information acquisition and under diversification if an investor wants to form a portfolio of risky assets and can exert effort to collect information on the future value of these assets before he invests which assets should he learn about the best assets to acquire information about are ones the investor expects to hold but the assets the investor holds depend on the information he observes we build a framework to solve jointly for investment and information choices with general preferences and information cost functions although the optimal research strategies depend on preferences and costs the main result is that the investor who can first collect information systematically deviates from holding a diversified portfolio information acquisition can rationalize investing in a diversified fund and a concentrated set of assets an allocation often observed but usually deemed anomalous copyright wiley blackwell

private agri food standards implications for food policy and the agri food system abstract this paper provides a brief introduction to the evolution and nature of private food safety and quality standards highlighting the resultant impacts on the structure and modus operandi of supply chains for agricultural and food products and the challenges posed for processes of agricultural development it serves as an introduction to a series of papers that provide a comprehensive overview of the current state of knowledge regarding private food safety and quality standards in both an industrialised and developing country context in so doing it aims to provide a catalyst for further research on this rapidly evolving field of inquiry

economic news exchange rates and interest rates the paper esamines the post october 1979 response of exchange rates and interest rates to the new information contained in the first announcement of fifteen us macroeconomic series illarkets respond primarily to monetary news but also to news about the trade deficit domestic inflation and variables that reflect the state of the business cycle for all fifteen macroeconomic variables an increase decrease in interest rates is accompanied by an appreciation depreciation of the dollar which is consistent with models that stress price rigidity and absence of purchasing power parity the effect of economic news on asset prices has received increasing attention in the economic literature because an outcome of the efficient markets rational expectations hypothesis is that flesible asset prices change the moment new information about future fundamentals arrives in the market in the exchange rate literature the role of news has gained importance because structural models have failed to predict most of the variation in exchange rates during the 1970s see imeese and rogoff 1983 researchers were naturally led to investigate the types of news that make exchange rates so volatile and to utilize news in order to test which model of exchange rate determination is consistent with the floating eschange rate experience notable studies are those of dornbusch 1980 frenkel 1981 edwards 1982a b 1983 copeland 1984 and rose 1984 in this paper i also examine the effects of macroeconomic news on eschange rates but i adopt a different more direct strategy one that complements previous work avoids some of its shortcomings and promises interesting conclusions i examine the instantaneous response of exchange rates the moment a piece of economic news hits the market if one can isolate the exact time during a business day when news arrives it is straightforward to examine the response of exchange rates because financial data are continuously available the advantages of the present methodology are many first it is possible to identify the exact types of economic news and how they affect exchange rates second the simultaneity bias which plagues the previous literature on exchange rates and news is not present here the independent variables that represent news can be interpreted as causal the paper was presented at the 1985 meeting ofthe american economic association the author wishes to thank sebastian edwards r w hafer nicholas karamouzis andrew rose and two anonymous referees for helpful comments kim rupert of the money market services for providing the survey data soo kounne for able research assistance and barnard college for research support

managing the dollar has the plaza agreement mattered this paper considers whether the plaza agreement of september 1985 marked the beginning of a fundamental shift in the exchange rate policy regime for the united states the former west germany and japan the paper uses a simple monetary model of the open economy to illustrate how the exchange rate responses to news about the trade balance when the government authorities gear policy toward resolving external imbalances the paper finds that u s dollars exchange rates against the japanese yen and the west german mark respond strongly to news about the u s trade deficit during the period following the plaza agreement but not during the period preceding the agreement this evidence evaluated in the context of the simple model suggests that the plaza agreement marked a significant shift toward more active government management of exchange rates copyright 1991 by ohio state university press

