modeling economies of scale the case of us electric power companies modeling and validating the existence of technical progress within the neoclassical production function specification has been facilitated through the translog functional form however attempts to separate out the effects of technical progress and returns to scale has been limited this study develops and presents a model for testing the existence of these two separate effects using data from a sample of us electric power companies the analysis found that for these electric utilities there existed increasing returns to scale and technical progress that was energy using but capital neutral however scale effects were found to be a dominant factor in lessening the impact of declining average productivity

economics of scale versus technological change an aggregate product function for switzerland in estimating a production function for an economy constant returns to scale has been a traditionally maintained hypothesis in modelling switzerland s gross output as a function of labor capital and imports a general functional form is selected which displays increasing returns to scale and is not hicks neutral it is a technology which is labor saving import saving and capital using this paper also quantifies the mismeasurements associated with using a constant returns to scale model to estimate such variables as own elasticities of demand elasticities of substitution impacts on factor income and rate of technical progress

default risk and risk averse international investors abstract this paper develops an endogenous default risk model for small open economies that interact with risk averse international investors whose preferences exhibit decreasing absolute risk aversion dara by incorporating risk averse investors who trade with an emerging economy the present model explains a larger proportion and volatility of the spread between sovereign bonds and riskless assets than the standard model with risk neutral investors the paper shows that if investors have dara preferences then the emerging economy s default risk capital flows and bond prices are a function not only of the fundamentals of the economy but also of the level of financial wealth and risk aversion of international investors in particular as investors become wealthier or less risk averse the emerging economy becomes less credit constrained as a result the emerging economy s default risk is lower and its bond prices and capital inflows are higher additionally with risk averse investors the risk premium in the asset prices of the sovereign countries can be decomposed into two components a base premium that compensates the investors for the probability of default and an excess premium that compensates them for taking the risk of default

state intervention for food price stabilisation in africa can it work abstract although its arguments may have more general applicability this paper discusses the desirability and options for the stabilisation of staple food prices principally in eastern and southern africa it addresses three broad questions i why is stabilisation of food grain prices desirable ii what is technically feasible and iii can the governance and trade issues thrown up by suggested mechanisms be solved it considers a number of options for price stabilisation assessing the strengths and weaknesses of each and suggesting situations in which each may be appropriate

a policy agenda for pro poor agricultural growth abstract sub saharan africa and parts of south asia are likely to hold large numbers of very poor rural people into the foreseeable future although both history and theory suggest a pre eminent role for agricultural growth in poverty reduction in poor agrarian economies such growth today faces new difficulties many of these difficulties are endogenous to today s poor rural areas others result from broader processes of global change but some are due to changes in the dominant policy environment emphasizing liberalization and state withdrawal examination of 20th century green revolutions suggests that active state interventions were important in supporting critical stages of agricultural market development unfortunately such interventions benefits in institutional development are easily overlooked whereas their high costs are much more visible policy implications are discussed

empirical effects of short term export bans the case of african maize abstract temporary export restrictions have been widely used in recent years in an attempt to stabilize domestic prices of staple grains i use monthly market level price data to investigate the empirical effects of 13 short term export bans on maize implemented by 5 countries in east and southern africa i find no statistically significant effect of export bans on the price gaps between pairs of affected cross border markets my results for price gaps match those from a model simulation in which export bans are not implemented however prices and price volatility in the implementing country are significantly higher during export ban periods in the data than in the model simulation with no bans export bans in the region are imperfectly enforced divert trade into the informal sector and appear to destabilize domestic markets rather than stabilizing them

consumer response to maize market liberalization in urban kenya abstract the elimination of consumer food subsidies associated with structural adjustment in africa has been widely thought to exacerbate food insecurity for low income consumers this article determines how urban maize consumption and expenditure patterns have responded to the liberalization of the maize and maize meal markets in kenya the article decomposes changes in maize meal prices attributable to changes in maize grain prices and maize milling margins results are obtained through two random household surveys in nairobi the first having been conducted before and the second after liberalization the main finding of the study is that maize market liberalization has conferred substantial benefits to urban consumers the combined saving to nairobi consumers from lower maize milling costs has been roughly us 10 1 million each year about the same amount that the government of kenya allocates annually to agricultural research results also indicate that the former consumer subsidies conferred through the official marketing channel were untargeted and actually inversely related to household income the subsidies on sifted meal also served to entrench a non competitive market structure that inhibited the development of a lower cost informal milling system these findings are consistent with research results from other eastern and southern african countries showing that the negative effects of eliminating food subsidies in the state marketing system have been largely compensated by relaxing controls on private grain trade which has increased consumers access to less expensive grain products distributed through informal markets

