Exaggerated Death of Distance: Revisiting Distance Effects on Regional Price Dispersions

This paper empirically establishes the signicant roles of transport costs in price dispersions across regions. We identify and estimate the iceberg-type distance-elastic transport costs as a parameter of a structural model of cross-regional price dierentials featuring product delivery decisions. Utilizing a data set of wholesale prices and product delivery patterns of agricultural products in Japan, our structural estimation approach nds large distance elasticities of the transport costs. The result conrms that geographical barriers are an economically signicant contributor to the failures of the law of one price.

"Exaggerated Death of Distance: Revisiting Distance Effects on Regional Price Dispersions"

This paper empirically establishes the significant roles of transport costs in price dispersions across regions. We identify and estimate the iceberg-type distance-elastic transport costs as a parameter of a structural model of cross-regional price differentials featuring product delivery decisions. Utilizing a data set of wholesale prices and product delivery patterns of agricultural products in Japan, our structural estimation approach finds large distance elasticities of the transport costs. The result confirms that geographical barriers are an economically significant contributor to the failures of the law of one price.

The hamburger theorem

We generalize the ham sandwich theorem to $d+1$ measures in $\mathbb{R}^d$ as follows. Let $\mu_1,\mu_2, \dots, \mu_{d+1}$ be absolutely continuous finite Borel measures on $\mathbb{R}^d$. Let $\omega_i=\mu_i(\mathbb{R}^d)$ for $i\in [d+1]$, $\omega=\min\{\omega_i; i\in [d+1]\}$ and assume that $\sum_{j=1}^{d+1} \omega_j=1$. Assume that $\omega_i \le 1/d$ for every $i\in[d+1]$. Then there exists a hyperplane $h$ such that each open halfspace $H$ defined by $h$ satisfies $\mu_i(H) \le (\sum_{j=1}^{d+1} \mu_j(H))/d$ for every $i \in [d+1]$ and $\sum_{j=1}^{d+1} \mu_j(H) \ge \min(1/2, 1-d\omega) \ge 1/(d+1)$. As a consequence we obtain that every $(d+1)$-colored set of $nd$ points in $\mathbb{R}^d$ such that no color is used for more than $n$ points can be partitioned into $n$ disjoint rainbow $(d-1)$-dimensional simplices.Comment: 11 pages, 2 figures; a new proof of Theorem 8, extended concluding remark

Habit Formation and the Present-Value Model of the Current Account: Yet Another Suspect ( Revised version of CARF-F-101(2007); Revised version subsequently published in "Journal of International Economics", 2009, 78, p72-85. )

A recent paper claims that habit formation in consumption plays an important role in current account fluctuations in selected developed countries, extending the present-value model of the current account (PVM) with consumption habits. In this paper, however, I show that the habit-forming PVM is observationally equivalent to the PVM augmented with persistent transitory consumption, which is induced by world real interest rate shocks. Based on a small open-economy real business cycle (SOE-RBC) model endowed with consumption habits as well as persistent world real interest rate shocks, this paper resolves the inherent dentification problem of the habit-forming PVM by Bayesian methods to seek effects of habit formation on current account fluctuations in typical small open economies, Canada and the United Kingdom. Results reveal no clear evidence that habit formation plays a crucial role in current account fluctuations.

A Structural VAR Approach to the Intertemporal Model of the Current Account

The intertemporal current account approach predicts that the current account of a small open economy is independent of global shocks, and that responses of the current account to country-specific shocks depend on the persistence of the shocks. The author shows that these predictions impose cross-equation restrictions (CERS) on a structural vector autoregression (SVAR). To test the CERs, the author develops identification schemes of the SVAR that exploit the orthogonality of the world real interest rate to country-specific shocks as well as the lack of a long-run response of net output to transitory shocks. Tests of the SVAR reveal two puzzling aspects of the Canadian and U.K. current account: (i) the response of the current account to a country-specific transitory shock is too large, and (ii) the fluctuations in the current account are dominated by country-specific transitory shocks that explain almost none of the fluctuations in net output growth.

"Habit Formation and the Present-Value Model of the Current Account: Yet Another Suspect"

A recent paper claims that habit formation in consumption plays an important role in current account fluctuations in selected developed countries, extending the present-value model of the current account (PVM) with consumption habits. In this paper, however, I show that the habit-forming PVM is observationally equivalent to the PVM augmented with persistent transitory consumption, which is induced by world real interest rate shocks. Based on a small open-economy real business cycle (SOE-RBC) model endowed with consumption habits as well as persistent world real interest rate shocks, this paper resolves the inherent identification problem of the habit-forming PVM by Bayesian methods to seek effects of habit formation on current account fluctuations in typical small open economies, Canada and the United Kingdom. Results reveal no clear evidence that habit formation plays a crucial role in current account fluctuations.

Habit Formation and the Present-Value Model of the Current Account: Yet Another Suspect (Revised as CARF-F-124 (2008) )

A recent paper claims that habit formation in consumption plays an important role in current ac-count ??ctuations in selected developed countries, extending the present-value model of the current account (PVM) with consumption habits. In this paper, however, I show that the habit-forming PVM is observationally equivalent to the PVM augmented with persistent transitory consumption, which is induced by world real interest rate shocks. Based on a small open-economy real busi-ness cycle (SOE-RBC) model endowed with consumption habits as well as world real interest rate shocks, this paper seeks e�ects of habit formation on current account ??ctuations in a typical small open economy, Canada, by a Bayesian calibration approach. Results reveal no clear evidence that habit formation plays a crucial role in current account ??ctuations.

A Comparison of Japanese Corporate Finance Between the High Growth Period and the Bubble Economy: Eichner-Kaleckian Modelling And An Analysis

The two Japanese economies, the high growth period economy and the Bubble Economy have common features, but they are different in many respects. Though different models for analysing these two economies appear here, they are basically the same. They are based on the Eichner-Kaleckian type models, and the model for the high growth period economy could be located as a special case of the Bubble Economy model. The reason for not applying the latter model to both periods is that not doing so makes the common features and differences of both periods clearer. In both economies, the predetermined or exogenous variables, bank loan interest rate in the high growth period and financial investment return net of risk play key roles. Finally, these Eichner-Kaleckian models seem to contradict Post Keynesian endogenous money supply. It is proven below that this is not true.