How do dealers price contemporary art in a world where objective criteria seem absent?Talking Pricesis the first book to examine this question from a sociological perspective. On the basis of a wide ...range of qualitative and quantitative data, including interviews with art dealers in New York and Amsterdam, Olav Velthuis shows how contemporary art galleries juggle the contradictory logics of art and economics. In doing so, they rely on a highly ritualized business repertoire. For instance, a sharp distinction between a gallery's museumlike front space and its businesslike back space safeguards the separation of art from commerce.
Velthuis shows that prices, far from being abstract numbers, convey rich meanings to trading partners that extend well beyond the works of art. A high price may indicate not only the quality of a work but also the identity of collectors who bought it before the artist's reputation was established. Such meanings are far from unequivocal. For some, a high price may be a symbol of status; for others, it is a symbol of fraud.
Whereas sociological thought has long viewed prices as reducing qualities to quantities, this pathbreaking and engagingly written book reveals the rich world behind these numerical values. Art dealers distinguish different types of prices and attach moral significance to them. Thus the price mechanism constitutes a symbolic system akin to language.
•We show that 0-ending prices are popular and rigid at convenience stores.•We use 3 datasets: two retail price datasets from the US, and CPI data from Israel.•Existing explanations rely on ...transaction convenience 0-ending prices offer.•We argue and show that cognitive convenience is relevant and important as well.•We show that cognitive convenience of 0-ending prices leads to higher demand.
We assess the role of cognitive convenience in the popularity and rigidity of 0-ending prices in convenience settings. Studies show that 0-ending prices are common at convenience stores because of the transaction convenience that 0-ending prices offer. Using large store-level retail CPI data, we find that 0-ending prices are popular and rigid at convenience stores even when they offer little transaction convenience. We corroborate these findings with two large retail scanner price datasets from Dominick's and Nielsen. In Dominick's data, we find that there are more 0-endings in the prices of the items in the front-end candies category than in any other category, even though these prices do not affect the convenience of the consumers' check-out transaction. In addition, in both Dominick's and Nielsen's datasets, we find that 0-ending prices have a positive effect on demand. Ruling out consumer antagonism and retailers’ use of heuristics in pricing, we conclude that 0-ending prices are popular and rigid, and that they increase demand in convenience settings, not only for their transaction convenience but also for the cognitive convenience they offer.
Large fluctuations in energy prices have been a distinguishing characteristic of the U.S. economy since the 1970s. Turmoil in the Middle East, rising energy prices in the United States, and evidence ...of global warming recently have reignited interest in the link between energy prices and economic performance. This paper addresses a number of the key issues in this debate: What are energy price shocks and where do they come from? How responsive is energy demand to changes in energy prices? How do consumer's expenditure patterns evolve in response to energy price shocks? How do energy price shocks affect U.S. real output, inflation, and stock prices? Why do energy price increases seem to cause recessions but energy price decreases do not seem to cause expansions? Why has there been a surge in the price of oil in recent years? Why has this new energy price shock not caused a recession so far? Have the effects of energy price shocks waned since the 1980s and, if so, why? As the paper demonstrates, it is critical to account for the endogeneity of energy prices and to differentiate between the effects of demand and supply shocks in energy markets when answering these questions.
US retail food price increases in recent years may seem large in nominal terms, but after adjusting for inflation have been quite modest even after the change in US biofuel policies in 2006. In ...contrast, increases in the real prices of corn, soybeans, wheat and rice received by US farmers have been more substantial and can be linked in part to increases in the real price of oil. That link, however, appears largely driven by common macroeconomic determinants of the prices of oil and of agricultural commodities rather than the pass-through from higher oil prices. We show that there is no evidence that corn ethanol mandates have created a tight link between oil and agricultural markets. Moreover, increases in agricultural commodity prices have contributed little to US retail food price increases, because of the small cost share of agricultural products in food prices. In short, there is no evidence that oil price shocks have been associated with more than a negligible increase in US retail food prices in recent years. Nor is there evidence for the prevailing wisdom that oil-price driven increases in the cost of food processing, packaging, transportation and distribution have been responsible for higher retail food prices. Similar results hold for other industrialized countries. There is reason, however, to expect food commodity prices to be more tightly linked to retail food prices in developing countries.
This paper evaluates the degree of pass-through from oil price shocks to disaggregate U.S. consumer prices. We find significantly positive effects of the oil price shock only on energy-intensive ...CPIs, which imply that significantly positive, though quantitatively small, response of the total CPI is mainly driven by substantial increases in prices of energy-related commodities. Unexpected changes in the oil price may result in decreases in the budget for non-energy commodities, if the demand for energy is inelastic (Edelstein and Kilian, 2009). Decreases in the demand for non-energy commodities will then result in limited influences on prices of those goods, which is consistent with our empirical findings.
•We evaluate the degree of pass-through from oil price shocks to CPIs.•We estimate the responses of disaggregate U.S. CPIs to the shock.•We fail to find significant pass-through from majority CPIs.•We find highly significant pass-through only in energy-intensive expenditures.•We propose an explanation for this from the role of spending adjustments.
