Publications of Rátfai, A.

The border effect in small open economies

Abstract: This paper examines the importance of the national border in relative price variability in two neighboring, small open economies. Using monthly frequency price data of narrowly defined, homogenous consumer products, it finds that the time-series variation in within-country relative prices is about the same in the two countries. After controlling for distance, relative price variation is significantly higher across than within countries. The border is the dominant determinant of relative prices, even after accounting for nominal exchange rate variability and local culture as represented by language spoken. Our estimates of the border effect are largely immune to the bias identified in Gorodnichenko and Tesar [Gorodnichenko, Y., Tesar, L., 2006. Border effect or country effect? Seattle is 110miles from Vancouver after all. Unpublished manuscript]. Copyright 2008 ElsevierCopyright of Economic Systems is the property of Elsevier Science Publishing Company, Inc. and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

The frequency and size of price adjustment: microeconomic evidence

This paper presents direct, non-parametric microeconomic evidence on pricing behavior and evaluates the findings in light of theories of nominal price rigidity. The main issues examined include the durability of price quotations and the size of price changes. The analysis is based on a unique high-frequency panel data set of consumer prices recorded in 1993–1996 in Hungary. The results indicate that price adjustment patterns in the sample are primarily consistent with implications of two-sided (S,s) pricing models. Copyright © 2007 John Wiley & Sons, Ltd. ABSTRACT FROM AUTHORCopyright of Managerial & Decision Economics is the property of John Wiley & Sons, Inc. / Business and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

Cyclical fluctuations in CIS economies

This paper documents a number of stylized facts of quarterly frequency cyclical fluctuations in a specific group of developing economies, previously belonging to the same country organization, the former Soviet Union. We find that in these countries (1) fluctuations are in general less persistent than elsewhere; (2) private consumption is extremely volatile; (3) net exports are procyclical and persistent in commodity exporter countries; (4) government consumption is a very important, dominantly procyclical determinant of output; (5) Belarus, Russia, Ukraine, and to a smaller degree, Kazakhstan and Moldova are surprisingly similar in the behavior of their GDP components, industrial production and certain nominal variables; (6) there is mixed evidence regarding the dominance of supply versus demand shocks.

How fast is convergence to the law of one price? Very

In a highly disaggregated product-level sample of monthly frequency prices, the degree of persistence in cross-location price differentials is estimated. When location specific effects are accounted for in measuring price differentials, the median half-life of the conditional convergence to the Law of One Price is about four months. The degree of persistence is related to the mean and volatility in product price inflation. The equilibrium level of price differentials depends on the relative size of the location, but not on its geographical position.

Linking individual and aggregate price changes

This paper studies the implications of lumpiness and heterogeneity in microeconomic pricing decisions for dynamics in price aggregates. To capture the latent deviation between actual and target prices, it develops a semi-structural empirical model of two-sided (S,s) price setting. Applying the model to a unique panel of store level retail prices reveals that fluctuations in the shape of cross-sectional price deviation densities contain extra information on aggregate price change dynamics. Asymmetry in the density particularly matters. Idiosyncratic shocks magnify the size, but do not alter the direction of aggregate fluctuations. When the target price is proxied by the cross-store mean price, the link between inflation and the price deviation density disappears. ABSTRACT FROM AUTHORCopyright of Journal of Money, Credit & Banking is the property of Ohio State University Press and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

Supply and demand shocks in accession countries to the Economic and Monetary Union

The success of the enlarged Economic and Monetary Union (EMU) depends on the relative incidence of demand and supply shocks in both the participating and the accession countries. This paper addresses the issue using bivariate vector autoregression models for current and would-be EMU member countries. While the degree of symmetry in business cycle shocks among EMU accession countries is significant, idiosyncratic shocks between current and would-be member states dominate. Our results suggest a costly process of adjustment following EMU enlargement. (C) 2004 Association for Comparative Economic Studies. Published by Elsevier Inc. All rights reserved.

Inflation and relative price asymmetry

By placing store-level price data into bivariate Structural VAR models of inflation and relative price asymmetry, this study evaluates the quantitative importance of idiosyncratic pricing shocks in short-run aggregate price change dynamics. Robustly to alternative definitions of the relative price, identification schemes dictated by two-sided (S,s) pricing theory and measures of asymmetry in the relative price distribution, idiosyncratic shocks explain about 25 to 30 percent of the forecast error variance in inflation at the 12-month horizon. While the contemporaneous correlation between inflation and relative price asymmetry is positive, idiosyncratic shocks lead to a substantial build-up in inflation only after two to five months following the initial disturbance.

Book review

Book review of ‘Másként gazdálkodás’ by László Zsolnai

A C, Rátfai A. Beruházási ciklusok. In: Ambrus-Lakatos L, editor. Gazdaság és társadalomtörténeti szöveggyűjtemény a szocializmus magyarországi történetének tanulmányozásához. Budapest: Aula; 1990.