managing food price risks and instability in a liberalizing market environment overview and policy options abstract managing food price risks and instability is a major challenge in the midst of ongoing food market reforms key findings from the papers in this special volume revolve around five broad areas i the sources and magnitudes of food price instability in different country contexts ii the economic and social costs stemming from price instability iii the lessons from food market reforms to date iv the design of policy reforms in ways that promote efficient and stable market development and protect the interests of the poor and v potential policy responses to food price instability in a liberalizing market environment

the effects of price deregulation on maize marketing margins in south africa abstract there has been continuous controversy over the impact of food market reforms on food security in africa in south africa the government and media have often questioned the effects of price deregulation of maize meal the major staple food on consumers this article determines the effect of retail price deregulation on the size of maize milling retail margins in south africa regression models of monthly milling retail margins are run from the period may 1976 to december 2004 to assess the robustness of our findings we estimate several different models of structural change vary the sample period to examine the sensitivity of findings to unusual weather and market conditions in the region during episodes between 2001 and 2004 and run the models using different estimation techniques ols with newey west robust estimators and feasible general least squares in virtually all models the results indicate that real maize milling retailing margins in south africa have increased by at least 20 since the deregulation of retail prices in 1991 moreover there is evidence of trend growth in the size of the milling margin over time simulations indicate that the deregulation of maize meal prices has entailed a transfer of at least us 179 million year from consumers to agents in the marketing system further study is needed to understand why this outcome in south africa differs from findings in other countries in the region concerning the effects of reform on food marketing margins

welfare gains of bailouts in a sovereign default model abstract we examine the welfare effects of bailouts in economies exposed to sovereign default risk when a government of a small open economy requests a bailout from an international financial institution it receives a non defaultable loan of size g that comes with imposed debt limits the government endogenously asks for the bailout during recessions and repays it when the economy recovers hence the bailout acts as an imperfect state contingent asset that makes the economy better off the bailout duration is endogenous and increases with its size the bailout size creates non trivial tradeoffs between receiving a larger amount of relatively cheap resources precisely in times of need on the one hand and facing longer lasting financial constraints and accumulated interest payments on the other hand we characterize and quantify these tradeoffs and document that welfare gains of bailouts are hump shaped in the size of bailout loans

high yields the spread on german interest rates this paper is a first attempt at evaluating the determinants of the interest rate differentials on government bonds between high yielders namely italy spain and sweden and germany in particular we concentrate on daily frequencies where the relevance of economic fundamentals is rather limited and address the question of the relative importance of local and global factors in the determination of such spread we identify and measure three components of total yield differentials one due to expectations of exchange rate depreciation which we call the exchange rate factor another which reflects the market assessment of default risk and a last one due to the different taxation treatment of long term yields

yield spreads on emu government bonds government bond spreads we provide evidence that the movements in yield differentials between euro zone government bonds explained by changes in international risk factors as measured by banking and corporate risk premiums in the united states are more pronounced for bonds issued by italy and spain liquidity factors play a smaller role so policies meant to increase financial market efficiency do not appear sufficient to deliver a seamless bond market in the euro area the risk of default is a small but important component of yield differentials movements which signal market perceptions of fiscal vulnerability impose market discipline on national fiscal policies and may be reduced only by further convergence in debt ratios lorenzo codogno carlo favero and alessandro missale

how competitive are crop markets in sub saharan africa during the structural adjustment era of the 1980s and 1990s governments across sub saharan africa generally withdrew from crop markets to encourage entry by private traders and foster competition since that time the degree of competition in crop markets has been a central concern of policymakers donors and researchers we review the evidence on that topic by first developing a conceptual framework to guide our analysis then discussing the findings from four categories of literature we have two main findings first there is a paucity of empirical evidence on this question which hinders our ability to draw strong conclusions second that point notwithstanding the evidence that does exist is broadly supportive of the notion that crop markets are competitive the dominant themes in the literature are that trading profits are highly variable trader entry and exit rates are high and price co movements between markets suggest relatively efficient levels of competitive arbitrage it is possible that the high costs of entry foster non competitive conditions at the level of large scale long distance subnational trade but we find no positive evidence to that effect only the satisfaction of certain necessary conditions

the structure of indigenous food crop markets in sub saharan africa the rice market in uganda abstractusing data obtained from a series of nation wide market surveys in uganda this article attempts to document and assess the domestic rice market at all stages in the post harvest marketing chain from the farm gate to metropolitan area retail outlets the criteria used are quantities marketed prices marketing margins marketing costs and net returns to traders the results show that the regional rice markets are integrated into the national market and that on average little surplus is left for rice traders at all market stages if marketing costs are accounted for the spontaneously developed indigenous crop market works reasonably well