consumer preferences for cowpea in cameroon and ghana consumer preference information is essential to targeting research this paper reports an effort of a multi disciplinary team to measure the market value of cowpea characteristics five samples were purchased once per month in seven markets in ghana and cameroon starting in september 1996 in the market price and vendor characteristics were noted in the laboratory size of grains testa color testa texture eye color and damage levels were recorded a hedonic pricing regression model was used results indicate that grain size is the most important characteristic consumers seem more sensitive to bruchid callosobruchus maculates damage than hypothesized cowpeas with white testa command a clear premium only in one of the ghanaian markets in ghana black eyes sell at a premium but in cameroon black eyes are discounted in general this study indicates that quality characteristics are very important in west african food markets even low income consumers are willing to pay a premium for products that match their preferences and they are vigilant in identifying products that do not meet their standards purchasing samples on a regular basis and hedonic pricing offers a practical way for biological scientists and economists to work together to measure these consumer preferences

how should consumers willingness to pay be measured an empirical comparison of state of the art approaches abstract this study compares the performance of four commonly used approaches to measure consumers willingness to pay with real purchase data real the open ended oe question format choice based conjoint cbc analysis becker degroot and marschak s bdm incentive compatible mechanism and incentive aligned choice based conjoint icbc analysis with this five in one approach the authors test the relative strengths of the four measurement methods using real as the benchmark on the basis of statistical criteria and decision relevant metrics the results indicate that the bdm and icbc approaches can pass statistical and decision oriented tests the authors find that respondents are more price sensitive in incentive aligned settings than in non incentive aligned settings and the real setting furthermore they find a large number of none choices under icbc than under hypothetical conjoint analysis this study uncovers an intriguing possibility even when the oe format and cbc analysis generate

estimating price discounts for low quality maize in sub saharan africa evidence from benin summary this article uses household data from benin to estimate the extent that markets in sub saharan africa discount damaged maize stated preference methods indicate that a 10 increase in insect damage results in a 9 maize price discount however revealed preference methods indicate that this discount is only 3 discounts are larger immediately after harvest than they are in the lean period when maize is scarce our results help explain why many smallholder farmers sell maize at harvest rather than making the effort to preserve grain of good quality for later in the season when it may fetch a higher price

estimating the private benefits of vaccination against cholera in beira mozambique a travel cost approach abstract this paper reports the results of the first study that estimates households private demand for cholera vaccines using the travel cost method we take advantage of an unusual natural experiment in january 2004 more than 41 000 residents from various locations in beira mozambique received two doses of oral cholera vaccine free of charge during the first vaccination trial to test its effectiveness in an endemic cholera zone of africa about 30 000 people participated from outside the target zone resulting in long queues and an average waiting time of about 85 min per dose we estimated travel cost models of the revealed demand for cholera vaccines among households informed of the trial using information collected in in person interviews conducted during the summer of 2005 to explore households participation in the trial we used standard and zero inflated household count models for all household members and dichotomous choice models for the head of the household our analysis shows that the quantity of vaccines obtained by households and the likelihood of participation decreased as travel cost in time and transport expenses rose our best estimates of per capita willingness to pay for the two required doses of cholera vaccine are about 0 85 usd these estimates are sensitive to the assumed value of time spent acquiring vaccines

stock prices and economic news this paper examines the daily response of stock prices to announcements about the money supply inflation real economic activity and the discountrate except for the discount rate survey data on market participants expectations of these announcements are used to identify the unexpected component of the announcements in order to test the efficient markets hypothesis that only the unexpected part of any announcement the surprise moves stock prices the empirical results support this hypothesis and indicate further that surprises related to monetary policy significantly affect stock prices there is only limited evidence of an impact from inflation surprises and no evidence of an impact from real activity surprises on the announcement days there is also only weak evidence of stock price responses to surprises beyond the announcement day this abstract was borrowed from another version of this item

elastic attention risk sharing and international comovements in this paper we examine the effects of elastic information processing capacity or elastic attention proposed in sims 2010 on international consumption and income correlations in a tractable small open economy soe model with exogenous income processes we find that in the presence of capital mobility in financial markets elastic attention due to a fixed information processing cost lowers the international consumption correlations by generating heterogeneous consumption adjustments to income shocks across countries facing different macroeconomic uncertainty in addition we show that elastic attention can improve the model s predictions for the other key moments of the joint dynamics of consumption and income

