Optimal price dynamics and speculation with a storable good
AbstractWhen the seller of a storable good must keep pace with inflation, buyers will speculate on the timing of price increases to buy and store just before. The unique Markov perfect equilibrium of this game involves recurrent periods during which the firm injects uncertainty into its price, while speculators store in increasing numbers, with possibly a final "run." The stochastic policies of many firms consistently aggregate back to a price index growing at the general rate of inflation. The model establishes that (1) inflation causes price uncertainty; and (2) speculation can be destabilizing and welfare-reducing even under perfect information. Copyright 1989 by The Econometric Society.
Download InfoTo our knowledge, this item is not available for download. To find whether it is available, there are three options:
1. Check below under "Related research" whether another version of this item is available online.
2. Check on the provider's web page whether it is in fact available.
3. Perform a search for a similarly titled item that would be available.
Bibliographic InfoPaper provided by CEPREMAP in its series CEPREMAP Working Papers (Couverture Orange) with number 8708.
Length: 52 pages
Date of creation: 1987
Date of revision:
Other versions of this item:
- Benabou, Roland, 1989. "Optimal Price Dynamics and Speculation with a Storable Good," Econometrica, Econometric Society, vol. 57(1), pages 41-80, January.
You can help add them by filling out this form.
CitEc Project, subscribe to its RSS feed for this item.
- Pastine, Ivan, 2002.
"Speculation and the decision to abandon a fixed exchange rate regime,"
Journal of International Economics,
Elsevier, vol. 57(1), pages 197-229, June.
- Ivan Pastine, 2000. "Speculation and the Decision to Abandon a Fixed Exchange Rate Regime," Econometric Society World Congress 2000 Contributed Papers 0931, Econometric Society.
- Pastine, Ivan, 2001. "Speculation and the Decision to Abandon a Fixed Exchange Rate Regime," CEPR Discussion Papers 2893, C.E.P.R. Discussion Papers.
- Julio J. Rotemberg, 2004.
NBER Working Papers
10915, National Bureau of Economic Research, Inc.
- Andrew Caplin & John Leahy, 2010. "Economic Theory and the World of Practice: A Celebration of the ( S, s ) Model," Journal of Economic Perspectives, American Economic Association, vol. 24(1), pages 183-202, Winter.
- Andrew C. Caplin & Daniel F. Spulber, 1987.
"Menu Costs and the Neutrality of Money,"
NBER Working Papers
2311, National Bureau of Economic Research, Inc.
- David Romer., 1989.
"Staggered Price Setting with Endogenous Frequency of Adjustment,"
Economics Working Papers
89-115, University of California at Berkeley.
- Romer, David, 1990. "Staggered price setting with endogenous frequency of adjustment," Economics Letters, Elsevier, vol. 32(3), pages 205-210, March.
- David Romer, 1989. "Staggered Price Setting with Endogenous Frequency of Adjustment," NBER Working Papers 3134, National Bureau of Economic Research, Inc.
- Caballero, R.J. & Engel, E.M.R.A., 1989.
"Heterogeneity And Output Fluctuations In A Dynamic Menu Cost Economy,"
1989_40, Columbia University, Department of Economics.
- Caballero, Ricardo J & Engel, Eduardo M R A, 1993. "Heterogeneity and Output Fluctuations in a Dynamic Menu-Cost Economy," Review of Economic Studies, Wiley Blackwell, vol. 60(1), pages 95-119, January.
- Caballero, R. & Engel, E.M.R.A., 1991. "Heterogeneity and Output Fluctuations in a Dynamic Menu-Cost Economy," Discussion Papers 1991_16, Columbia University, Department of Economics.
- Ricardo J. Caballero & Eduardo M.R.A. Engel, 1991. "Heterogeneity and Output Fluctuations in a Dynamic Menu-Cost Economy," NBER Working Papers 3729, National Bureau of Economic Research, Inc.
- Mariano Tommasi, 1992. "The Welfare Effects of Inflation, The Consequences of Price Instability on Search Markets," UCLA Economics Working Papers 655, UCLA Department of Economics.
- Andreas Schabert & Sweder J.G. van Wijnbergen, 2011. "Sovereign Default and the Stability of Inflation Targeting Regimes," Tinbergen Institute Discussion Papers 11-064/2/ DSF20, Tinbergen Institute.
- Laurence M. Ball, 1990.
"Time-Consistent Policy and Persistent Changes in Inflation,"
NBER Working Papers
3529, National Bureau of Economic Research, Inc.
- Ball, Laurence, 1995. "Time-consistent policy and persistent changes in inflation," Journal of Monetary Economics, Elsevier, vol. 36(2), pages 329-350, November.
- Julio J. Rotemberg, 2010.
"Altruistic Dynamic Pricing with Customer Regret,"
Scandinavian Journal of Economics,
Wiley Blackwell, vol. 112(4), pages 646-672, December.
- Halkos, George, 2009. "A Differential game approach in the case of a polluting oligopoly," MPRA Paper 23742, University Library of Munich, Germany.
- Sweder van Wijnbergen & Christiaan van der Kwaak, 2014. "Financial Fragility and the Fiscal Multiplier," Tinbergen Institute Discussion Papers 14-004/VI, Tinbergen Institute.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Sébastien Villemot).
If references are entirely missing, you can add them using this form.