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A New Approach to Understanding Price Stickiness
Why do consumer prices and wages adjust so slowly to changes in market conditions? The rigidity or stickiness of price setting in business is central to Keynesian economic theory and a key to understanding how monetary policy works, yet economists have made little headway in determining why it occurs. Asking About Prices offers a groundbreaking empirical approach to a puzzle for which theories abound but facts are scarce. Leading economist Alan Blinder, along with co-authors Elie Canetti, David Lebow, and Jeremy B. Rudd, interviewed a national, multi-industry sample of 200 CEOs, company heads, and other corporate price setters to test the validity of twelve prominent theories of price stickiness. Using everyday language and pertinent scenarios, the carefully designed survey asked decisionmakers how prominently these theoretical concerns entered into their own attitudes and thought processes. Do businesses tend to view the costs of changing prices as prohibitive? Do they worry that lower prices will be equated with poorer quality goods? Are firms more likely to try alternate strategies to changing prices, such as warehousing excess inventory or improving their quality of service? To what extent are prices held in place by contractual agreements, or by invisible handshakes? Asking About Prices offers a gold mine of previously unavailable information. It affirms the widespread presence of price stickiness in American industry, and offers the only available guide to such business details as what fraction of goods are sold by fixed price contract, how often transactions involve repeat customers, and how and when firms review their prices. Some results are surprising: contrary to popular wisdom, prices do not increase more easily than they decrease, and firms do not appear to practice anticipatory pricing, even when they can foresee cost increases. Asking About Prices also offers a chapter-by-chapter review of the survey findings for each of the twelve theories of price stickiness. The authors determine which theories are most popular with actual price setters, how practices vary within different business sectors, across firms of different sizes, and so on. They also direct economists' attention toward a rationale for price stickiness that does not stem from conventional theory, namely a strong reluctance by firms to antagonize or inconvenience their customers. By illuminating how company executives actually think about price setting, Asking About Prices provides an elegant model of a valuable new approach to conducting economic research.
Enabling Sprawl through Policy and Planning
Hanford and the American West
Takes readers behind the headlines into the Manhattan Project at Hanford and the communities that surround it and offers perspectives on today’s controversies in an area now famous for the monumental effort to clean up decades of nuclear waste.
America, India, and Pakistan to the Brink and Back
India and Pakistan will be among the most important countries in the twenty-first century. In Avoiding Armageddon, Bruce Riedel clearly explains the challenge and the importance of successfully managing America's affairs with these two emerging powers and their toxic relationship.
Born from the British Raj, the two nations share a common heritage, but they are different in many important ways. India is already the world's largest democracy and will soon become the planet's most populous nation. Pakistan, soon to be the fifth most populous country, has a troubled history of military coups, dictators, and harboring terrorists such as Osama bin Laden.
The longtime rivals are nuclear powers, with tested weapons. They have fought four wars with each other and have gone to the brink of war several times. Meanwhile, U.S. presidents since Franklin Roosevelt have been increasingly involved in the region's affairs. In the past two decades alone, the White House has intervened several times to prevent nuclear confrontation on the subcontinent. South Asia clearly is critical to American national security, and the volatile relationship between India and Pakistan is the crucial factor determining whether the region can ever be safe and stable.
Based on extensive research and Riedel's role in advising four U.S. presidents on the region, Avoiding Armageddon reviews the history of American diplomacy in South Asia, the crises that have flared in recent years, and the prospects for future crisis. Riedel provides an in-depth look at the Mumbai terrorist attack in 2008, the worst terrorist outrage since 9/11, and he concludes with authoritative analysis on what the future is likely to hold for America and the South Asia puzzle as well as recommendations on how Washington should proceed.
Conflict and Consensus in Post-Pinochet Chile
Michelle Bachelet was the first elected female president of Chile, and the first women elected president of any South American country. What was just as remarkable, though less noted, was the success and stability of the political coalition that she represented, the Concertacion. Though Bachelet was the fourth consecutive Concertacion president, upon taking office her administration quickly faced a series of crises, including massive student protests, labor unrest, internal governmental divisions, and allegations of ineptitude and wrongdoing as a result of a major reorganization of Santiago's transportation system.
Candidate Bachelet promised not only different policies but also a different policymaking style--a style characterized by a kinder and gentler approach to politics in a country with a long tradition of machismo and strong male rulers. Bachelet promised to listen to the people and to return power to those who had been denied it in the past. Her attitude enhanced the influence of existing social movements and inspired the formation of new ones.
The Bachelet Government is the first book to examine the policies, political issues, and conflicts of Bachelet's administration, and the first to provide analyses of the challenges, successes, and failures experienced by the Concertacion since 1989.
