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Despite extensive research on retailers' price responses to demand shocks, much less is known about their non‐price responses. Using heterogeneity in timing, location, and magnitude of income and wealth shocks associated with the 2008 Great Recession, we explore how US retail stores adjusted product offerings under local demand shocks. We find that stores offer fewer products and varieties besides lowering prices. Using a structural demand model, we quantify the net welfare impact of the price and assortment adjustments. On average, the consumer welfare losses from variety reduction more than offset the welfare gains from price reductions. [ABSTRACT FROM AUTHOR]

The growing demand for personal mobility is leading to an increase in vehicle use, which is in turn contributing to higher carbon emissions. It is widely acknowledged that emission-free electric vehicles (EVs) will play a pivotal role in the decarbonization process, particularly in the decarbonization of transport systems. The objective of this paper was to present the trends in demand for electric vehicles (EVs) in Poland, together with the identification of market shocks and an assessment of the programs supporting electromobility. The number of imported and domestically purchased new and used electric vehicle (BEV) registrations was analyzed using the TRAMO-SEATS and ARIMA-X-12 seasonal adjustment methods. The rise in sales of electric vehicles in Poland was driven by the government's electromobility support programs and alterations to tax legislation, with no discernible seasonal impact. The number of registrations in Poland increased significantly, exhibiting an upward trajectory. However, this growth is constrained by the inadequate number of charging stations, which are primarily powered by electricity derived from coal. Consequently, while the development of electromobility in Poland is evident, the decarbonization process remains a challenge. [ABSTRACT FROM AUTHOR]

The article addresses financial troubles in French amateur football clubs and their origins. Previous literature has demonstrated that – in particular in French football – club bankruptcies are triggered by demand shocks. The present research intends highlighting the determinants of demand shocks on those clubs playing French amateur football top two tiers with a longitudinal analysis (2009/2010-2019/2020). Various exogenous elements that influence club demand (i.e. revenues) are taken on board, namely, macroeconomic variables, such as the variation of GDP growth rate between two football seasons, a dummy for the Covid-19 sanitary crisis, and a sport dummy for the effect of the French national team winning the 2018 male football World Cup. The latter is used to check a potential trickle-down effect on amateur elite football. None of these variables do explain demand shocks except if the heterogeneity of clubs' economic models is taken into account. The determinants of shock demands appear to be clubs' strategic orientations (towards win maximization vs. a stable economic organization). [ABSTRACT FROM AUTHOR]

This paper uses financial accounting data of the universe of Italian worker cooperatives, from 2011 to 2018, to examine whether cooperatives were able to achieve employment stabilization in a period of prolonged recession. Since wages have experienced, in most of the period, a negative growth, we further consider whether wages' downward flexibility had been sufficient to sustain employment stabilization and whether, under these circumstances, cooperatives' financial solidity had weakened. Given the non-experimental setting, we proceed by defining a control group of conventional firms to which we compare the group of worker cooperatives. We find evidence that, relative to the control group, during negative demand shocks, worker cooperative contained employment drop and allowed a greater downward wage adjustment. Their profitability and equity ratio also fell by more than in the control group. We find significant-sector heterogeneity, especially in response to positive demand shocks; in Less Knowledge Intensive Services and in Constructions, which together comprise more than 70% of worker cooperatives, it is employment, rather than wages, that rises by more than in conventional firms. This suggests that in the aftermath of a prolonged recession most worker cooperatives chose to favour growth at the expense of members' wage. [ABSTRACT FROM AUTHOR]

Canada's inflation rate rose to generational highs in 2022. We explore this rapid surge. Using new methods and detailed household consumption data, we separately identify demand- and supply-driven price increases. We find that the latter account for most of the rise in inflation—especially among energy-intensive and highly traded items. In addition, we find that items with normally transitory price changes or those that are highly sensitive to interest rates account for nearly all of the increase. Our work sheds important new light on recent inflation trends and illustrates new empirical methods that can add value to inflation-monitoring efforts in Canada. [ABSTRACT FROM AUTHOR]

