The Distribution of the Size of Price Changes

Different theories of price stickiness have distinct implications on the number of modes in the distribution of price changes. We formally test for the number of modes in the price change distribution of 36 supermarkets, spanning 22 countries and 5 continents. We present results for three modality tests: the two best-known tests in the statistical literature, Hartigan's Dip and Silverman's Bandwidth, and a test designed in this paper, called the Proportional Mass test (PM). Three main results are uncovered. First, when the traditional tests are used, unimodality is rejected in about 90 percent of the retailers. When we used the PM test, which reduces the impact of smaller modes in the distribution and can be applied to test for modality around zero percent, we still reject unimodality in two thirds of the supermarkets. Second, category-level heterogeneity can account for about half of the PM test's rejections of unimodality. Finally, a simulation of the model in Alvarez, Lippi, and Paciello (2010) shows that the data is consistent a combination of both time and state-dependent pricing behaviors.

Do Credit Rating Agencies Add Value? Evidence from the Sovereign Rating Business Institutions

If rating agencies add no new information to markets, their actions are not a public policy concern. But as rating changes may be anticipated, testing whether ratings add value is not straightforward. This paper argues that ratings and spreads are both noisy signals of fundamentals and suggest ratings add value if, controlling for spreads, they help explain other variables. The paper additionally analyzes the different actions (ratings and outlooks) of the three leading agencies for sovereign debt, also considering the differing effects of more or less anticipated events. The results are consistent across a wide range of tests. Ratings do matter and hence how the market for ratings functions may be a public policy concern.

Stadsvernieuwing: een kwestie van kansen; Ontwerpprojecten voor Amsterdam­Oost

As part of the research project Renewal of Urban Renewal the master specialisation Hybrid Build-ings2 launched several Design Research Gradua­tion Studios proposing as main theme of investi­gation the role of architecture in contemporary urban renewal. The research project is starting from the observation that most urban renewal approaches until now have been focusing very much on the scale of the housing block, concen­trating on the relationships within the neighbour­hood itself. Considering the Dutch scene, despite a rather convincing renewal of the housing stock, this neighbourhood­based approach does not seem to deliver the desired results. In addition, this subject deserves particular attention in the current post­crisis period, in which the official authorities too are clearly switching their position, from a leading role to almost an undefined player seeking new operational strategies and opportuni­ties. Therefore, starting from the acknowledgment that urban renewal is no longer driven by a prede­fined economic, social and spatial agenda, the Renewal of Urban Renewal research project prop­agated the need of finding new balance, consen­sus and perspectives in the approach to urban transformations. Instead of massive restructuring processes characterising the first urban regenera­tion flow, nowadays reality argues for a more bot­tom­up driven urban renewal, for more limited interventions involving facilities, infrastructures and/or public space, in short, for new challenges and opportunities.In het kader van het onderzoeksprogramma ‘Vernieuwing van de stadsvernieuwing’ heeft de masterspecialisatie Hybrid Buildings2 een aantal afstudeerstudio’s gelanceerd met als centraal onderzoeksthema de rol van de architectuur in de hedendaagse stadsvernieuwing. Het onderzoeks­project gaat uit van de vaststelling dat de meeste benaderingen van de stadsvernieuwing tot nu toe sterk gericht zijn op de schaal van het woningblok en zich concentreren op de relaties binnen de buurt. In de Nederlandse context lijkt een buurt­gerichte benadering, ondanks een betrekkelijk overtuigende vernieuwing van de woningvoorraad, niet de gewenste resultaten op te leveren. Dit onderwerp verdient bijzondere aandacht omdat in de periode na de crisis de officiële instanties dui­delijk van standpunt veranderen, van een leidende rol naar een amper nog gedefinieerde rol van medespeler op zoek naar nieuwe operationele strategieën en kansen. Uitgaande van de erken­ning dat stadsvernieuwing niet langer wordt gemotiveerd door een van tevoren vastgestelde economische, maatschappelijke en ruimtelijke agenda, vroeg het onderzoeksprogramma ‘Ver­nieuwing van de stadsvernieuwing’ dan ook aan­dacht voor de noodzaak om een nieuwe balans, consensus en perspectieven te vinden in de benadering van stedelijke transformaties. In plaats van de massale herstructureringsprocessen die de eerste stroom van stedelijke regeneratie kenmerkten, geeft de huidige realiteit aanleiding tot een meer van onderop aangedreven stads­vernieuwing, tot beperktere interventies waarin voorzieningen, infrastructuren en/of de openbare ruimte worden betrokken, kortom tot nieuwe uit­dagingen en kansen

