Publications

November 2019
Case

Floating the Exchange Rate: In Pursuit of the Chinese Dream

By: Laura Alfaro and Sarah Jeong

In the decades following 2005, China faced significant financial challenges. Inflation spiraled upwards and China’s economy stagnated in the wake of the Global Financial Crisis. The country’s leaders took an interventionist approach to weather the storm, controlling... View Details

Keywords: Exchange Rate; Inflation; Debt; Currency Exchange Rate; Inflation and Deflation; Borrowing and Debt; China

November 1974 (Revised May 1994)
Case

Science Technology Co.

By: Thomas R. Piper

The president of a medium-sized electronics company is evaluating the financial forecasts and proposed financing program submitted by the chief financial officer. The forecasts are prepared in constant dollars, on which basis the proposed financing plan seems... View Details

Keywords: Currency; Financial Strategy; Forecasting and Prediction; Inflation and Deflation; Risk and Uncertainty; Outcome or Result; Technology Industry; Electronics Industry

December 2007 (Revised July 2008)
Case

General Mills (A)

By: Raymond V. Gilmartin, Marco Iansiti and Bianca Buccitelli

General Mills is an 80-year-old company that specializes in consumer foods such as cereal, snacks, baking, and dinner products. Although General Mills is, on the whole, a very successful company, they have, in the recent past, had to face challenges as a result the... View Details

Keywords: Competitive Strategy; Change Management; Cost Management; Problems and Challenges; Inflation and Deflation; Price; Consumer Products Industry; Manufacturing Industry

May 2013
Supplement

Kinyuseisaku: Monetary Policy in Japan (C)

By: Laura Alfaro and Hilary White

Assuming office in December 2012, Prime Minister Shinzo Abe was determined to revive Japan's stagnating economy through an ambitious plan known as 'Abenomics.' Under the guidance of the newly appointed governor of the central bank, Haruhiko Kuroda, the Bank of Japan... View Details

Keywords: Japan; Inflation Targeting; Inflation; Abenomics; Monetary Policy; Stimulus; Quantitative Easing; Government Bonds; Macroeconomics; Inflation and Deflation; Money; Economic Slowdown and Stagnation; Japan

2008
Working Paper

Behavioral Aspects of Price Setting, and Their Policy Implications

By: Julio J. Rotemberg

This paper starts by discussing consumers' cognitive and emotional reaction to posted prices. Cognitively, some consumers do not appear to make effective use of price information to maximize their consumption-based utility. Emotionally, prices can induce regret and... View Details

Keywords: Inflation and Deflation; Price; Policy; Laws and Statutes; Consumer Behavior; Emotions

2009
Chapter

Behavioral Aspects of Price Setting, and Their Policy Implications

By: Julio J. Rotemberg

This paper starts by discussing consumers' cognitive and emotional reaction to posted prices. Cognitively, some consumers do not appear to make effective use of price information to maximize their consumption-based utility. Emotionally, prices can induce regret and... View Details

Keywords: Inflation and Deflation; Price; Policy; Laws and Statutes; Demand and Consumers; Business and Government Relations

1996
Article

Limits on Interest Rate Rules in the IS Model

By: William R. Kerr and Robert G. King

There has been a substantial amount of research on interest rate rules. This literature finds that the feasibility and desirability of interest rate rules depends on the structure of the model used to approximate macroeconomic reality. We employ a series of... View Details

Keywords: Inflation and Deflation; Macroeconomics; Interest Rates; Price; Governing Rules, Regulations, and Reforms; Performance Expectations

March 2001
Article

Preferences over Inflation and Unemployment: Evidence from Surveys of Happiness

By: Rafael Di Tella, Robert MacCulloch and Andrew Oswald

Keywords: Inflation and Deflation; Job Cuts and Outsourcing; Happiness

Find at Harvard

April 2011 (Revised December 2012)
Supplement

South Africa (B): Getting Unstuck?