the time varying volatility of macroeconomic fluctuations we investigate the sources of the important shifts in the volatility of us mac roeconomic variables in the postwar period to this end we propose the esti mation of dsge models allowing for time variation in the volatility of the structural innovations we apply our estimation strategy to a large scale model of the business cycle and find that shocks specific to the equilibrium condition of investment account for most of the sharp decline in volatility of the last two decades jel c51 e32

productivity growth in british manufacturing spatial variation in the role of scale economies technological growth and industrial structure this paper investigates the role of scale economies technological growth and industrial structure in creating spatial variation in manufacturing labour and total factor tfp productivity in britain separate estimates of a translog specification are presented for british manufacturing firms located in defined areas of the country over the period 1994 1998 the results show that tfp change due to scale economies and technological growth has been of much less important in influencing the output growth of manufacturing firms than input growth or industrial structure regarding the components of tfp technological growth has been the dominant force at play the analysis of average labour productivity identifies shifts to other factors of production and industrial structure as being the main determinants of change scale economies appear to have had a marginal role the results identify spatial patterns indicating that more favourable locational effects arise for firms in areas adjacent to large urban centre

sovereign default interest rates and political uncertainty in emerging markets abstract a large body of the empirical literature shows that high turnover rates length of tenure of policymakers and the degree of conflict within a country affects sovereign spreads debt and default rates we help to rationalize such claims by including these political features in a dynamic stochastic small open economy model of sovereign debt and default in this way we offer a complementary approach to the econometric analyses in the literature consistent with the data the quantitative analysis shows that politically unstable and more polarized economies experience higher default rates and larger level and volatility of sovereign interest rate spreads

can agricultural traders be trusted evidence from coffee in ethiopia summary traditional food marketing systems in developing countries are often not trusted in consequence policy makers frequently try to regulate them and modern marketing arrangements are increasingly emerging to address some of their presumed deficiencies however it is unclear how trustworthy these markets actually are the purpose of this study is to look at these issues in the case of coffee marketing in ethiopia coffee markets in ethiopia present an interesting case study due to the high price and quality differentiation linked to a number of both easily and not so easily observable characteristics moreover modern marketing practices such as modern retail branding and packaging are becoming increasingly common in ethiopia s urban coffee markets when we define and examine trustworthiness in the addis ababa coffee market as a function of weights and quality we find that traditional traders are relatively trustworthy on observable quality characteristics and weights however there is a consistent pattern of over representation of not so easily verifiable quality characteristics we further find that modern marketing outlets or formats including modern domestic retail and branded packaged products deliver higher quality at a higher price but are not more trustworthy than traditional marketing arrangements in terms of these dimensions of trade transactions

coordination commitment and enforcement the case of the merchant guild we interpret historical evidence in light of a repeated game model to conclude that merchant guilds emerged during the late medieval period to allow rulers of trade centers to commit to the security of alien merchants the merchant guild developed the theoretically required attributes secured merchants property rights and evolved in response to crises to extend the range of its effectiveness contributing to the expansion of trade during the late medieval period we elaborate on the relations between our theory and the monopoly theory of merchant guilds and contrast it with repeated game theories that provide no role for formal organization

market liberalization and integration of maize markets in malawi the paper studies the extent of market integration of maize markets in malawi in order to understand how it has been affected by market liberalization several measures of integration are introduced to analyze both the comovement of prices and the price adjustment process over time monthly retail prices of maize at eight main locations over the period january 1984 to december 1991 are considered the main conclusion is that liberalization has increased market integration

modelling trends in food market integration method and an application to tanzanian maize markets abstract pushed by increasing availability of price data and extensive market liberalisation efforts in many developing countries research on food market integration has evolved rapidly over the last two decades empirical methods to measure market integration diverged in two directions on the one hand there is the parity bounds model pbm using a switching regressions technique while on the other hand the use of threshold autoregressive tar models has been proposed this article provides a discussion on the two methods and argues that tar models are better able to capture the dynamics of the arbitrage process underlying interconnected markets furthermore we extend the standard tar model to include a time trend in both the threshold and the adjustment parameter using weekly maize price data on seven selected markets in tanzania we illustrate how both transaction cost and the speed of adjustment have changed during the nineties

