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Archive for 8. August 2019

How shrinkflation is playing havoc with economists’ models

Posted by hkarner - 8. August 2019

Date: 07-08-2019
Source: The Economist: Free exchange

In a world of sticky prices, firms use other means to respond to market conditions

TWO YEARS ago British chocoholics felt the pinch from the decision to leave the European Union. As sterling tumbled, global firms selling to the British market faced the same production costs as before, but got less money for each sweet sold. Rather than raise the price per chocolate, some chose to shrink the chocolate per price. The famous peaks on a bar of Toblerone grew conspicuously less numerous (though Mondelez, the bar’s maker, said Brexit was not the cause). Other products suffered the same “shrinkflation”: toilet rolls and toothpaste tubes became smaller. The threat of Brexit made the phenomenon more visible, but it is surprisingly common. Statisticians and policymakers need to take note.

Every first-year economics student quickly becomes familiar with charts of supply and demand, which place price on one axis and quantity on the other. Given a drop in demand, the charts show, firms can either sell fewer items at the prevailing price or cut prices to prop up sales. But online retailing, which makes it easier to collect fine-grained price data, reveals how poorly textbook models reflect real-world market dynamics. The prices of consumer goods, it turns out, behave oddly. Den Rest des Beitrags lesen »

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The Lure of the West: Bosnia Feels the Pinch of Brain Drain to EU

Posted by hkarner - 8. August 2019

In Bosnia, thousands of people are learning German. With a lack of opportunity in their own country, talented young Bosnians are emigrating to what they hope will be a brighter future abroad. Entire towns have emptied out.

By Keno Verseck, spiegel.de
Young men learning German in the city of Jajce, Bosnia, as they prepare to move to a German-speaking country.

August 06, 2019 01:20 PM

This is the beginner’s course and most attendees barely speak any German yet, but they already know quite a few words that will be helpful to them later, like „diploma,“ „desired salary“ and „job application.“ Or they read sentences out loud, like: „Mr. Kindler would like to work in a garage as a mechanic.“

Josip Strkalj is sitting in the second row and concentrating on his class materials. The 24-year-old received his university degree in occupational safety engineering last year and is now eager to learn German. His goal is to emigrate to Germany, possibly as soon as just a few months from now. His girlfriend already lives there, in the city of Ulm. „No one pays attention to any rules in our country,“ he says. „I like Germany. I like that everything has its place and everything is predictable.“
Dragana Crnoja and her colleague Tarik Zjajo teach evening German classes for adults at the vocational school in Jajce, a town in central Bosnia. The classes, which take place several times a week, are extremely popular — because many from the town and the surrounding villages hope to emigrate to Germany or Austria. Den Rest des Beitrags lesen »

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China Digs In to Outlast U.S. in Trade Dispute

Posted by hkarner - 8. August 2019

Date: 07-08-2019
Source: The Wall Street Journal By Chao Deng and Chun Han Wong

President Xi Jinping, struggling to revive economy and quell Hong Kong protests, has little leeway for concessions that would undercut strongman image

Chinese President Xi Jinping faces a sluggish domestic economy and rising antigovernment protests in Hong Kong.

BEIJING—The volley-for-volley trade war between China and the U.S. is accelerating at a time when Chinese President Xi Jinping can ill afford to make concessions, raising the likelihood of a protracted struggle between the world’s two biggest economies.

Mr. Xi is ordering a celebratory run-up to the 70th anniversary of the People’s Republic in October, an event that Communist Party watchers and media say will showcase him as a strong leader of a powerful nation. With his government struggling to rejuvenate a sluggish economy and quell antigovernment protests in Hong Kong, Mr. Xi has little leeway to take steps that would undercut his strongman image. Den Rest des Beitrags lesen »

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