By: Richard H. K. Vietor and Diego Comin

15 years after ending apartheid, formal unemployment in South Africa was still at 24%. While the country had grown at 4 to 5% annually during the 2000s, the financial crisis set it back by 1 million more unemployed. Moreover, it seemed as if the nation were stuck... View Details

Keywords: Financial Crisis; Inflation and Deflation; Policy; Employment; Wages; Competition; South Africa

2013
Working Paper

Return Predictability in the Treasury Market: Real Rates, Inflation, and Liquidity

By: Carolin E. Pflueger and Luis M. Viceira

Estimating the liquidity differential between inflation-indexed and nominal bond yields, we separately test for time-varying real rate risk premia, inflation risk premia, and liquidity premia in U.S. and U.K. bond markets. We find strong, model independent evidence... View Details

Keywords: Expectations Hypothesis; Term Structure; Real Interest Rate Risk; Inflation Risk; Inflation-Indexed Bonds; Financial Crisis; Inflation and Deflation; Financial Liquidity; Bonds; Investment Return; Risk and Uncertainty; United Kingdom; United States

SSRN

April 1996 (Revised May 2008)
Exercise

Adam Baxter Company/Local 190: 1978 Negotiation, Baxter Management Confidential Information

By: Kathleen L. McGinn and Victoria Medvec

Includes a series of three negotiation exercises portraying management/labor relations at ABC over a period of seven years. ABC, initially a family-owned business, had prided itself on its cooperative relationship with its union, Local 190. With the skyrocketing... View Details

Keywords: Inflation and Deflation; Compensation and Benefits; Wages; Working Conditions; Management; Negotiation Process; Labor and Management Relations

29 May 2006
What Do You Think?

How Important Is the “Service Sector Effect” on Productivity?

sides can't win, with better service and more satisfied employees." On the other hand, E. Hassen cautioned, that "Before criticizing, we should examine carefully the social sector effects of wage deflation and higher... View Details

Keywords: by James Heskett; Service

Article

Inflation-Indexed Bonds and the Expectations Hypothesis

By: Carolin E. Pflueger and Luis M. Viceira

This paper empirically analyzes the Expectations Hypothesis (EH) in inflation-indexed (or real) bonds and in nominal bonds in the U.S. and in the U.K. We strongly reject the EH in inflation-indexed bonds and also confirm and update the existing evidence rejecting the... View Details

Keywords: TIPS; Breakeven Inflation; Return Predictability; Bond Risk Premia; Risk Management; Bonds; Financial Liquidity; Inflation and Deflation; United Kingdom; United States

Find at Harvard

May 2023
Case

Uruguay: South America's Singapore?

By: Richard Vietor

Uruguay, the richest country in Latin America and the only one that has not turned to the left, suffers from slow growth, high inflation and a weak education system. President Lacrolle Pou has two more years in office to reform these problems. View Details

Keywords: Macroeconomics; Economic Slowdown and Stagnation; Inflation and Deflation; Government Administration; Latin America; Uruguay

2009
Working Paper

Altruistic Dynamic Pricing with Customer Regret

By: Julio J. Rotemberg

A model is considered where firms internalize the regret costs that consumers experience when they see an unexpected price change. Regret costs are assumed to be increasing in the size of price changes and this can explain why the size of price increases is less... View Details

Keywords: Inflation and Deflation; Price; Marketing; Consumer Behavior; Mathematical Methods

20 Sep 2006
Research & Ideas

The Power of Ordinary Practices

or deflate the people who were working for them. They were trying to do a good job of leading their teams, but lacked an effective model for how to behave. So, I would say sweat the small stuff, not only when you're dealing with your... View Details

Keywords: Re: Teresa M. Amabile

19 Oct 2010
First Look

First Look: October 19, 2010

flows equal the forecasted cash flows plus an omitted downside. When the omitted downside is temporary, the adjustment is to deflate the forecasts and to set the discount rate equal to the cost of capital. However, when the downside is... View Details

Keywords: Sean Silverthorne

2024
Working Paper

Changing Perceptions and Post-Pandemic Monetary Policy

By: Michael D. Bauer, Carolin Pflueger and Adi Sunderam

We document that the Fed’s perceived monetary policy response to inflation shifted materially over the post-pandemic period. In forward-looking policy rules estimated from surveys of macroeconomic forecasters, the inflation coefficient rose significantly after liftoff... View Details

Keywords: Policy; Inflation and Deflation; Interest Rates; Perception; Government Administration

December 1999 (Revised January 2003)
Case

Standard International Inc. (A)

By: David F. Hawkins

The company top management must make a series of accounting decisions that will determine the company's quarterly income. A rewritten version of an earlier case. View Details

Keywords: Financial Reporting; Financial Statements; Inflation and Deflation; International Finance; Research and Development; Accounting Industry