Ecuador’s Lasso weathers early storm but clouds loom

Significance He appears to have weathered this early political storm, achieving notable successes in areas such as tax reform. However, the political outlook remains uncertain, with a likely COVID-19 resurgence heralding new challenges in 2022. Impacts Containing the spread of the Omicron variant will be a priority for Lasso in the coming months. A pandemic resurgence would place downward pressure on economic growth and tax collection. Tax reforms will please international investors and support efforts to attract foreign direct investment to stimulate economic activity.

Analysis of Income Attribution of Consumption Tax in China’s Central and Local Government

After the policy to replace the business tax with a value-added tax was launched, local finance has encountered greater difficulties. In recent years, the economic downward pressure has made the dilemma far more serious. Some scholars, even from state level, showed some intentions of recommending that the consumption tax should be changed from the current central tax to a local tax or a shared tax to relieve the pressure of local governments. In this paper, we proved by presenting recent year’s tax figures of business, consumption, and local and central fiscals and their growth rate that replacing the consumption tax with a local tax does not exactly correspond to the trend of China’s reform of the financial system, the functional orientation of the consumption tax, and the nature of the consumption tax itself and may trigger some problems, and it may still be a better choice for the consumption tax to serve as a central tax.

Sharing Demand Information with Retailer Under Upstream Competition

We analyze demand information sharing collaboration between two manufacturers and a retailer under upstream competition. The manufacturers produce partially substitutable products, which are stocked by the retailer that sells them in the market characterized by random demand. The manufacturers are privately informed about uncertain demand and decide on whether to share this information with the retailer. We show that by not sharing information, a manufacturer ends up distorting its wholesale price upward to signal its private information to the retailer, and under upstream competition, this distortion is propagated to the competing manufacturer. Thus, although a manufacturer’s decision to not share information may benefit or hurt its own profit, this always benefits the competing manufacturer. Under low intensity of competition, signaling-driven distortions exacerbate double marginalization and hurt all parties, whereas under more intense competition, these distortions help manufacturers offset downward pressure on wholesale prices. Thus, in equilibrium similarly informed manufacturers share information in the former case but not in the latter case. Additionally, when manufacturers differ in their information accuracies, only the better-informed manufacturer shares information. The retailer always benefits from both manufacturers sharing information, and its benefits are larger when the better-informed manufacturer shares information. We show existence of a contracting mechanism the retailer can employ to enable information sharing. Finally, we analyze manufacturers’ information acquisition decisions and find that under competition, two manufacturers acquire minimal information so that they are better off not sharing information in the information sharing game. This paper was accepted by Vishal Gaur, operations management.

Understanding the Interaction of Chinese Fiscal and Monetary Policy

Interaction of fiscal and monetary policy is crucial for macroeconomic stability, especially for an economy with downward pressure as well as a tightened space for macro policy, like China. In this paper, we use a time-varying-parameter (TVP-VAR) model to study Chinese fiscal–monetary interaction and divide it into three periods. We claim that China went through a monetary dominant regime from 1996Q to 2017Q4 since the response of CPI to a fiscal expansion was negative in the short run and about zero in the long run, while the monetary expansion had positive effects on CPI. During this period, the response of government spending and money supply to each other’s shock had the same sign, indicating that the two policies acted as complements. However, we argue that 2008Q4 was a turning point that divided this period into two different periods. The response level of M2 growth rate to a fiscal expansion kept rising from 1996Q1 to 2008Q4, indicating the central bank’s increasingly active cooperation with fiscal policy, while it decreased from 2009Q1 to 2017Q4. Since 2018Q1, the economy has been going through a fiscal dominant regime in that the response of GDP growth rate and CPI to the fiscal expansion has sharply increased. We also argue that the relative change of the role between the two policies should be mainly attributed to the variation in the fiscal authority’s characteristics because fiscal response to a monetary shock has remained at a similar level the whole time, even if there have been changes in the characteristics of the central bank.

Election points to mounting instability risks in Peru

Significance The voting underscores deep social divides. If the result stands, it opens the way to a left-of-centre government whose stated programme has business worried. Fujimori’s claims of fraud have not been substantiated but may encourage street violence between rival supporters. Impacts Unless Castillo can reassure business, capital flight will continue, putting downward pressure on the exchange rate. Negative investor sentiment will be partly offset in the longer term by the increase in prices for minerals. Fujimori's claims of irregularities will increase and extend uncertainty, and will prompt widespread anger if the result is reversed.