Political Parties and Central Bank Independence in the Industrial Democracies
Banking on Reform examines the political determinants of recent reforms to monetary policy institutions in the industrial democracies. With these reforms, political parties have sought to draw on the political credibility of an independent central bank to cope with electoral consequences of economic internalization and deindustrialization. New Zealand and Italy made the initial efforts to grant their central banks independence. More recently, France, Spain, Britain, and Sweden have reformed their central banks' independence. Additionally, members of the European Union have implemented a single currency, with an independent European central bank to administer monetary policy. Banking on Reform stresses the politics surrounding the choice of these institutions, specifically the motivations of political parties. Where intraparty conflicts have threatened the party's ability to hold office, politicians have adopted an independent central bank. Where political parties have been secluded from the political consequences of economic change, reform has been thwarted or delayed. The drive toward a single currency also reflects these political concerns. By delegating monetary policy to the European level, politicians in the member states removed a potentially divisive issue from the domestic political agenda, allowing parties to rebuild their support constructed on the basis of other issues. William T. Bernhard provides a variety of evidence to support his argument, such as in-depth case accounts of recent central bank reforms in Italy and Britain, the role of the German Bundesbank in the policy process, and the adoption of the single currency in Europe. Additionally, he utilizes quantitative and statistical tests to enhance his argument. This book will appeal to political scientists, economists, and other social scientists interested in the political and institutional consequences of economic globalization. William T. Bernhard is Assistant Professor of Political Science, University of Illinois, Urbana-Champaign.
Nationalist Reforms and Cultural Negotiations in Early Republican Turkey, 1923-1945
“Becoming Turkish” seeks to provide a better understanding of the modernist nation-building processes in post-Ottoman Turkey through a rare perspective in the field that stresses the social and cultural dimensions and everyday negotiations that occurred during the leadership of Mustafa Kemal. Employing an interdisciplinary approach and drawing on a wide range of primary sources, including new archival evidence and oral histories, Yilmaz’s work delineates several specific examples of how individuals become Turkish citizens. She examines how Republican reforms were implemented and how they effected social and cultural change. By focusing on four specific areas of the state’s attempt to produce a new “Turk” and a modern Turkish nation (men’s clothing, women’s dress, language, and celebrations), she shows how individuals and communities received, reacted to, negotiated, and experienced reforms in their everyday lives. While the emphasis of the book is on the Turkish experience specifically, “Becoming Turkish” offers rich insights into similar processes throughout the Middle East and in other Islamic and colonial contexts which will arguably become more relevant every day.
Abortion Policy in the States
Behavioral economics questions the basic underpinnings of economic theory, showing that people often do not act consistently in their own self-interest when making economic decisions. While these findings have important theoretical implications, they also provide a new lens for examining public policies, such as taxation, public spending, and the provision of adequate pensions. How can people be encouraged to save adequately for retirement when evidence shows that they tend to spend their money as soon as they can? Would closer monitoring of income tax returns lead to more honest taxpayers or a more distrustful, uncooperative citizenry? Behavioral Public Finance, edited by Edward McCaffery and Joel Slemrod, applies the principles of behavioral economics to government's role in constructing economic and social policies of these kinds and suggests that programs crafted with rational participants in mind may require redesign. Behavioral Public Finance looks at several facets of economic life and asks how behavioral research can increase public welfare. Deborah A. Small, George Loewenstein, and Jeff Strnad note that public support for a tax often depends not only on who bears its burdens, but also on how the tax is framed. For example, people tend to prefer corporate taxes over sales taxes, even though the cost of both is eventually extracted from the consumer. James J. Choi, David Laibson, Brigitte C. Madrian, and Andrew Metrick assess the impact of several different features of 401(k) plans on employee savings behavior. They find that when employees are automatically enrolled in a retirement savings plan, they overwhelmingly accept the status quo and continue participating, while employees without automatic enrollment typically take over a year to join the saving plan. Behavioral Public Finance also looks at taxpayer compliance. While the classic economic model suggests that the low rate of IRS audits means far fewer people should voluntarily pay their taxes than actually do, John Cullis, Philip Jones, and Alan Lewis present new research showing that many people do not underreport their incomes even when the probability of getting caught is a mere one percent. Human beings are not always rational, utility-maximizing economic agents. Behavioral economics has shown how human behavior departs from the assumptions made by generations of economists. Now, Behavioral Public Finance brings the insights of behavioral economics to analysis of policies that affect us all.
Corruption in the European Union
As the European Union moved in the 1990s to a unified market and stronger common institutions, most observers assumed that the changes would reduce corruption. Aspects of the stronger EU promised to preclude-or at least reduce-malfeasance: regulatory harmonization, freer trade, and privatization of publicly owned enterprises. Market efficiencies would render corrupt practices more visible and less common.
In The Best System Money Can Buy, Carolyn M. Warner systematically and often entertainingly gives the lie to these assumptions and provides a framework for understanding the persistence of corruption in the Western states of the EU. In compelling case studies, she shows that under certain conditions, politicians and firms across Europe, chose to counter the increased competition they faced due to liberal markets and political reforms by resorting to corruption. More elections have made ever-larger funding demands on political parties; privatization has proved to be a theme park for economic crime and party profit; firms and politicians collude in many areas where EU harmonization has resulted in a net reduction in law-enforcement powers; and state-led "export promotion" efforts, especially in the armaments, infrastructure, and energy sectors, have virtually institutionalized bribery.
The assumptions that corruption and modernity are incompatible-or that Western Europe is somehow immune to corruption-simply do not hold, as Warner conveys through colorful analyses of scandals in which large corporations, politicians, and bureaucrats engage in criminal activity in order to facilitate mergers and block competition, and in which officials accept private payments for public services rendered. At the same time, the book shows the extent to which corruption is driven by the very economic and political reforms thought to decrease it.