ASYMMETRIES IN RESPONSE TO SHOCKS IN PRICE SETTING: FIRM-LEVEL EVIDENCE FROM SURVEY BASED DATA

The objective of the paper is to estimate the asymmetric response of firms for prices to supply and demand shocks. Firms give an asymmetric response to supply and demand shocks while setting at a price, and the prices are upward flexible and downward rigid to changes in the determinants. Asymmetric response to the cost of raw material is highest. Moreover, the seasonal factors have the lowest degree of asymmetric response. Firms give an asymmetric response to different shocks, with respect to a price increase and decrease, and across variables of demand-side and supply side. The central bank has to focus more on stabilization in response to supply shocks than to demand shocks because supply shocks are found more important than demand shocks to change the prices of firms. Measures should be taken to prevent the possible effects of adverse supply shocks.

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Are PIIGS so different? An empirical analysis of demand and supply shocks

Panoeconomicus ◽

10.2298/pan1702189s ◽

2017 ◽

Vol 64 (2) ◽

pp. 189-222 ◽

Cited By ~ 1

Author(s):

Irina Syssoyeva-Masson ◽

Andrade Sousa

Keyword(s):

Supply And Demand ◽

Parametric Representation ◽

Structural Vector Autoregression ◽

Demand And Supply ◽

Demand Shocks ◽

Supply Shocks ◽

Supply And Demand Shocks ◽

Long Run ◽

Svar Model ◽

The Usa

This paper analyses responses to supply and demand shocks in PIIGS countries. We compare the results obtained for PIIGS with those of Germany and the USA, and also with those of France, which despite its government?s efforts demonstrate relatively poor recent economic performance. The main objective of this paper is to establish whether it is still reasonable to consider PIIGS as a group apart. Our methodological strategy is based on the Okun Law (OL) which is incorporated in a Structural Vector Autoregression (SVAR) model with Blanchard-Quah (BQ) restrictions. We address two drawbacks that usually present in the OL: the interdependency problem and the non-stationarity problem. By using a non-parametric representation of OL, we identify the heterogeneity between countries. We build stable VAR models for each of the economies and use the BQ SVAR impulses to analyse the importance of contemporary and long-run effects of supply and demand shocks. The main conclusion of this paper is that it does not make any sense today to identify PIIGS as a separate group. Additionally, a country that stands out from our analysis is France. The question can thus be posed that if ?PIIGS? signifies ?countries with poor economic performances? then should not France also belong to this group?

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150 YEARS OF BOOM AND BUST: WHAT DRIVES MINERAL COMMODITY PRICES?

Macroeconomic Dynamics ◽

10.1017/s136510051600050x ◽

2016 ◽

Vol 22 (3) ◽

pp. 702-717 ◽

Cited By ~ 17

Author(s):

Martin Stuermer

Keyword(s):

Supply And Demand ◽

Commodity Prices ◽

Data Set ◽

Demand Shocks ◽

Supply Shocks ◽

Supply And Demand Shocks ◽

Novel Approach ◽

Long Run ◽

Mineral Commodity ◽

Boom And Bust

This paper provides long-run evidence on the dynamic effects of supply and demand shocks on commodity prices. I assemble and analyze a new data set of price and production levels of copper, lead, tin, and zinc from 1840 to 2014. Using a novel approach to identification, I show that price fluctuations are primarily driven by demand, rather than supply shocks. Demand shocks affect the price for up to 15 years, whereas the effect of mineral supply shocks persists for up to 5 years. Price surges caused by rapid industrialization are a recurrent phenomenon throughout history. Mineral commodity prices return to their declining or stable trends in the long run.

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KARAKTERISTIK TEKANAN INFLASI DI INDONESIA: PENGARUH DINAMIS SISI PERMINTAAN-PENAWARAN DAN PROSPEK KE DEPAN

Buletin Ekonomi Moneter dan Perbankan ◽

10.21098/bemp.v9i3.209 ◽

2007 ◽

Vol 9 (3) ◽

Author(s):

Solikin M. Juhro

Keyword(s):

Supply And Demand ◽

Jel Classification ◽

Demand Shocks ◽

Supply Shocks ◽

Supply And Demand Shocks ◽

Supply Shock ◽

Preliminary Study ◽

Second Year ◽

Parsimonious Model

This preliminary study is aimed to look into characteristics of inflation and sources of shocks triggering inflation pressures in Indonesia. A focus will be directed to find a better measurement about the role of supply and demand shocks. Based on parsimonious model estimation, it can be concluded that the contribution of supply shocks predominant demand shocks ‘proportionally’, implying that a prudent monetary policy is still feasible and can be implemented effectively along with the structural efforts to combat inflation in Indonesia. A further preliminary exercise shows that the prospect of inflation pressures in two year ahead will be statistically the same with the 2006 inflation pressures. However, cautious policy response should be taken in the second year as inflation pressures from supply side will be potentially greater.Keywords: Characteristics of inflation, supply shock, demand shock, inflation, Indonesia.JEL Classification: JEL Classification: E31, P24

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An Evaluation of Selected Economic Areas according to Similarity of Supply and Demand Shocks

Review of Economic Perspectives ◽

10.1515/revecp-2015-0018 ◽

2015 ◽

Vol 15 (2) ◽

pp. 221-240

Author(s):

Stanislav Kappel

Keyword(s):

Monetary Union ◽

Euro Area ◽

Supply And Demand ◽

Correlation Coefficients ◽

The United States ◽

Structural Vector Autoregression ◽

Demand And Supply ◽

Demand Shocks ◽

Supply Shocks ◽

Supply And Demand Shocks

Abstract The Euro Area remains a well-known monetary union in the World. But the possibilities of creation of new monetary unions are discussed. It is spoken about NAFTA (Canada, Mexico and the United States) or MERCOSUR (Argentina, Brazil, Paraguay, Uruguay and Venezuela). The aim of this paper is to assess the similarity of demand and supply shocks in the countries of NAFTA and MERCOSUR, and to compare it with the countries of the Euro Area. For these aims, correlation and structural vector autoregression methods are used. Methods are based on Blanchard and Quah (1989) and Bayoumi and Eichengreen (1993). We confirm the existence of core states and periphery states in the Euro Area with some exceptions. If we compare supply and demand shocks, we find more similarity in the case of supply shocks in the countries of the Euro Area. According to the results, the countries of NAFTA are more appropriate for the creation of monetary union than the countries of MERCOSUR. The countries of NAFTA achieve high correlation coefficients of supply and demand shocks (except Mexico for supply shocks).

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