China's manufacturing industry is facing multiplex changes both in domestic and foreign demand under the new pattern of “Dual Circulation”. In order to study how to successfully realize the transformation and upgrading of China's manufacturing industry and to raise the country's manufacturing power during the period of rapid demand transformation, we analyzed the theoretical mechanism of investment's impact on manufacturing upgrading under demand shocks based on the machine-substitution model, and then constructed a two-equation model that investment affects the proportion of capital and labor and productivity to test the mechanism of corporate investment on manufacturing upgrading under different demand shocks by using a big data of listed companies. Findings indicate that corporate investment has a significant role in promoting manufacturing upgrades. When the demand shocks gradually strengthen, the promotion effect of investment on the upgrading of the manufacturing industry gradually weakens, and the negative demand shocks are more conducive to stimulating the transformation and upgrading of the manufacturing industry. When distinguishing ownership, we found that investment is more likely to promote state-owned enterprises to increase the capital-labor ratio, while the promotion of productivity improvement of non-state-owned enterprises is more obvious under same demand shocks. Therefore, the paper puts forward some policy suggestions for enterprises to realize technological innovation, transformation and upgrading during the period of demand dip and expansion so as to realize precise policies under the extreme demand changes. [ABSTRACT FROM AUTHOR]

Millions of people are displaced by natural disasters each year, yet little is known about how evacuees affect host communities. We analyze the migratory effects of the most destructive fire in California history, the 2018 Camp Fire, which destroyed over 18,000 structures and displaced roughly 50,000 people. By merging geospatial information on the fire's footprint with Zillow's housing transaction data, we estimate both the spatial and temporal effects of the fire on real estate prices at a granular level. A number of important insights emerge. First, within 25 miles of the fire's footprint, home prices increased by 13 percent in the six-week aftermath of the fire. Effects decay with distance and are statistically insignificant beyond 100 miles. Second, effects are detected within two weeks of the fire, fully materialize within four weeks, and are persistent up to ten months (which exhausts our period of consideration). Results are consistent with the relocation decisions of evacuees and are robust to a variety of specifications and modeling assumptions. • The 2018 Camp Fire is the most destructive fire in California state history, having displaced roughly 50,000 people. • We study the migration of Camp Fire evacuees and the effect they had on neighboring housing markets. • Homes within 25 miles of the fire's footprint experienced a fairly sudden 13% increase in price. • Effects on real estate markets reach as far away as 100 miles, and are persistent (lasting up to at least 10 months after the fire). [ABSTRACT FROM AUTHOR]

This paper addresses the identification of supply and demand shocks in the South African economy over the 1960–2020 period, the relative importance of the two types of shock to fluctuations of growth and inflation from their steady‐state values, as well as the potential impact of the two types of shocks on the steady‐state growth and inflation values. Crucially, the paper examines the significance of three alternative identification strategies on the nature of supply and demand shocks and their impact on the economy: zero shock covariance in the presence of long‐run demand neutrality; non‐zero shock covariance in the presence of long‐run demand neutrality and long‐run demand non‐neutrality with zero shock covariance. Interest lies in which of the identification strategies provides shock decompositions that are theoretically coherent and congruent with the empirics of South African growth and inflation. Results support non‐zero shock covariance in the presence of long‐run demand neutrality identification. The analysis suggests that growth shocks in South Africa are dominated by supply shocks, and inflation shocks by demand shocks. Further, negative supply shocks lower steady state growth and raise steady‐state inflation, while positive demand shocks only raise steady‐state inflation and are growth neutral. South Africa appears relatively isolated from international productivity shocks. [ABSTRACT FROM AUTHOR]

We find that Chinese consumers responded strongly to government restrictions during the COVID‐19 crisis. Our event‐study framework shows that emergency declarations raised average food prices by as much as 7.8 standard deviations of the price change distribution, with a much larger effect on non‐perishable vegetable prices (e.g., 17.0 standard deviations for Chinese cabbage prices). The effects of lockdowns were smaller but longer‐lasting. These results suggest that consumers panic bought non‐perishables under emergency declarations while under lockdowns there was a sustained increase in demand for non‐perishables. Such consumer behavior likely caused sizable losses in consumer welfare, especially among poor households. [ABSTRACT FROM AUTHOR]