How do income shocks affect armed conflict? Theory suggests two opposite effects. If labour is used to appropriate resources violently, higher wages may lower conflict by reducing labour supplied to ...appropriation. This is the opportunity cost effect. Alternatively, a rise in contestable income may increase violence by raising gains from appropriation. This is the rapacity effect. Our article exploits exogenous price shocks in international commodity markets and a rich dataset on civil war in Colombia to assess how different income shocks affect conflict. We examine changes in the price of agricultural goods (which are labour intensive) as well as natural resources (which are not). We focus on Colombia's two largest exports, coffee and oil. We find that a sharp fall in coffee prices during the 1990s lowered wages and increased violence differentially in municipalities cultivating more coffee. This is consistent with the coffee shock inducing an opportunity cost effect. In contrast, a rise in oil prices increased both municipal revenue and violence differentially in the oil region. This is consistent with the oil shock inducing a rapacity effect. We also show that this pattern holds in six other agricultural and natural resource sectors, providing evidence that price shocks affect conflict in different directions depending on the type of the commodity.
While much research uses multivariate GARCH to model volatility dynamics and risk measures, one particular type of multivariate GARCH model, GO-GARCH, has been underutilized. This paper uses DCC, ...ADCC and GO-GARCH to model volatilities and conditional correlations between emerging market stock prices, oil prices, VIX, gold prices and bond prices. A rolling window analysis is used to construct out-of-sample one-step-ahead forecasts of dynamic conditional correlations and optimal hedge ratios. In most of the situations we study, oil is the best asset to hedge emerging market stock prices. Hedge ratios from the ADCC model are preferred (most effective) for hedging emerging market stock prices with oil, VIX, or bonds. Hedge ratios estimated from the GO-GARCH are most effective for hedging emerging market stock prices with gold in some instances. These results are reasonably robust to choice of model refits, forecast length and distributional assumptions.
•Data on emerging market stock prices, oil, gold, VIX, and bonds•Compare GO-GARCH with DCC-GARCH•Compare dynamic conditional correlations•Compare hedge ratios•Oil best for hedging emerging market stock prices
While two different streams of literature exist investigating 1) the relationship between oil prices and emerging market stock prices and 2) the relationship between oil prices and exchange rates, ...relatively little is known about the dynamic relationship between oil prices, exchange rates and emerging market stock prices. This paper proposes and estimates a structural vector autoregression model to investigate the dynamic relationship between these variables. Impulse responses are calculated in two ways (standard and the recently developed projection based methods). The model supports stylized facts. In particular, positive shocks to oil prices tend to depress emerging market stock prices and US dollar exchange rates in the short run. The model also captures stylized facts regarding movements in oil prices. A positive oil production shock lowers oil prices while a positive shock to real economic activity increases oil prices. There is also evidence that increases in emerging market stock prices increase oil prices.
► We study the dynamic relationship between oil prices, exchange rates and emerging market stock prices. ► A structural vector autoregression model is proposed and estimated. ► Impulse responses are calculated in two ways (standard and projection based methods). The model supports stylized facts. ► Positive shocks to oil prices tend to depress emerging market stock prices and US dollar exchange rates in the short run. ► There is also evidence that increases in emerging market stock prices increase oil prices.
This paper presents a model in which price setting firms decide what to pay attention to, subject to a constraint on information flow. When idiosyncratic conditions are more variable or more ...important than aggregate conditions, firms pay more attention to idiosyncratic conditions than to aggregate conditions. When we calibrate the model to match the large average absolute size of price changes observed in micro data, prices react fast and by large amounts to idiosyncratic shocks, but only slowly and by small amounts to nominal shocks. Nominal shocks have strong and persistent real effects.
Investors’ awareness of climate risks and attention to green investments are on the rise especially after the Paris Agreement. It stands to reason that this rise in awareness has an impact on the ...connection between clean energy prices and oil and technology stock prices. In this paper, we test this hypothesis by fitting an exogenous smooth transition regression model to the cycle of clean energy with oil and technology stock prices as exogenous regime driving variables before and after the Paris Agreement. After controlling for carbon price, market volatility, and policy uncertainty, we find that oil price has a stronger asymmetric persistence on the cycle of clean energy assets pre-Paris Agreement. In the period post Paris Agreement, however, the roles are reversed. Technology stock prices are the best regime drivers for clean energy assets with strong nonlinear asymmetric persistence, and the impact of oil price is completely absent. The superiority of technology stock prices over oil price in driving the cyclical behavior of clean energy assets supports our argument that the Paris Agreement and other recent climate-related events are contributing to the decoupling of the clean energy sector from traditional energy markets. Our findings are particularly important for climate mitigation and adaptation policies.
•Google SVI shows that attention to green investments rises post Paris Agreement.•We fit an exogenous STR model to the cycle of ECO pre and post the Paris Agreement.•We find stronger nonlinear asymmetric impact of technology prices post Paris Agreement.•The impact of oil price on the ECO cycle is totally absent post Paris Agreement.•Our results are of particular interest to climate mitigation and adaptation policies.
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