An Empirical Investigation into the Relative Price Effect and Income Effect on China��s Financial Stability

2012 ◽  
Vol 6 (22) ◽  
pp. 758-766
Author(s):  
Bo Li Gan Wang
Keyword(s):  
Financial Stability ◽  
Empirical Investigation ◽  
Income Effect ◽  
Relative Price ◽  
Price Effect

Decomposing the Slutsky Decomposition for the First Time in a Century

2017 ◽  
Vol 2 (2) ◽  
Author(s):  
Kazuyuki Sasakura
Keyword(s):  
Demand Curve ◽  
Substitution Effect ◽  
Income Effect ◽  
Price Effect ◽  
Total Income ◽  
Mathematical Formula ◽  
Ratio Effect ◽  
Long Time ◽  
Demand Changes ◽  
First Time

<p>The Slutsky decomposition is a mathematical formula which has been used for a very long time in economics to analyze how the demand for a good changes when its price goes up. Such a change in the demand is called the price effect. Most people will expect a decrease in the demand in response to a rise in the price. In other words, they will have a downward sloping demand curve in mind. Indeed they are right in usual cases.In terms of economicsit is said that the price effect is usually negative. But why? The Slutsky decomposition gives a correct answer to this question by decomposing the price effect into the substitution effect and the income effect. It is already known that the substitution effect is always negative, while the income effect is also negative if a good under considerationis “normal.”Since the sum of the two effects equals the price effect, it can be concluded that a demand for the good decreases when its price goes up, or the demand curve is downward sloping, in a “normal” situation. The Slutsky decomposition is so elegant and powerful that there would not be any economist who studies consumer behavior without mentioning it. Then, is there other decomposition than the Slutsky? This paperintroduces a new one which decomposes the price effect into the unit-elasticity effect and the ratio effect. The unit-elasticity effect means by how much the demand decreases in response to a rise in the price with the expenditure on it as fixed. The ratio effect means by how much the demand changes due to a change in the ratio of the expenditure on it to total income. The former effect is always negative, but the latter effect may be positive even in a “normal” situation. It is shown that anew decomposition is obtained by decomposing the Slutsky decomposition.</p>

scholarly journals The Impact of Tariff Reforms on Income Distribution in Pakistan: A CGE-based Analysis

1999 ◽  
Vol 38 (4II) ◽  
pp. 789-804 ◽  
Author(s):  
Rehana Siddiqui ◽  
Rizwana Siddiqui ◽  
Zafar Iqbal
Keyword(s):  
Developing Countries ◽  
Income Distribution ◽  
Computable General Equilibrium ◽  
Asset Price ◽  
Relative Price ◽  
Structural Reforms ◽  
Policy Reforms ◽  
Price Effect ◽  
Cge Models ◽  
The Impact

Like most developing countries, Pakistan has undertaken drastic economic policy reforms since the mid-1980s. Under these structural reforms there is a general shift away from quantitative restrictions and price controls towards liberalisation and privatisation. The empirical studies1 analysing the impact of the reforms report mixed results. Economy wide framework like Computable General Equilibrium (CGE), based on the social accounting matrix, is well suited to analysing the effect of these structural reforms. The CGE models are developed to capture the medium to long-run effects through which adjustment programmes affect income distribution. These models are often used to evaluate the effects of trade and tax policies on income distribution in developing countries. There are three interacting channels through which these adjustment policies affect income distribution, viz., the relative price effect, the asset price effect and the shift in portfolio. However, in this study, we are analysing the effect of changes in relative prices only.

On the Use of Substitutability as a Measure of Competition

2006 ◽  
Vol 6 (1) ◽  
pp. 1-9 ◽  
Author(s):  
Winfried Koeniger ◽  
Omar Licandro
Keyword(s):  
General Equilibrium ◽  
Market Structure ◽  
Market Power ◽  
Equilibrium Model ◽  
Monopolistic Competition ◽  
General Equilibrium Model ◽  
Relative Price ◽  
Elasticity Of Substitution ◽  
Price Effect ◽  
Induced Changes

In the recent macro literature the effect of competition has been analyzed by comparing economies with the same market structure but different degrees of substitutability. In this note, we argue that this approach may mingle the price effect of competition with a pure allocation effect. To illustrate the limitations of using the elasticity of substitution as a measure of competition, we present an example in which changes in the elasticity alter equilibrium allocations, but changes in the degree of market power do not. We use a simple static general equilibrium model in which sectors have different productivity. Then, higher substitutability always shifts resources towards the more productive sectors. Instead, changes in the market structure (monopolistic competition versus Bertrand duopoly) do not affect the relative price of consumption goods if the markups are symmetric, implying that the induced changes in competition do not have any price effect on equilibrium allocations.

scholarly journals The Impact of Banking Competition on Economic Growth and Financial Stability: An Empirical Investigation

2021 ◽  
Vol 10 (1) ◽  
pp. 203
Author(s):  
George Abuselidze
Keyword(s):  
Economic Growth ◽  
Monetary Policy ◽  
Central Bank ◽  
Financial Stability ◽  
Empirical Investigation ◽  
Banking System ◽  
Economic Sector ◽  
Banking Competition ◽  
Banking Market ◽  
The Impact

The paper examines the level of competition in banking market using different econometric models and analyzes the impact of efficiency of the banking system on the economic growth of the country. The research discusses to ensure banking competition as a function of the Central Bank. Also, the paper includes some recommendations developed to improve banking competition. Our hypothesis is that the existence of high levels of banking competition and low concentration in the banking market balances the speed of money supply in the economic sector. As a result, the Central Bank's monetary policy will be more effective in achieving its core objectives. Therefore, banking competition contributes to the economic growth of the country. In addition, the monetary policy of the Central Bank concentrates on financial stability, which is one of the fundamental factors in the economic development of a country.

Sign in / Sign up

Export Citation Format

Share Document