international comparison of bank production characteristics and technological change in this paper we conduct an international comparison of bank production and technological characteristics the comparison is performed using novel evidence on changes in labour demand over the period 1980 89 for banks headquartered in canada france west germany italy japan and the united states the results suggest that there is relatively low substitutability of labour for capital in the production process of these banking organizations significant scale economies were found with regards to the expansion of output and the concomitant increase in labour in addition technological change operated to lower the quantity of inputs needed to produce a given level of outputs and increased the minimum efficient size bank over the sample period many of the production characteristics and technology effects varied significantly across countries these findings imply that intercountry differences in production characteristics and technological change should be explicitly recognized in bank strategic planning

exploring the logic behind southern africa s food crises summary government action during food crises in southern africa frequently exacerbates the problems driving food staple prices well beyond import parity we argue that an inability to make credible commitments due largely to a lack of trust between public and private sectors contributes to this dynamic empirical policy analysis can facilitate resolution only within a consultative process involving a broad range of stakeholders the policies emerging from such a process are not likely to approximate first best recommendations yet the precise policies may be less important than the fact that they exist and that main stakeholders find them credible

time varying volatility default and the sovereign risk premium this paper studies how changes in the volatility of aggregate income aect the sovereign spread i document a positive correlation between sovereign spreads and aggregate income volatility for a set of european economies then i propose a model with endogenous sovereign spread and time varying volatility to understand this fact i nd that volatility changes aect savings and the sovereign spread however the impact of volatility shocks is state dependent when the economy is relatively rich an increase in volatility generates precautionary savings instead when the economy is relatively poor an increase in volatility induces an increase in foreign debt and a higher spread this mechanism is absent in standard business cycle models and only appears because of the default option moreover this mechanism can generate a substantial variability of spreads only due to volatility shocks in this way the model is able to rationalize the positive correlation between sovereign spreads and volatility observed in the data

the terms of trade the real exchange rate and economic fluctuations this paper examines the relationship between terms of trade and business cycles using a three sector intertemporal equilibrium model and a large multicountry database results show that terms of trade shocks account for nearly one half of actual gdp variability the model explains weak correlations between net exports and terms of trade the harberger laursen and metzler effect and produces large and weakly correlated deviations from purchasing power parity and real interest rate parity terms of trade shocks cause real appreciations and positive interest differentials although productivity shocks have opposite effects the puzzle that welfare gains of international asset trading are negligible is left unresolved copyright 1995 by economics department of the university of pennsylvania and the osaka university institute of social and economic research association

false promise or false premise the experience of food and input market reform in eastern and southern africa abstract the literature on the effects of agricultural market reform in africa is sharply divided and inconsistent this article attempts to reconcile opposing viewpoints on the effects of food and input market policy reform in eastern and southern africa drawing from studies of ethiopia kenya malawi zambia and zimbabwe we argue that a major source of the controversy stems from assumptions that countries have actually moved to a liberalized market environment we find that many of the most fundamental elements of the reform programs either remain unimplemented were reversed within several years or were implemented in such a way as to negate private sector investment incentives a framework is developed for explaining why some countries have been able to liberalize their food and fertilizer markets while others have not these findings have implications for how donor assistance and policy oriented research can more constructively contribute to an improved policy environment

seasonal food crises and policy responses a narrative account of three food security crises in malawi summary this paper examines seasonal food price crises in malawi in the 2000s malawi experienced three episodes in which seasonal maize prices rose in 2001 02 2004 05 and 2007 09 by 354 218 and 395 respectively these extreme price spikes resulted from a sequential interaction of economic and political events a repeated pattern of cause inapt response and adverse outcome is identified the relative neglect in vulnerability analysis of staple food price movements as lead indicators of impending food crises is emphasized and implications are drawn for price stabilisation public private coordination and social protection policies

why do emerging economies borrow short term the authors argue that emerging economies borrow short term due to the high risk premium charged by international capital markets on long term debt they first present a model where the debt maturity structure is the outcome of a risk sharing problem between the government and bondholders by issuing long term debt the government lowers the probability of a liquidity crisis transferring risk to bondholders in equilibrium this risk is reflected in a higher risk premium and borrowing cost therefore the government faces a tradeoff between safer long term borrowing and cheaper short term debt second the authors construct a new database of sovereign bond prices and issuance they show that emerging economies pay a positive term premium a higher risk premium on long term bonds than on short term bonds during crises the term premium increases with issuance shifting toward shorter maturities this suggests that changes in bondholders risk aversion are important to understand emerging market crises

the impact of droughts and floods on food security and policy options to alleviate negative effects this article introduces an analytical framework for understanding the impacts of droughts and floods on rural livelihoods based on sen s entitlement approach and applies the framework to the recent food crises in malawi weather shocks trigger a sequence of entitlement failures which can result in a famine unless public action intervenes to mitigate these impacts policy responses can compensate for failures of production based entitlement free or subsidized input distribution labor based entitlement public works programs or employment based safety nets trade based entitlement grain reserve management or food pricing policies and transfer based entitlement food aid or cash transfers

