natural experiment of symmetric value-added tax (VAT) changes in Hungary with highly asymmetric inflation responses to provide further evidence for state-dependent pricing and for the Ball-Mankiw conjecture. The paper shows, furthermore, that while a standard menu cost model like that of Golosov and Lucas (2007) underestimates the observed asymmetry, a model of multi-product firms that takes sectoral heterogeneity explicitly into consideration can quantitatively account for the inflation asymmetry observed in the data. This aggregation bias of the standard model is the result of the strong interaction term between trend inflation and menu costs in determining asymmetry in the model, and the positive correlation between sectoral inflation rates and menu costs in the data. The paper implies that the real effects of negative monetary shocks can be substantial even in the standard Golosov and Lucas (2007) model if these additional factors are taken into consideration.aggregation bias, inflation asymmetry, menu cost, sectoral heterogeneity, value-added tax

The effect of the change in VAT rates on the consumer price index

In the autumn of 2006 the Magyar Nemzeti Bank launched a series of research projects on the pricing of products and services with non-regulated prices, which is expected to last for one and a half years. Store-level price quotes used for the Hungarian CSO’s (Central Statistical Office) consumer price index calculation serve as a basis for the research. As a first step, we examined how earlier changes in VAT rates (the VAT increase in January 2004 and the VAT cut in January 2006) influenced the prices of products and services. Our analysis is of particular importance as the VAT rate of certain products increased again in September 2006. Our findings show that while a larger part of the VAT increase was transmitted into consumer prices within a few months, the VAT cut reduced consumer prices to a much smaller extent, thus adding to the profit of stores – at least in the short run.Consumer Price Index, state dependent pricing, VAT-rates.

Bounds for the expected value of one-step processes

Mean-field models are often used to approximate Markov processes with large state-spaces. One-step processes, also known as birth-death processes, are an important class of such processes and are processes with state space $\{0,1,\ldots,N\}$ and where each transition is of size one. We derive explicit bounds on the expected value of such a process, bracketing it between the mean-field model and another simple ODE. Our bounds require that the Markov transition rates are density dependent polynomials that satisfy a sign condition. We illustrate the tightness of our bounds on the SIS epidemic process and the voter model.Comment: 14 pages, 4 figures, revise

Inflation asymmetry, menu costs and aggregation bias - A further case for state dependent pricing

Asymmetric inflation response to aggregate shocks is an identifying macro-prediction of state dependent pricing models with trend inflation (Ball and Mankiw, 1994). The paper uses the natural experiment of symmetric value-added tax (VAT) changes in Hungary with highly asymmetric inflation responses to provide further evidence for state-dependent pricing and for the Ball-Mankiw conjecture. The paper shows, furthermore, that while a standard menu cost model like that of Golosov and Lucas (2007) underestimates the observed asymmetry, a model of multi-product firms that takes sectoral heterogeneity explicitly into consideration can quantitatively account for the inflation asymmetry observed in the data. This aggregation bias of the standard model is the result of the strong interaction term between trend inflation and menu costs in determining asymmetry in the model, and the positive correlation between sectoral inflation rates and menu costs in the data. The paper implies that the real effects of negative monetary shocks can be substantial even in the standard Golosov and Lucas (2007) model if these additional factors are taken into consideration

Short survey on stable polynomials, orientations and matchings

This is a short survey about the theory of stable polynomials and its applications. It gives self-contained proofs of two theorems of Schrijver. One of them asserts that for a $d$--regular bipartite graph $G$ on $2n$ vertices, the number of perfect matchings, denoted by $\mathrm{pm}(G)$, satisfies $$\mathrm{pm}(G)\geq \bigg( \frac{(d-1)^{d-1}}{d^{d-2}} \bigg)^{n}.$$ The other theorem claims that for even $d$ the number of Eulerian orientations of a $d$--regular graph $G$ on $n$ vertices, denoted by $\varepsilon(G)$, satisfies $$\varepsilon(G)\geq \bigg(\frac{\binom{d}{d/2}}{2^{d/2}}\bigg)^n.$$ To prove these theorems we use the theory of stable polynomials, and give a common generalization of the two theorems

