Endogenous pricing to market and financing costs:
This paper studies the endogenous determination of pricing to market, in a model with time dependent transportation costs, where the future terms of trade are random. Allowing time dependent transportation costs adds a dimension of investment to the pre-buying of imports, implying that financial con...
Gespeichert in:
| 1. Verfasser: | |
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| Format: | Buch |
| Sprache: | English |
| Veröffentlicht: |
Cambridge, Mass.
NBER
2000
|
| Schriftenreihe: | NBER working paper series
7914 |
| Online-Zugang: | kostenfrei |
| Zusammenfassung: | This paper studies the endogenous determination of pricing to market, in a model with time dependent transportation costs, where the future terms of trade are random. Allowing time dependent transportation costs adds a dimension of investment to the pre-buying of imports, implying that financial considerations determine the frequency of pricing to market, and the deviations from relative PPP. If the expected discounted cost of last minute delivery is higher than pre-buying, one exercises the option of spot market imports if the realized terms of trade are favorable enough. Pricing to market is observed in countries characterized by low terms of trade volatility and low financing costs. In these circumstances, imports are pre-bought, and the spot market for imports is inactive. In countries where the financing costs and the terms of trade volatility are high, few imports are pre-bought, the price of imports is determined by the realized real exchange rate, and a version of relative PPP holds. With an intermediate level of terms of trade volatility and of financing costs, a mixed regime is observed, and some imports are pre-bought. If the realized real exchange rate is favorable enough more imports are purchased in the spot market, the price of imports is determined by the realized real exchange rate, and the relative PPP holds. If the realized real exchange rate is weak, pricing to market would prevail, increasing consumers' welfare by shielding them from the adverse purchasing power consequences of weak terms of trade. Higher financing costs increase the cost of pre-buying imports, reducing thereby the frequency of pricing to market, increasing the expected relative price of imports, reducing the expected deviations from relative PPP, and reducing welfare. |
| Beschreibung: | 28 S. graph. Darst. 22 cm |
Internformat
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| 490 | 1 | |a NBER working paper series |v 7914 | |
| 520 | |a This paper studies the endogenous determination of pricing to market, in a model with time dependent transportation costs, where the future terms of trade are random. Allowing time dependent transportation costs adds a dimension of investment to the pre-buying of imports, implying that financial considerations determine the frequency of pricing to market, and the deviations from relative PPP. If the expected discounted cost of last minute delivery is higher than pre-buying, one exercises the option of spot market imports if the realized terms of trade are favorable enough. Pricing to market is observed in countries characterized by low terms of trade volatility and low financing costs. In these circumstances, imports are pre-bought, and the spot market for imports is inactive. In countries where the financing costs and the terms of trade volatility are high, few imports are pre-bought, the price of imports is determined by the realized real exchange rate, and a version of relative PPP holds. With an intermediate level of terms of trade volatility and of financing costs, a mixed regime is observed, and some imports are pre-bought. If the realized real exchange rate is favorable enough more imports are purchased in the spot market, the price of imports is determined by the realized real exchange rate, and the relative PPP holds. If the realized real exchange rate is weak, pricing to market would prevail, increasing consumers' welfare by shielding them from the adverse purchasing power consequences of weak terms of trade. Higher financing costs increase the cost of pre-buying imports, reducing thereby the frequency of pricing to market, increasing the expected relative price of imports, reducing the expected deviations from relative PPP, and reducing welfare. | ||
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Datensatz im Suchindex
| _version_ | 1804138244738121728 |
