How should central banks optimally aggregate sectoral inflation rates in the presence of imperfect labor mobility across sectors? We study this issue in a two-sector New-Keynesian model and show that a lower degree of sectoral labor mobility, ceteris paribus, increases the optimal weight on inflation in a sector that would otherwise receive a lower weight. We analytically and numerically find that, with limited labor mobility, adjustment to asymmetric shocks cannot fully occur through the reallocation of labor, thus putting more pressure on wages, causing inefficient movements in relative prices, and creating scope for central bank’ s intervention. These findings challenge standard central banks’ practice of computing sectoral inflation weights based solely on sector size and unveil a significant role for the degree of sectoral labor mobility to play in the optimal computation. In an extended estimated model of the US economy, featuring customary frictions and shocks, the estimated inflation weights imply a decrease in welfare up to 10% relative to the case of optimal weights.

What can a good’s durability tell us about its market organization? This paper argues that the socially expected durability of goods is one of their most important features. It illuminates temporal and material aspects of market organization and social change across different markets. While recent literature in the sociology of markets tends to emphasize financial goods, intangible assets, and the service economy, markets for material durable and nondurable consumer goods are still surprisingly pervasive in everyday life and in the household economy, as well as in modern economies’ basic infrastructure. Based on a comparison of the extreme cases of durable housing and fresh fish markets, we come to the general finding that the higher a good’s expected durability, the smaller the share of its new production will be and the larger its aftermarkets. Furthermore, it will be more tightly linked to credit and insurance markets, and its market will be more volatile in the short-term, but more inert in the long-term. Beyond this static distinction, we show how socio-technical mechanisms can “durabilize” or “dedurabilize” goods and hence change their market form. By comparing markets along the durability dimension, this paper contributes to a comparative sociology of market organization that goes beyond single-market studies, while at the same time opening up space for a more dynamic understanding of social change and market segmentation over time.

The operation of an economy is supported by the stock of materials in the form of durables and infrastructure such as machinery, equipment, buildings, and structures. The amount of durables and infrastructure or “capital stock” in the economy is of great interest in the literature of economics, and is usually measured in monetary terms based on the data on capital expenditure. In spite of its wide use by economists, this measure of “capital stock” is of very limited use for sustainable management of material stock because of its neglect of physical properties such as the mass and material composition. This paper proposes a new method of measuring the stock of long-lived durables and infrastructure in terms of the mass of its materials. This method is based on the WIO-MFA method [S. Nakamura et al. J. Ind. Ecol. 11 (2007) 50-63] and the capital formation matrix that is one of the supplementary tables of the input-output table. The method is applied to the Japanese input-output data with 400 sectors, with 9 types of metals (iron, ferroalloy, copper, zinc, lead, tin, aluminum, silver, and gold) and 8 types of plastics (thermo-setting resins, PE (low), PE (high), PS, PP, PVC, high-performance resins, and other resins) occurring as materials. It was found that substantial variations exist among sectors while fixed capital formation in the year 2000 weighs 518 kg per million Japanese yen on average in metals and plastics.

This paper deals with optimal investment and redistribution of the free reserves connected to life and pension insurance contracts in form of dividends and bonus. Formulated appropriately this problem can be viewed as a modification of Merton’s problem of optimal consumption and investment with a very particular form of consumption and utility hereof. Both are linked to a finite state Markov chain. We distinguish between utility optimization of dividends, where a semi-explicit result is obtained, and utility optimization of bonus payments. The latter connects to the financial notion of durable goods and allows for an explicit solution only in very special cases.