balance of trade announcements and movements in exchange rates there is a growing literature on the effect of economic news on foreign exchange rates the effects of weekly money supply announcements on exchange rates have been empirically investigated by a number of researchers over a variety of periods 1 2 3 4 7 11 12 13 the response of foreign exchange rates to other types of economic information has also been studied for example dornbusch 5 uses innovations in the current account cyclical factors and interest rates frenkel 10 uses innovations in interest rate differentials edwards 6 uses innovations in money real output and real interest rates most recently hardouvelis 14 studies the market response of three interest rates and seven exchange rates to economic news on fifteen economic aggregates including monetary announcements inflation rate announcements and announcements reflecting the stage of the business cycle this paper studies short run movements in foreign exchange rates to the commerce department s monthly announcements of the u s balance of merchandise trade it extends previous studies of foreign exchange response to economic news in three ways first by studying the response to the trade announcement which occurs two months after the month to which the announcement refers the paper provides a more precise measure of the response to the news content of trade related announcements than earlier studies this for instance is an improvement over dornbusch s 5 definition of current account news as the innovation in the actual oecd organization for economic co operation and development biannual current account estimates second the paper studies not only movements in spot rates to the announcement but calculates the movements in forward premiums to this information by studying the response in forward premiums to the merchandise trade announcements the paper examines whether the information in the announcements implies effects that operate through capital flows and interest rates in addition to responses that operate through the flow of merchandise trade

robustness information processing constraints and the current account in small open economies article i nfo in this paper we examine the effects of two types of induced uncertainty model uncertainty due to robust ness rb and state uncertainty due to finite information processing capacity called rational inattention or ri on consumption and the current account we show that the combination of rb and ri improves the model s predictions for i the contemporaneous correlation between the current account and income and ii the volatility and persistence of the current account in small open emerging and developed economies in addition we show that the two informational frictions improve the model s ability to match the impulse response of consumption to income and the relative volatility of consumption to income growth

is there a j curve abstract if the response of the value of the trade balance to movements in the real exchange rate is described by a j curve then a real depreciation initially worsens a balance of trade deficit only improving it over time this paper investigates whether a j curve can be detected in the last twenty five years of american data no statistically reliable evidence of a stable j curve is detected the model is checked extensively to support this finding

effect of certified organic production systems on poverty among smallholder farmers empirical evidence from kenya summary this study evaluates the effect of certified organic production on poverty in smallholder production systems data was collected from cross sectional survey of local market oriented peri urban vegetable and rural honey producers in kenya poverty was measured using the multidimensional poverty methodology and endogenous switching probit model used to assess the effect of certified organic production on multidimensional poverty findings were that certified producers were less likely to be multidimensional poor compared to their counterfactual case of not participating in organic certification schemes additionally noncertified producers would be less likely to be poor if they were to participate in organic certification production

welfare gains from quality certification of infant foods results from a market experiment in mali in low income countries malnutrition is often most severe among infants of six to twenty four months they need higher density foods than the family diet but density is a credence attribute we hypothesize that the premium now paid for heavily advertised brands reflects demand for quality assurance which could be provided at lower cost to competing firms through third party certification we use a new market experiment to find that mothers average willingness to pay for certification is about 1 75 kg or four times its cost so that total economic surplus gains from introducing certification to mali would be on the order of 1 million annually

portfolio choice attention allocation and price comovement abstract this paper models the attention allocation of portfolio investors investors choose the composition of their information subject to an information flow constraint given their expected investment strategy in the next period which is to hold a diversified portfolio in equilibrium investors choose to observe one linear combination of asset payoffs as a private signal when investors use this private signal to update information about two assets changes in one asset affect both asset prices and may lead to asset price comovement the model also has implications for the transmission of volatility shocks between two assets

why is consumption so smooth for thirty years it has been accepted that consumption is smooth because permanent income is smoother than measured income this paper considers the evidence for the contrary position that permanent income is in fact less smooth than measured income so that the smoothness of consumption cannot be straightforwardly explained by permanent income theory the paper argues that in postwar u s quarterly data consumption is smooth because it responds with a lag to changes in income