Prices and Supply Disruptions during Natural Disasters

We study the daily behavior of supermarket prices and product availability following two recent natural disasters: the 2010 earthquake in Chile and the 2011 earthquake in Japan. In both cases there was an immediate and persistent effect on product availability. The number of goods available for sale fell 32 percent in Chile and 17 percent in Japan from the day of the disaster to its lowest point, which occurred 61 and 18 days after the earthquakes, respectively. Product availability recovered slowly, and a significant share of goods remained out of stock after six months. By contrast, prices were relatively stable and did not increase for months after the earthquakes, even for goods that were experiencing severe stockouts. These trends are present at all levels of aggregation, but appear strongly in non-perishable goods and emergency products. Our findings shed light into the determinants of sticky prices in conditions where traditional adjustment costs are less important. In particular, we look at the frequency and magnitudes of price changes in both countries and find that the results in Chile are consistent with pricing models where retailers have fear of “customer anger”. In Japan, by contrast, the evidence suggests a bigger role for supply disruptions that restricted the ability of retailers to re-stock goods after the earthquake

The Distribution of the Size of Price Changes

Different theories of price stickiness have distinct implications on the number of modes in the distribution of price changes. We formally test for the number of modes in the price change distribution of 36 supermarkets, spanning 22 countries and 5 continents. We present results for three modality tests: the two best-known tests in the statistical literature, Hartigan’s Dip and Silverman’s Bandwidth, and a test designed in this paper, called the Proportional Mass test (PM). Three main results are uncovered. First, when the traditional tests are used, unimodality is rejected in about 90 percent of the retailers. When we used the PM test, which reduces the impact of smaller modes in the distribution and can be applied to test for modality around zero percent, we still reject unimodality in two thirds of the supermarkets. Second, category-level heterogeneity can account for about half of the PM test’s rejections of unimodality. Finally, a simulation of the model in Alvarez, Lippi, and Paciello (2010) shows that the data is consistent a combination of both time and state-dependent pricing behaviors.

Potential for social involvement modulates activity within the mirror and the mentalizing systems

Processing biological motion is fundamental for everyday life activities, such as social interaction, motor learning and nonverbal communication. The ability to detect the nature of a motor pattern has been investigated by means of point-light displays (PLD), sets of moving light points reproducing human kinematics, easily recognizable as meaningful once in motion. Although PLD are rudimentary, the human brain can decipher their content including social intentions. Neuroimaging studies suggest that inferring the social meaning conveyed by PLD could rely on both the Mirror Neuron System (MNS) and the Mentalizing System (MS), but their specific role to this endeavor remains uncertain. We describe a functional magnetic resonance imaging experiment in which participants had to judge whether visually presented PLD and videoclips of human-like walkers (HL) were facing towards or away from them. Results show that coding for stimulus direction specifically engages the MNS when considering PLD moving away from the observer, while the nature of the stimulus reveals a dissociation between MNS -mainly involved in coding for PLD- and MS, recruited by HL moving away. These results suggest that the contribution of the two systems can be modulated by the nature of the observed stimulus and its potential for social involvement

EAAE Conference 2016:

The conference ‘For Example Delft’ addresses approaches in architecture education, their past, present & future in relation to professional practice and the architectural discipline. Using the example of Delft, the conference starts from the observation that the broad field of architecture and the built environment carries a re-assembled character that has lost its Modern, structured and disciplinary way. Moreover the conference addresses the issue what architecture research currently means and upon which policies Delft as an institution has set eyes, for example with regard to its ambitions, organisation and profile

The Price Impact of Joining a Currency Union: Evidence from Latvia

Does membership in a currency union matter for a country’s international relative prices? The answer to this question is critical for thinking about the implications of joining (or exiting) a common currency area. This paper is the first to use high-frequency good-level data to provide evidence that the answer is yes, at least for an important subset of consumption goods. It considers the case of Latvia, which recently dropped its pegged exchange rate and joined the euro zone. The paper analyzes the prices of thousands of differentiated goods sold by Zara, the world’s largest clothing retailer. Price dispersion between Latvia and euro zone countries collapsed swiftly following entry to the euro. The percentage of goods with nearly identical prices in Latvia and Germany increased from 6 to 89 percent. The median size of price differentials declined from 7 percent to zero. If a large number of firms also behave this way, these results suggest that membership in a currency union has significant implications for a country’s real exchange rate

Currency Unions, Product Introductions, and the Real Exchange Rate

We use a novel data set of online prices of identical goods sold by four large global retailers in dozens of countries to study good-level real exchange rates and their aggregated behavior. First, in contrast to the prior literature, we demonstrate that the law of one price holds very well within currency unions for tens of thousands of goods sold by each of the retailers, implying good-level real exchange rates often equal to 1. Prices of these same goods exhibit large deviations from the law of one price outside of currency unions, even when the nominal exchange rate is pegged. This clarifies that the common currency per se, and not simply the lack of nominal volatility, is important in reducing cross-country price dispersion. Second, we derive a new decomposition that shows that good-level real exchange rates in our data predominantly reflect differences in prices at the time products are first introduced, as opposed to the component emerging from heterogeneous passthrough or from nominal rigidities during the life of the good. Further, these international relative prices measured at the time of introduction move together with the nominal exchange rate. This stands in sharp contrast to pricing behavior in models where all price rigidity for any given good is due simply to costly price adjustment for that good.University of Chicago. Booth School of Business (Neubauer Family Foundation