We investigate the prices and quantities of face masks when the 2020 COVID-19 pandemic was particularly serious to understand the impact of demand shocks on the cost of living index (COLI). Using a recently developed index number formula that is exact for the constant elasticity of substitution utility function with variable preferences, we quantified the degree of demand shock caused by the pandemic. Our empirical analysis revealed that shifts in preferences during the pandemic were so large that the COLI with variable tastes became very different from the standard superlative indexes. While the prices of face masks decreased in the Fisher index in May 2020 by 0.76% per week, the COLI increased by 1.92% per week. [ABSTRACT FROM AUTHOR]

Diewert and Fox (2022) examine various implications of the 2020 COVID-19 pandemic for constructing consumer price indexes. The authors state that the pandemic caused major changes in consumption expenditures and shares which makes fixed basket index number formulae inapplicable. They emphasize the need for more frequent surveys of consumer expenditure which will enable compilation of the Fisher index which is considered superior to the traditional Laspeyres or Young indexes. In addition, Diewert and Fox discuss the use of various "new" technologies such as web scraping, scanner data, and information from transactions through credit cards to estimate consumption expenditure. [ABSTRACT FROM AUTHOR]

The aim of this paper is to evaluate the symmetry of demand and supply shocks affecting Polish voivodeships and to assess the risk of asymmetric shocks in the future. The study employs the SVAR-based Blanchard and Quah (1989) decomposition as modified by Bayoumi and Eichengreen (1992), and uses a new method of estimating quarterly GDP by voivodeships. The results point to a relatively high symmetry of shocks and a rather low risk of their occurrence. Shock asymmetry does not appear to be strongly related to differences in production structures, which is claimed in most theoretical approaches, including the Optimum Currency Areas Theory.

This paper assesses the nature and correlation of shocks in Visegrad countries and investigates the role of labour mobility in the process of adjustment to the effects of asymmetric shocks. Structural vector autoregression (SVAR) models are employed to assess the nature and correlation of shocks while dynamic cointegrated panel autoregressive distributed lag (ARDL) models are used to determine the role of labour mobility in the adjustment process. The dataset for the SVAR models is quarterly time series and covers the period 2000–2020. The dataset for the cointegrated panel ARDL models is annual and covers the period 2000–2019. The results show more asymmetries in external supply, domestic supply, demand and monetary shocks before the financial crisis. The findings also show that more symmetries occurred in Visegrad countries after the financial crisis in relation to external and domestic supply shocks. Asymmetries persisted with regard to demand and monetary shocks after the financial crisis. With labour mobility as an adjustment mechanism to asymmetric shocks, the paper finds that the capacity of labour mobility is very low. The percentage of net migration in the total population is less than 1% in the four countries compared to 15% in the United States. The size of the adjustment coefficients shows that it takes 3–5 years for countries to adjust to asymmetric shocks through labour mobility. [ABSTRACT FROM AUTHOR]

This paper analyses the dynamic impact of geopolitical risks (GPRs) on real oil returns for the period February 1974 to August 2017, using a time-varying parameter structural vector autoregressive (TVP-SVAR) model. Besides the two variables of concern, the model also includes growth in world oil production, global economic activity (to capture oil-demand), and world stock returns. We show that GPRs (based on a tally of newspaper articles covering geopolitical tensions), in general, has a significant negative impact on oil returns, primarily due to the decline in oil demand captured by the global economic activity. Our results, thus, highlight the risk of associating all GPRs with oil supply shocks driven by geopolitical tensions in the Middle East, and hence, ending up suggesting that higher GPRs drive up oil prices. [ABSTRACT FROM AUTHOR]

We explore the impact of wage adjustment on employment with a focus on the role of downward nominal wage rigidities. We use a harmonised survey dataset, which covers 25 European countries in the period 2010–2013. These data are particularly useful for this paper given the firm-level information on the change in economic conditions and collective pay agreements. Our findings confirm the presence of wage rigidities in Europe: first, collective pay agreements reduce the probability of downward wage adjustment; second, wage responses to demand developments are asymmetric with a weaker downward response. Estimation results show that a wage reduction significantly lowers the probability of a decrease in employment at the firm level when demand falls and thereby point to a negative effect of downward wage rigidities on employment at the firm level. [ABSTRACT FROM AUTHOR]