information immobility and the home bias puzzle many argue that home bias arises because home investors can predict home asset payoffs more accurately than foreigners can but why does global information access not eliminate this asymmetry we model investors endowed with a small home information advantage who choose what information to learn before they invest surprisingly even when home investors can learn what foreigners know they choose not to investors profit more from knowing information others do not know learning amplifies information asymmetry the model matches patterns of local and industry bias foreign investments portfolio outperformance and asset prices finally we propose new avenues for empirical research

trade balance news and exchange rates is there a policy signal abstract contrary to earlier studies surprisingly large us trade deficits are shown to have a significant effect on exchange rates throughout the 1980s three possible reasons for the time varying effect are considered the evidence presented yields the following inference deficit news is likely to have changed expectations of fed intervention that moved exchange rates deficit news probably has an effect on revisions of future deficit expectations and exchange rates change as a result and deficit news may change expectations regarding us trade policy that is reflected in exchange rates

estimating consumer willingness to pay for food quality with experimental auctions the case of yellow versus fortified maize meal in kenya biofortification of maize with provitamin a carotenoids is a new approach to the alleviation of vitamin a deficiencies in africa unfortunately these varieties are yellow or orange while consumers generally prefer white consumer willingness to pay for yellow and fortified maize was compared in experimental auctions in three regions in kenya the premium that consumers are willing pay for fortified maize 24 was higher than the discount they require to buy yellow maize 11 and in one zone consumers prefer yellow yellow color is therefore not an impossible obstacle for biofortified maize although it would clearly be easier to introduce this maize first in regions where yellow maize is currently grown

robustly strategic consumption portfolio rules with informational frictions this paper provides a tractable continuous time constant absolute risk aversion gaussian framework to explore how the interactions of fundamental uncertainty model uncertainty due to a preference for robustness and state uncertainty due to information processing constraints rational inattention affect strategic consumption portfolio rules and precautionary savings in the presence of uninsurable labor income specifically after solving the model explicitly i compute and compare the elasticities of strategic asset allocation and precautionary savings to risk aversion robustness and inattention furthermore for plausibly estimated and calibrated model parameters i quantitatively analyze how the interactions of model uncertainty and state uncertainty affect the optimal share invested in the risky asset and show that they can provide a potential explanation for the observed stockholding behavior of households with different education and income levels this paper was accepted by neng wang finance

estimating market demand for fresh yam characteristics using contingent valuation implications for crop breeding and production choices this study uses the box cox bc transformations to examine nonlinearity in price modeling and compare results from several functional specifications in hedonic price analysis of yam in togo based on a sample of 6 402 observations on price and produce characteristics generated through a market experiment it is found that the bc quadratic asymmetric specification is the most suitable function several characteristics are valued more than others and prices vary across species time and market sites some residual symptoms of pest and disease damages on yam tubers reduce their market values tuber weight exhibits a diminishing marginal value and price per kilogram decreases above an optimum size therefore producers do not derive additional reward from extra large tubers we conclude that to effectively access and benefit from urban markets producers should focus on small size low weight and conical shaped tubers which are easy to process and meet the esthetic qualities preferred by urban consumers the implications for research on improved variety development to reduce poverty and for crop and resource management practices are drawn

measurement of the unexpected us trade deficit abstract monthly announcements from 1980 through 1992 of the us overall and bilateral balance of trade figures and revisions of previous announcements are examined in detail the unexpected trade deficit is measured as the difference between the announced overall trade deficit and the median survey measure from money market services survey expectations are found to incorporate publicly available information a surprisingly large trade deficit is associated with expectations of larger future trade deficits unexpected bilateral trade balances and revisions of previous overall balances which are released at the same time as the overall trade deficit significantly influence the canadian dollar and some us stock market indexes

consumption puzzles and precautionary savings abstract when marginal utility is convex agents accumulate savings as a precautionary measure against labor income eventualities this paper shows that precautionary savings can go a long way in making the excess growth excess smoothness and excess sensitivity features of consumption consistent with the stochastic processes of labor income observed in the u s at the microeconomic level