Effects of Stimulation of Front Tooth by Toothpick on Headache and Brain Tumor as well as other Malignant Tumors Malignant

It has been found that pain in various parts of the body can be temporarily eliminated by mechanically suppressing or stimulating the front tooth. Some typical examples of this are described in this article. We know which teeth represent which organs, but we also have diagrams that show the cause of the pain, such as changes in certain areas of the electrocardiogram, and those possible areas are shown somewhere in the electrocardiogram. One minute downward pressure on the tip of any one of the front 3 teeth (1st incisor, 2nd incisor, and canine) at the right and left sides of the upper and lower jaw by a wooden toothpick induced temporary disappearance (20 min-4 hours) of abnormally increased pain parameters (pain grading, Substance P, & TXB2), and cancer parameters (Telomere, Integrin α5 β1, Oncogene C-fos Ab2, etc. of Astrocytoma, Glioblastoma, squamous cell carcinoma of esophagus, adenocarcinoma of lung, breast cancer, adenocarcinoma of colon, prostate cancer). The effect included temporary disappearance of headache, toothache, chest and abdominal pain, and backache, often with improved memory & concentration. Since these beneficial changes resembled the effects of giving one optimal dose of DHEA, increase of DHEA was measured. Above mechanical stimulation of one of these front teeth increased abnormally reduced DHEA levels of less than 10 ng to normal 100–130 ng BDORT units and normal cell (NC) telomeres from markedly reduced values to near normal values, and improved acetylcholine in the Hippocampus. Large organ representation areas for the Adrenal gland & Hippocampus may exist at these front teeth. This method can be used for emergency pain control and can explain the beneficial effect of bruxism and tooth brushing, through the increase of DHEA levels and activities of the Hippocampus by increasing Acetylcholine. Increasing NC telomere to optimally high level resulted in disappearance of pain and improvement or significant reduction of malignant tumor.

Effects of Southwest Airlines on Carrier Profits and Entry Probabilities

This paper studies the effects of Southwest Airlines, the largest low-cost carrier (LCC) in the U.S., on other carriers’ payoff functions and entry probabilities. A static entry game model is developed and estimated by viewing entry as an indicator of underlying profitability and making use of Nash Equilibrium. Results indicate that Southwest has a remarkable and negative impact on the payoffs of other carriers. This impact is firm-specific, with LCCs being more affected than full-service carriers (FSCs). Comparing the two service types, the results show that Southwest’s nonstop presence apparently imposes more downward pressure on opponents’ profits than its connecting presence. A counterfactual experiment is then conducted. Once Southwest is counterfactually removed, the probability of each carrier entering a market significantly changes. This paper examines Southwest’s impacts from a new perspective and extends literature on entry game estimation.

The resilience and realignment of house prices in the era of Covid-19*

Purpose The study aims to analyze the effects of the Covid-19 pandemic on house prices. Design/methodology/approach The authors start by discussing the possibility that house price indexes may not fully incorporate the effects of the pandemic as of yet. Against the background of the pandemic, the authors then analyze economic and behavioral effects affecting house prices. The authors also discuss how the linkages between tourism and house prices have been affected. The authors further present evidence of an emerging shift in preferences from urban locations to more peripheral ones. Findings The authors report variance in the evolution of house prices across countries at the onset of the pandemic, with locations depending heavily on tourism showing slower price appreciation while appreciation has firmed in other places. The authors argue that the resilience of house prices is not only because of the low-interest rate environment and government efforts to support firms and households, but also behavioral factors. In some locations, the price of condominiums has declined relative to the price of detached houses. This could indicate that wealthier households are seeking more space and larger units as a result of the crisis. There is also evidence of a downward pressure on rents, leading to increased price–rent ratios in the USA. Originality/value By considering both economic and behavioral factors, this paper provides for a better understanding of the resilience and realignment of house prices at the onset of the Covid-19 pandemic.

Housing Supply in the Presence of Informality

We study housing supply in markets where informal housing is common. Using a combination of census and satellite data, we estimate housing supply for more than 90 metropolitan areas in Brazil. We find that widespread informal housing increases the housing supply elasticity, partially offsetting the downward pressure of geographical constraints. Our empirical approach is guided by a monocentric city model that includes informal housing. Our identification strategy relies on the use of two novel instruments, combining demographic data and public land ownership. We use the supply elasticity estimates to forecast the response of future housing prices to natural population growth.