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This study examines the relationship between exogenous demand shock and market structure in India's influenza vaccine markets. Using a novel dataset of detailed purchasing information for vaccines in India, and exploiting the 2009–10 global H1N1 pandemic as an exogenous demand shock, we provide evidence of heterogeneous responses to the shock by domestic and multinational vaccine manufacturers in the influenza vaccine market relative to our control group of all other vaccine markets. We find that such a shock results in a reversal of the market structure for influenza vaccines in India, with a decline in the market share of multinational vaccine manufacturers and significant gains in the market share of domestic vaccine manufacturers. This reversal of the market structure is driven by increased efforts at new product introduction among domestic vaccine manufacturers, the effects of which persist even after the pandemic has ended. Our results remain robust to the use of alternative controls, synthetic control method, coarsened exact matching method, and other relevant estimation methodologies. These results provide new evidence on the role of a pandemic‐induced demand shock in the context of an emerging economy by creating differential incentives for domestic and multinational vaccine manufacturers to bring new products to market. We also conduct additional analysis to explore the impact of targeted policy instruments on the new product introduction efforts of domestic vaccine manufacturers. Finally, we discuss the implications of our findings and offer insights into the role of policy on pandemic preparedness in emerging markets facing adverse welfare effects from pandemics. [ABSTRACT FROM AUTHOR]

The French trade balance deteriorated almost continuously from the late 1990s to the early 2010s. At the macroeconomic level, French export market share deteriorated while domestic sales kept pace with domestic demand. Does this assessment apply to individual firms? Using microlevel data for French industrial firms over the period 2002–12, we explore the link between domestic and export sales. We show that export and domestic sales have a tendency, albeit slight, to move in opposite directions. This may be due to factors such as deliberate strategies to target a specific market or the presence of production constraints. Addressing the resulting endogeneity issue, our analysis shows that a positive demand shock in the domestic market also leads to an increase in exports. In particular, a 10% increase in domestic demand leads to a 4% increase in exports. This complementarity between markets seems to be driven by small firms and could reflect the existence of liquidity constraints. Increased sales in one market could lessen these constraints by facilitating funding for company development in the export market. [ABSTRACT FROM AUTHOR]

The main goal of the paper is to extract the aggregate demand and aggregate supply shocks in Greece, Ireland, Italy and Portugal, as well as to examine the correlation among the two types of shocks. The decomposition of the shocks was achieved by using a structural vector autoregression that analyses the relationship between the evolution of the gross domestic product and inflation in the period 1997-2015. The goal of the paper is to confirm the aggregate demand - aggregate supply model in the above-mentioned economies.

Using data for a sample of advanced and developing countries, the paper studies variation in the effects of aggregate demand shocks on the macro-economy and distinguish between the effects of expansionary and contractionary shocks. The aim is to study the determinants and implications of cyclicality across representative countries in each group. The composite evidence points to high degree of cyclicality in many countries. The risk of cyclicality is higher in developing countries as high trend inflation limits the scope to mobilize growth and increases downward rigidity of prices. Policy priorities in developing countries should be focused on fighting inflation and improving the investment environment towards maximizing the return on investment and sustaining growth and capacity building. Policy priorities in advanced countries should be focused on mobilizing resources to ease capacity constraints and finance larger investment, with limited crowding out, to maximize the potential of real growth and combat inflationary pressures. [ABSTRACT FROM AUTHOR]

The aim of this paper is to evaluate the symmetry of demand and supply shocks affecting Polish voivodeships and to assess the risk of asymmetric shocks in the future. The study employs the SVAR-based Blanchard and Quah (1989) decomposition as modified by Bayoumi and Eichengreen (1992), and uses a new method of estimating quarterly GDP by voivodeships. The results point to a relatively high symmetry of shocks and a rather low risk of their occurrence. Shock asymmetry does not appear to be strongly related to differences in production structures, which is claimed in most theoretical approaches, including the Optimum Currency Areas Theory. [ABSTRACT FROM AUTHOR]