individual income incomplete information and aggregate consumption individual income is much more variable than aggregate per capita income i argue that aggregate information is therefore not very important for individual consumption decisions and study models of life cycle consumption in which individuals react optimally to their own income process but have incomplete or no information on economy wide variables since individual income is less persistent than aggregate income consumers will react too little to aggregate income variation aggregate consumption will be excessively smooth since aggregate information is slowly incorporated into consumption aggregate consumption will be autocorrelated and correlated with lagged income on the other hand the model has the same prediction for micro data as the standard permanent income model the second part of the paper provides empirical evidence on individual and aggregate income processes different models for individual income are fit to quarterly data from the survey of income and program participation making various adjustments for measurement error calibrating the consumption model using the estimated parameters for the income process yields predictions which qualitatively correspond to the empirical findings for aggregate consumption but do not match them well in magnitude

balance of trade announcements and asset prices influence on equity prices exchange rates and interest rates abstract this paper examines the informational impact of traded balance announcements on asset prices including equities currrencies long and short term debt instruments and financial futures this study finds that in the 1980s prior to the 1985 plaza agreement for international economic cooperation information in trade balance announcements seem to have influenced only interest rates however in the 1985 1987 period such announcements also influenced stock prices and currency values these influences intensity further in the 1987 1988 period thus asset prices are sensitive to news in trade balance announcements and this sensitivity seems to have increased significantly in recent years with important implications for asset pricing models and economic policy formulation jel f30

the exchange rate exposure of u s multinationals this article examines the exposure of u s multinationals to foreign currency risk evidence is presented that the relationship between stock returns and exchange rates differs systematically across multinationals given these results the study focuses on the determinants of exchange rate exposure the comovements between stock returns and the value of the dollar is found to be positively related to the percentage of foreign operations of u s multinationals copyright 1990 by the university of chicago

putting their money where their mouths are consumer willingness to pay for multi ingredient processed organic food products in response to dramatically increasing adoption in consumer markets the national organic program nop initiated novel labeling standards for food products in the us in 2002 this program is a particularly relevant standardization effort for multi ingredient processed foods rather than a simple binary message organic or not gradations of organic content are now codified no existing published study evaluates consumer willingness to pay or motivation to purchase in response to such a rich organic label this article presents evidence of the impact of the nop through analysis of data collected in seven central ohio usa grocery stores results suggest that consumers are willing to pay premium prices for organic foods even those with less than 100 organic ingredients the magnitudes of wtp premia varied significantly among consumer groups suggesting that targeted marketing may be effective for organic merchandisers

trade deficit announcements intervention and the dollar abstract the effect of u s trade deficit announcements on the dollar exchange rate from 1980 1988 is examined the announcement is found to affect the dollar only after mid 1984 central bank intervention does not appear to have had a consistent impact on the dollar on the day of the announcement

model uncertainty and intertemporal tax smoothing in this paper we examine how model uncertainty due to the preference for robustness rb aects optimal taxation and the evolution of debt in the barro tax smoothing model 1979 we rst study how the government spending shocks are absorbed in the short run by varying taxes or through debt under rb furthermore we show that introducing rb improves the model s predictions by generating i the observed relative volatility of the changes in tax rates to government spending ii the observed comovement between government decits and spending and iii more consistent behavior of government budget decits in the us economy finally we show that rb can also improve the model s predictions in the presence of multiple shocks

unpacking postharvest losses in sub saharan africa a meta analysis summary reducing postharvest losses phl is a key pathway to food and nutrition security in sub saharan africa however knowledge of phl magnitudes is limited a meta analysis has been conducted to expose nature and magnitude of phl and the kinds of interventions that have been attempted to mitigate the losses findings reveal inadequacies of loss assessment methodologies that result in inaccurate phl estimates moreover losses are often economic rather than physical product losses overall technologies for loss mitigation fail to address dynamics of supply chains consequently rigorous phl assessment using systematic methodologies as well as holistic approaches for losses mitigation are in need 2014 published by elsevier ltd

