Developing Intuition for Prices in Euros: Rescaling or Relearning Prices?

This article examines how numerical intuition for prices develops after a major change in currency. University students in Portugal (Study 1) and Austria (Study 2) made price estimates for 40 different items from November 2001 to June 2002, surrounding the time at which these countries switched to the euro. Overall results are more in accordance with a relearning hypothesis, considering that price estimates become progressively more accurate by a process that is related to buying frequency and, hence, is faster for frequently bought items. An alternative global rescaling hypothesis received mixed support. Results also suggest that price estimations in euros have not yet reached a level of accuracy comparable with estimations in the former national currency. (PsycINFO Database Record (c) 2010 APA, all rights reserved)     

Inflation Cycles and Metals Prices

A leading index of inflation, developed and published monthly by the Center for International Business Cycle Research at Columbia University, has been designed to anticipate swings in broad measures of inflation such as the consumer price index. It generates signals indicating when the rate of inflation is likely to move up or down. Since metals prices are sensitive to the same types of economic factors that influence the overall inflation rate, we have examined the behavior of metals prices during intervals marked off by the signal dates. Between 1949 and 1986 the producer price index for metals and metal products moved up at an average annual rate of 6.7% when the leading index signaled an upswing, compared to a 1.7% rate during the remaining intervals. Aluminum scrap prices rose at a 15% average rate during the upswing signals but declined at an 11% rate otherwise. Copper scrap and zinc prices behaved similarly. The leading index of inflation appears to be a promising tool for forecasting short-run trends in metals prices.     

Impact of Phase Shifters on Locational Prices

With the introduction of restructuring in the electric power industry, the price of electricity has become the focus of power market activities. Phase shifters in a power system can mitigate or reduce transmission congestion by redirecting line flows, reduce the cost of power dispatch by adjusting locational marginal prices (LMPs), and enhance market competition by reducing the chance of market power occurrences due to limited transmission flows. This paper analyzes the role of phase shifters in restructured power systems by simulating electricity market prices. The paper further provides a comparison among various alternatives such as transmission expansion for mitigating congestion. The simulation results are analyzed for a three-bus and presented for the Institute of Electrical and Electronics Engineers (IEEE) 118-bus power system.