This article examines insolvency (payment failure) in the top three divisions of French soccer. Between 1970 and 2014, we observed 79 cases of insolvency arising from participation in the top two or three (since 1993) divisions. We find that demand (attendance) shocks can account for insolvency to a significant degree. We also find that insolvency can be explained by club status and ownership structure, with professional status and the association structure being more likely to lead to insolvency. We also examine the postinsolvency performance of soccer clubs and find that the adverse consequences of insolvency are long lasting. [ABSTRACT FROM AUTHOR]

• Incorporates the effect of sudden demand shocks on the rail transit line development in a commuter corridor. • Develops a dynamic stochastic model for jointly optimizing rail transit investment timing and length choice. • It can be suboptimal to immediately introduce a new mode even if positive cumulative savings are expected. • Closely related investment timing and sizing decisions can behave differently for the same parameter change. This paper is motivated by the inadequate treatment of uncertainty in public transit infrastructure investments. As observed in the past, rare but dramatic events can heavily disrupt public transit system operations and negatively affect the transit riders. For example, the COVID-19 pandemic caused an 80%-90% transit demand decline in March 2020 in the U.S. However, the existing transit infrastructure planning studies have not modeled such sudden demand shocks. We thus improve the modeling realism of uncertain transit demand by formulating demand evolution as a jump-diffusion process, which is a combination of continuous-time Brownian motion and a discrete counting process, namely Poisson process, and present analytical optimization models for the development of a rail transit line under such uncertainty. We jointly optimize two related decisions, namely the timing for introducing rail transit to a commuter corridor and length choice for the rail line. We refute a misconception that investment in a project should always start immediately if a positive cost saving over the planning horizon is expected. We also find that investment timing and sizing decisions are closely related and behave quite differently for the same change in some parameters, such as the infrastructure construction period. The developed modeling and analysis framework should be transferable to other civil infrastructure development and investment problems under uncertainty. [ABSTRACT FROM AUTHOR]

Using data for a sample of advanced and developing countries, the paper studies variation in the transmission of shocks from public and private components of spending to the macro-economy and distinguishes between the effects of expansionary and contractionary shocks. The aim is to study the extent by which capacity and propagation channels would reinforce or mitigate the cyclical responses of macroeconomic variables to expansionary and contractionary shocks to private and public components of spending. Further, the evidence will spell out the extent of co-movement in the variables’ adjustments to the specific shock across the macro economy. The bulk of the time-series evidence indicates more pervasive effects on growth in connection to private consumption across advanced countries. In contrast, the growth effects of public consumption are more pervasive across developing countries. Across the two groups, the growth impact of public consumption is more pronounced, compared to that of public investment. Further, the inflationary effects are pronounced with respect to public and private spending shocks. In general, the limited statistically significant real time-series evidence attests to conflicting channels with respect to variables’ adjustments to one shock and inadequate co-movement in the transmission mechanism of various public and private spending shocks in many countries. [ABSTRACT FROM AUTHOR]

This paper investigates the time-varying impacts of demand and supply oil shocks on correlations between changes in crude oil prices and stock markets returns. The findings, obtained by means of a DCC-GARCH from June 2006 to June 2016, indicate that demand shocks positively affected the correlations between crude oil prices and stock market returns from late 2007 to mid-2008, during the apex of the financial markets volatility; from early 2009 to mid-2013, during global economy recovery from the financial crisis; and after 2015, when uncertainties about the Chinese growth and the US economy upturning arose. The dynamic conditional correlation, obtained after the removal of demand shocks effects, presented an average value of 0.13 when all economy sectors were considered and of 0.03 when the energy sector returns were excluded from the stock index. These correlations, still positive on average, suggest that exogenous supply oil shocks had little impact on US mainly enterprises cash flows over the last 10 years. Exceptions are the periods from 2006 to financial crisis and from 2014 until April 2016, when significant and unpredicted changes in oil market happened, considerably affecting the value of the main US companies. [ABSTRACT FROM AUTHOR]