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| author | Aizenman, Joshua 1949- |
| author_GND | (DE-588)124080057 |
| author_facet | Aizenman, Joshua 1949- |
| author_role | aut |
| author_sort | Aizenman, Joshua 1949- |
| author_variant | j a ja |
| building | Verbundindex |
| bvnumber | BV023589587 |
| ctrlnum | (OCoLC)45250921 (DE-599)BVBBV023589587 |
| dewey-full | 330.072 |
| dewey-hundreds | 300 - Social sciences |
| dewey-ones | 330 - Economics |
| dewey-raw | 330.072 |
| dewey-search | 330.072 |
| dewey-sort | 3330.072 |
| dewey-tens | 330 - Economics |
| discipline | Wirtschaftswissenschaften |
| discipline_str_mv | Wirtschaftswissenschaften |
| format | Book |
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| id | DE-604.BV023589587 |
| illustrated | Illustrated |
| index_date | 2024-07-02T22:41:25Z |
| indexdate | 2024-07-09T21:25:07Z |
| institution | BVB |
| language | English |
| oai_aleph_id | oai:aleph.bib-bvb.de:BVB01-016904917 |
| oclc_num | 45250921 |
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| owner | DE-521 DE-19 DE-BY-UBM |
| owner_facet | DE-521 DE-19 DE-BY-UBM |
| physical | 28 S. graph. Darst. 22 cm |
| publishDate | 2000 |
| publishDateSearch | 2000 |
| publishDateSort | 2000 |
| publisher | NBER |
| record_format | marc |
| series | NBER working paper series |
| series2 | NBER working paper series |
| spelling | Aizenman, Joshua 1949- Verfasser (DE-588)124080057 aut Endogenous pricing to market and financing costs Joshua Aizenman Cambridge, Mass. NBER 2000 28 S. graph. Darst. 22 cm txt rdacontent n rdamedia nc rdacarrier NBER working paper series 7914 This paper studies the endogenous determination of pricing to market, in a model with time dependent transportation costs, where the future terms of trade are random. Allowing time dependent transportation costs adds a dimension of investment to the pre-buying of imports, implying that financial considerations determine the frequency of pricing to market, and the deviations from relative PPP. If the expected discounted cost of last minute delivery is higher than pre-buying, one exercises the option of spot market imports if the realized terms of trade are favorable enough. Pricing to market is observed in countries characterized by low terms of trade volatility and low financing costs. In these circumstances, imports are pre-bought, and the spot market for imports is inactive. In countries where the financing costs and the terms of trade volatility are high, few imports are pre-bought, the price of imports is determined by the realized real exchange rate, and a version of relative PPP holds. With an intermediate level of terms of trade volatility and of financing costs, a mixed regime is observed, and some imports are pre-bought. If the realized real exchange rate is favorable enough more imports are purchased in the spot market, the price of imports is determined by the realized real exchange rate, and the relative PPP holds. If the realized real exchange rate is weak, pricing to market would prevail, increasing consumers' welfare by shielding them from the adverse purchasing power consequences of weak terms of trade. Higher financing costs increase the cost of pre-buying imports, reducing thereby the frequency of pricing to market, increasing the expected relative price of imports, reducing the expected deviations from relative PPP, and reducing welfare. Erscheint auch als Online-Ausgabe NBER working paper series 7914 (DE-604)BV002801238 7914 http://papers.nber.org/papers/w7914.pdf kostenfrei Volltext |
| spellingShingle | Aizenman, Joshua 1949- Endogenous pricing to market and financing costs NBER working paper series |
| title | Endogenous pricing to market and financing costs |
| title_auth | Endogenous pricing to market and financing costs |
| title_exact_search | Endogenous pricing to market and financing costs |
| title_exact_search_txtP | Endogenous pricing to market and financing costs |
| title_full | Endogenous pricing to market and financing costs Joshua Aizenman |
| title_fullStr | Endogenous pricing to market and financing costs Joshua Aizenman |
| title_full_unstemmed | Endogenous pricing to market and financing costs Joshua Aizenman |
| title_short | Endogenous pricing to market and financing costs |
| title_sort | endogenous pricing to market and financing costs |
| url | http://papers.nber.org/papers/w7914.pdf |
| volume_link | (DE-604)BV002801238 |
| work_keys_str_mv | AT aizenmanjoshua endogenouspricingtomarketandfinancingcosts |