Fenntartható hitelpiac, fenntartható fejlődés = Sustainable lending, sustainable development

A pénzügyi közvetítő rendszer akkor tudja betölteni társadalmi funkcióját, ha az általa megvalósított hitelezés támogatja az adott nemzetgazdaság és közösség fenntartható fejlődését. A magyar bankok nem mindig és nem minden szempontból feleltek meg ennek a feltételnek. Az utóbbi egy-másfél évtizedben több olyan banki gyakorlat is azonosítható, amely épp ezzel ellentétes hatású volt. Ilyennek tekinthető többek között a kkv-szektor nem elégséges mértékű hitelezése, illetve a háztartások devizában való túlhitelezése, amit súlyosbított, hogy a magyar lakosság pénzügyi tudatossága elmaradt a kívánatostól. A válság óta eltelt időszak második felében több stratégiai kezdeményezés történt és program indult annak érdekében, hogy a hitelpiacon mind a kínálat, mind pedig a kereslet a fenntartható és egyensúlyi fejlődést segítse elő, de további lépések szükségesek ezen a téren. --- The role of the financial system can be fulfilled in the society only if its lending activity supports the sustainable development of the society and the economy. Hungarian banks could not always meet these requirements from every perspective. Several practices with adverse effect can be identified in the last one and a half decade. The low SME lending activity of the banking sector can be considered as an example, or FX lending for the household sector which was aggravated by the Hungarian households’ poor financial literacy. Several strategic programs were launched in the last half decade to support the sustainable lending both on the supply and the demand side. But further step should be made in the future

Relationship between serum calcium and CA 19-9 levels in colorectal cancer

AIM: To examine the calcium metabolism of colorectal cancer (CRC) in patients with colorectal cancer and control patients. METHODS: Seventy newly diagnosed CRC patients were included. The healthy control group was age and gender matched (n=32). Particular attention was devoted to the relationship between serum calcium of patients, and levels of AFP, CEA, carbohydrate antigen 19-9 (CA 19-9) (that could be considered as prognostic factors). Furthermore, the Ca-sensing receptor (CaSR) gene A986S polymorphism was investigated in these patients, as well as the relationship between different CaSR genotypes and the data stated above. RESULTS: A lower level of ionized calcium (also corrected for albumin) was found in the serum of CRC patients with normal 25(OH) vitamin D levels. The ionized calcium concentration was inversely correlated with the serum level of CA 19-9. There was no difference in the distribution of CaSR genotypes, between CRC patients and general population. The genotypes did not correlate with other data examined. CONCLUSION: Based on these results, lower levels of serum calcium might be a pathogenic and prognostic factor in colorectal cancer

A coupled 3D finite element model of the sound production by mallet percussion instruments

The sound production in mallet percussion instruments involves mechanical vibrations, acoustical resonance, and radiation inherently coupled. The source of energy is the mallet that excites mechanical oscillations in the sound bar when the player hits one of the notes. The sound bar in itself is an inefficient radiator, therefore acoustical resonators are applied in order to reinforce the radiated sound. There are various challenges in modeling tuned idiophone instruments, including the nonlinear interaction of the mallet and the sound bar, the orthotropic behavior of the material of the bars, and the sound radiation into the half-open acoustical space. In this contribution the coupled finite element model of a xylophone is examined in detail. The three-dimensional model consists of mechanical and acoustical finite elements, and infinite acoustical elements that emulate free field radiation conditions. The coupled system is solved in the time domain with exploiting the benefits of the modal basis for reducing the size of the system of equations. The paper demonstrates the capabilities of the model, emphasizing the effect of two-way vibroacoustic coupling between the sound bar and the resonator. By analyzing the energy balance of the mechanical and acoustical subsystems the effect of tuning the resonator is investigated. The three-dimensional sound bar model is further exploited by studying the effect of the excitation of the torsional modes of the bar. Finally, synthesized sound samples illustrate the applicability of the model for physics-based sound synthesis