what drives local food prices evidence from the tanzanian maize market this study quantifies the relationship between tanzanian and external maize markets while also accounting for domestic influences it concludes that external influences on domestic prices originate from regional rather than global markets it also shows that compared to external factors domestic factors exert a greater influence on tanzanian maize markets further the mechanisms through which trade policies influence maize markets involve interactions with both external market shocks and domestic weather shocks overall it provides evidence that the intermittent imposition of export bans in tanzania has had adverse impacts on its maize markets and consequently on the development of its agrarian economy

rules versus discretion in food storage policies this article compares various policies in a rational expectations food storage model with risk averse consumers and missing insurance markets calibrated to represent a developing country i consider an optimal storage policy under discretion and two optimal simple rules a constant private storage subsidy and a price band the storage subsidy achieves welfare gains similar to the discretionary policy the price band maximizing social welfare is a price peg scheme the floor and ceiling prices are the same and the capacity constraint represents 11 of the steady state production level this price band achieves three quarters of the gains from the optimal policy under discretion

the spanish automotive industry scale economies and input relationships this paper investigates the existence of economies of scale in the spanish automobile industry as well as the substitution possibilities between input pairs and the direct and cross price elasticities of demand for the various inputs by estimating a translog cost function for both a three input model involving capital labour and intermediate goods as well as a four input model where energy is separated from other intermediate goods the results of this study are consistent with the hypothesis of economies of scale in the spanish automobile industry particularly at the low and mean levels of output these results also are consistent with the hypothesis that capital is a substitute for the other inputs but that labour and intermediate goods are complements labour and energy also appear to have a complementary relationship over most of the data points in this study the significance of a complementary relationship between labour and intermediate goods is that any attempt by the spanish government to res

production and costs in the south african motor vehicle industry this study investigates the existence of economies of scale in the south african motor vehicle industry as well as the substitution possibilities between input pairs and the direct and cross price elasticities of demand for the various inputs because of data limitations a translog cost function was estimated for only a three input model corresponding to a homogeneous production function involving capital labour and intermediate goods the issue of the existence of economies of scale in the south african motor vehicle industry is a particularly important one because south africa once again is a member of gatt and a full participant in the international trade arena the null hypothesis of constant returns to scale was rejected at the 0 5 level of significance thus the results of this model are certainly consistent with economies of scale in the south african motor vehicle industry the estimated direct price elasticities were consistent with the hypothesis that during the past two decades capital wa

exploitative briefcase businessmen parasites and other myths and legends assembly traders and the performance of maize markets in eastern and southern africa summary small scale assemblers are both the most vilified and least understood actors in food value chains in sub saharan africa drawing on data from kenya zambia malawi and mozambique this article explores how maize assemblers influence the market access conditions of small scale farmers assembly markets for maize are found to be highly competitive in terms of the number of traders operating and marketing margins farmers market access conditions in remote areas are particularly improved by the operation of assembly traders direct state operations in markets have sometimes unintentionally exacerbated market access conditions for farmers through their effects on rural assembly markets while smallholder farmers face important marketing challenges the brightest prospects for effectively addressing them require greater support for the development of competitive assembly markets rather than supplanting them

spatial price efficiency in mozambique s post reform maize markets maize zea mays shortages and maize price instability continue to occur in mozambique in spite of policy reforms and great capacity for increased production in northern mozambique this study measured the efficiency of spatial maize price arbitrage in mozambique s post reform period spatial price inefficiency does not seem to explain why food shortages continue to occur in mozambique suggesting nonprice market constraints such as poor infrastructure and poor market institutions as more likely explanations baulch s spatial efficiency test indicated that it is not profitable to ship maize from northern surplus maize regions to southern mozambique records of interregional maize shipments show that indeed grain is not being shipped from the north to the south market liberalization may have improved spatial price efficiency but high transfer costs still limit trade and potential benefits from freeing markets under these circumstances food shortages and price instability are likely to continue

multiple regime spatial price transmission with an application to maize markets in southern africa conventional threshold models of price transmission allow for different speeds of adjustment to equilibria depending on the magnitude of price differentials between markets however these models typically assume only one underlying long run equilibrium price relationship in this article we develop a framework for allowing multiple equilibria and multiple speeds of adjustment with regime separation depending on the magnitude of trade flows between regions rather than the magnitude of price differentials applying this framework to maize price transmission between south africa and zambia shows no transmission during periods of high imports when the government was heavily involved in maize importation but stronger transmission during periods of low imports when the government was not importing copyright 2012 oxford university press