Journal of Economic Theory and Econometrics: Journal of the Korean Econometric Society

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Journal of Economic Theory and Econometrics
Journal of the Korean Econometric Society

Volume 27, Issue 3 (September 2016)

Cover pages
Abstract | PDF (137 kilobytes)

No abstract is available for this article.

Inter-Firm Rivalry: Maximum or Minimum Departure Flight Times Differentiation?, Pages 1–30

Joo Yeon Sun

Abstract | PDF (525 kilobytes)

This paper explores the impact of concentration levels on airline flight scheduling
behaviors. Airline-level data were collected for each of the five domestic Jeju
Island non-stop routes from June 2006 to June 2010. Unlike previous studies on
the U.S. airline industry, the present empirical findings suggest that the decrease
in concentration (increase in competition) on the Jeju Island routes is associated
with smaller inter-firm departure times differentiation. We confirm that the
smaller inter-firm differentiation is the driving force of the decline in departure
times differentiation with competition. This tendency for less inter-firm differentiation
is weaker on the routes with LCCs.In the presence of legacy carriers’
diversified responding strategies on the routes with significant entry of low-cost
carriers (LCCs), independent LCCs differentiate their flight services from those
of legacy carriers through maximum product differentiation.

Trade-in Programs and Product Compatibility in Durable Goods Monopoly with Network Externalities, Pages 31–79

Bong-Ju Kim

Abstract | PDF (3342 kilobytes)

This paper considers product differentiation in view of a monopolist’s incentive to introduce a new version of his product over time when the monopolist can use trade-in programs in two-period model. Contrary to previous literature, we assume that the upgraded product, which is based on the existing product and forward compatible with the new product, can be provided in the second period. The above assumption reflects on the coexistence of new and upgrade products in the real marketplace. Moreover, we assume that the new product can be either an improved product or a downgraded product compared to the product provided in the first period. The following conclusions come from these assumptions: In case of the improved product, trade-in programs can increase social welfare. However, in case of the downgraded product, trade-in programs can lead to reduced social welfare, which could be avoided by prohibiting them.

How the capital utilization adjustment cost should be implemented in DSGE model?, Pages 80–111

Kwang Hwan Kim, Chang-kee Lee

Abstract | PDF (8358 kilobytes)

Variable capital utilization is an important element in recent DSGE models. To allow capital utilization to respond to shocks, the cost of varying utilization is modelled in terms of either accelerated depreciation of capital (Greenwood et al., 1988) or foregone consumption (Christiano et al., 2005). We perform a Bayesian estimation of the standard medium-scale DSGE model augmented with news shocks to examine which specification is supported by the data. The former exhibits a superior fit with the data relative to the latter. We show that it is attributable to the fact that the former explains better the properties of nominal variables, such as inflation and nominal interest rates.

The Effect of Banking Sector's Business Conditions on the Transmission Mechanism of Monetary Policy, Pages 112–143

Jaeho Yun, Hoon Tae Ryoo, Jin Mo Chung

Abstract | PDF (4061 kilobytes)

In this paper, we estimate a dynamic factor model for Korean macro economy and banking sector's business conditions by using the FAVAR (Factor augmented vector autoregressive) model, and analyze impulse responses of various variables such as macro aggregates and banks' financial ratios.Our empirical analysis shows that the macro economy tends to affect the banking sector unilaterally over time. Next, in our counter-factual analysis where we artificially remove the effect of banking sector on the macro economy in the FAVAR model, we find that there is no substantial effect of banking sector's business conditions on the transmission mechanism of monetary policy.


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