will they buy it the potential for marketing organic vegetables in the food vending sector to strengthen vegetable safety a choice experiment study in three west african cities abstract considering the hazardous use of synthetic pesticides in vegetable production in urban west africa this research investigated the marketing potential of organic vegetables in the food vending sector of cotonou benin accra ghana and ouagadougou burkina faso certified organic production and marketing was examined as a potential strategy to improve chemical food safety a stratified random sampling strategy was applied to study the preferences of food vendors n 180 and consumers n 360 vegetable use risk perception choice preferences and willingness to pay wtp for organic certification were specifically analyzed the results showed that awareness of chemical contamination risks was generally low appearance of a product was central to vendor choice consumers attributed similar utility to taste and organic certification consumer wtp was calculated to be a premium of 1 04 usd per plate if the food served contained only certified organic vegetables in restaurants this would mean an average premium of 19 for a meal if certified organic vegetable production is to make a positive impact on food safety in urban west africa we suggest concentrating marketing efforts on the educated elite who frequent restaurants however considering that restaurant owners exhibited a lower preference for organic certification than lower class food vendors the marketing situation is difficult we therefore conclude that demand from the food vending sector alone will not institutionalize domestic certification mechanisms this underlines the need for public commitment to facilitating such change

the sensitivity of tests of the intertemporal allocation of consumption to near rational alternatives suppose a consumer sets consumption equal to income each period rather than following the optimal permanent income decision rule how much utility does he lose this paper finds that the answer is typically less than 10 cents 1 per quarter in environments specified by popular tests on aggregate data it includes calculations of the costs of excess sensitivity and excess smoothness to income and interest rate changes and the costs of ignoring information it concludes that the theory does not make predictions for aggregate tests that are robust to small costs such as information or transactions copyright 1989 by american economic association

robust permanent income and pricing i suppose there exists an extremely powerful and if i may so speak malignant being whose whole endeavours are directed toward deceiving me rene descartes meditations ii 1

optimal sticky prices under rational inattention this paper presents a model in which price setting firms decide what to pay attention to subject to a constraint on information flow when idiosyncratic conditions are more variable or more important than aggregate conditions firms pay more attention to idiosyncratic conditions than to aggregate conditions when we calibrate the model to match the large average absolute size of price changes observed in micro data prices react fast and by large amounts to idiosyncratic shocks but only slowly and by small amounts to nominal shocks nominal shocks have strong and persistent real effects we use the model to investigate how the optimal allocation of attention and the dynamics of prices depend on the firms environment jel e 3 e5 d8

implications of rational inattention abstract a constraint that actions can depend on observations only through a communication channel with finite shannon capacity is shown to be able to play a role very similar to that of a signal extraction problem or an adjustment cost in standard control problems the resulting theory looks enough like familiar dynamic rational expectations theories to suggest that it might be useful and practical while the implications for policy are different enough to be interesting

organic certification agro ecological practices and return on investment evidence from pineapple producers in ghana the recent empirical literature on economic sustainability of certified export crops shows that certification standards that enhance yields are important for improving farm revenues and household welfare however limited evidence exists on the impact of organic certification on the adoption of agro ecological practices in this study we use unique farm level data from pineapple producers in ghana to examine the impact of organic certification on the use of agro ecological practices such as organic fertilizers organic pest and weed control crop rotation and soil and water conservation as well as how using these measures affect farm outcomes such as return on investment our empirical results reveal that organic certification increases agro ecological practice use although from a very low starting point using a generalized propensity score approach we show that there is a positive but nonlinear relationship between the intensity of agro ecological practice use and return on investment

induced uncertainty market price of risk and the dynamics of consumption and wealth abstract in this paper we examine the implications of model uncertainty or robustness rb for consumption and saving and the market price of uncertainty under limited information processing capacity rational inattention or ri first we show that ri by itself creates an additional demand for robustness that leads to higher induced uncertainty facing consumers second if we allow capacity to be elastic rb increases the optimal level of attention third we explore how the induced uncertainty composed of i model uncertainty due to rb and ii state uncertainty due to ri affects consumption and wealth dynamics the market price of uncertainty and the welfare losses due to incomplete information we find that induced uncertainty can better explain the observed consumption income volatility and market price of uncertainty low attention increases the effect of model misspecification