Unexpected price spikes in petroleum can lead to instability in markets and have a negative economic effect on sectors which rely on petroleum consumption. Sudden rises in the price of petroleum do not have to be long-term to cause negative, cascading impacts across the economy. Firms which make futures purchases or hedge against a higher price during a price spike can become insolvent when the...

policy makers have taken into less consideration the market mechanism in the allocation of water resources, contrary to its long role and precedent in allocation goods and resources. the market mechanism is used in many regions of world for water management to increase the water scarcity certainly, but historical form of acquiring water resources didn’t lead to a proper market so economic price...

The article examines how the existence of a retailer owned brand, private label, a¤ects the price setting of a national brand. We ...nd that the potential for a private label introduction may lead to price concessions from the national brand producer, but that actual private label introduction as such may very well lead to higher retail prices on national brands. We argue that this may have imp...

This paper presents a model in which a firm attempts to gain market power by pricing above the competitive market price and simply trying to persuade illinformed consumers not to search for other lower priced firms. Fictitious price comparisons, or false sale signs could be used in this way to deceptively and profitably deter consumer search. A simplified model shows how this mechanism could ex...

We construct a dynamic stochastic general equilibrium model to study optimal monetary stabilization policy. Prices are fully ‡exible and money is essential for trade. Our main result is that if the central bank pursues a price-level target, it can control in‡ation expectations and improve welfare by stabilizing short-run shocks to the economy. The optimal policy involves smoothing nominal inter...

B etween 1986 and 1998, the price of a barrel of West Texas Intermediate (WTI) oil remained quite stable, fluctuating between $16 and $42 constant 2011-U.S. dollars, with the exception of a brief spike in 1990 at the time of the first Gulf War. In December 1998, the barrel of WTI had reached a low point of $17. Almost 10 years later, in July 2008, the same barrel cost $134. By March 2009, the p...

Commodity prices are important both as a source of shocks and for the propagation of shocks originating elsewhere in the economy. Many vector autoregression (VAR) studies estimate a gradual response of commodity prices to monetary policy shocks. Exploiting information in high-frequency financial market data, and using the methods of Rigobon and Sack (2004) I find that a 10 basis point surprise ...

for helpful discussions and comments, and to Pam Dillon and Paula Drew for assistance in preparing this document. The views expressed are those of the authors and should not be attributed to the Reserve Bank of Australia.

How should monetary authorities react to an oil price shock? The New Keynesian literature has concluded that ensuring complete price stability is the optimal thing to do. In contrast, this paper argues that a meaningful trade-off between stabilizing inflation and the welfare relevant output gap arises in a distorted economy once one recognizes (i) that oil (energy) cannot be easily substituted ...

IIn recent years, policymakers have generally relied on regulatory policies to address financial stability concerns. However, our understanding of these policies and their efficacy in curbing housing prices is limited. In this paper, we examine the impact of three regulatory tools i.e. LTV (loan to value) ratio, reserve requirement rate (RR), and capital adequacy ratio (CAR) on housing price in...