Two degrees of demand uncertainty can be discerned: demand variation and demand shock. Demand shocks, being much larger in scale than demand variations, represent significant risk to capacity investment in many high-tech industries wherein equipment has short and finite lifetime. However, in the literature, demand shocks are usually treated as part of demand variations and are not adequately addressed. The objective of this paper is to determine whether or not demand shock and demand variation should be distinguished in capacity planning. This paper starts with an analysis of demand variations and shocks by using data of a major high-tech manufacturing firm. A model of demand shock on growth trend is proposed. Simulation is then used to compare the performance of a shock-conscientious model and a variation-conscientious model of capacity expansion by using stylized industry data. Two important findings are drawn from simulation results. Demand shock and demand variation have the opposite effects on the optimal capacity level. They are best treated as separate elements of the uncertainty. It is also found that the recovery rate after a demand shock is a major aspect of the shock that should be taken into consideration in capacity planning. [ABSTRACT FROM AUTHOR]

The objective of this study is to identify the demand and supply shocks affecting 13 EU member states and to estimate their degree of correlation with the Euro area shocks. This research ensures identifying the asymmetry of shocks degree with the monetary union, depending on which it’s judging the desirability of adopting a single currency. The analysis is also useful for the economies outside the Euro area, because they are strongly commercial and financial integrated especially with the core economies from union. Applying the Blanchard and Quah methodology to estimate the shocks in the period from 1998:1- 2010:3, I have found a weak and negative correlation between demand shocks and a medium to high correlation of the supply shocks. The results obtained suggest the presence of a structural convergence process with the Euro area, in the context of domestic macroeconomic policies rather different, both inside and outside the monetary union.

In the present article, using dynamic panel data and large industrial plants, annual data for the period 1994-2007, effects of the industrial demand shocks on the production of different industries, divided according two digit ISIC, have been examined. The manner and degree of effectiveness of industrial demand shocks on the production of different industries is aim of this article. Results of the article are as follows: A- The positive industrial demand shocks have been effective on the production of some of the large industrial plants but they don't affect some of others. B- The negative industrial demand shocks have not had a meaningful effect on the production of large industrial plants. C- Industrial demand shocks have not had asymmetrical effects on the production of all industries. They have had asymmetrical effects on industries with code numbers, 16, 17, 18, 19, 20, 21, 22, 24, 28, 30, 33 and 36, but they haven't asymmetrical effects on others industries' production. D- Intensity of the affects of industrial demand shocks is not the same in the production of different industries.

ABSTRACT This study aims to compare the performance of free-floating and currency board regimes for Hong Kong by examining historical data of the two on the output growth and inflation rate. Structural vector autoregression has been applied in the empirical analysis. Without making a strong assumption of unit variance in the residual matrix, this study applies a more natural approach proposed by Cecchetti and Rich to recover the structural parameters. The study has further investigated the recovery of the economy under a demand shock under different exchange rate regimes, in order to provide some evidence to answer why Hong Kong's recovery process after the Asian financial crisis is relatively longer than that in other economies with a managed floating exchange rate regime. New evidence in this study indicates that output recovers much faster in a flexible exchange rate regime than in a fixed exchange rate regime after an aggregate demand shock. Furthermore, this study has applied a more robust method in the counterfactual analysis when comparing the two regimes. New evidence in this study suggests that a free-floating regime may generate much smaller output variance in Hong Kong and deliver higher output and price levels to Hong Kong. [ABSTRACT FROM AUTHOR]

ABSTRACT In today's competitive market, demand volume and even the underlying demand distribution can change quickly for a newsvendor seller. We refer to sudden changes in demand distribution as demand shocks. When a newsvendor seller has limited demand distribution information and also experiences underlying demand shocks, the majority of existing methods for newsvendor problems may not work well since they either require demand distribution information or assume stationary demand distribution. We present a new, robust, and effective machine learning algorithm for newsvendor problems with demand shocks but without any demand distribution information. The algorithm needs only an approximate estimate of the lower and upper bounds of demand range; no other knowledge such as demand mean, variance, or distribution type is necessary. We establish the theoretical bounds that determine this machine learning algorithm's performance in handling demand shocks. Computational experiments show that this algorithm outperforms the traditional approaches in a variety of situations including large and frequent shocks of the demand mean. The method can also be used as a meta-algorithm by incorporating other traditional approaches as experts. Working together, the original algorithm and the extended meta-algorithm can help manufacturers and retailers better adapt their production and inventory control decisions in dynamic environments where demand information is limited and demand shocks are frequent [ABSTRACT FROM AUTHOR]