what drives deregulation economics and politics of the relaxation of bank branching restrictions this paper investigates private interest public interest and political institutional theories of regulatory change to analyze state level deregulation of bank branching restrictions using a hazard model we find that interest group factors related to the relative strength of potential winners large banks and small bank dependent firms and losers small banks and the rival insurance firms can explain the timing of branching deregulation across states during the last quarter century the same factors also explain congressional voting on interstate branching deregulation while we find some support for each theory the private interest approach provides the most compelling overall explanation of our results

distinguishing between equilibrium and integration in spatial price analysis this article introduces a new spatial price analysis methodology based on maximum likelihood estimation of a mixture distribution model incorporating price transfer cost and trade flow data this method permits differentiation between market integration and competitive market equilibrium and derivation of intuitive measures of intermarket tradability competitive market equilibrium perfect integration segmented equilibrium and segmented disequilibrium one can also use these estimates to derive semiparametric measures of time varying regime probabilities to track changing market conditions an application to trade in soybean meal among pacific rim economies demonstrates the usefulness of the method copyright 2002 oxford university press

integration of spatial markets studies of spatial market integration draw their implications from a theory which assumes that there are no intraregional transport costs an alternative theory is offered based on the assumptions that buyers and sellers are spatially dispersed and intraregional transport costs are significant this implies that the market is a linked oligopoly or oligopsony and that market integration tests are tests of alternative oligopoly price formation processes for example collusive basing point pricing produces results typically assumed to imply efficiently integrated markets while competitive fob pricing does not the theoretical implications are illustrated with an analysis of hog prices in canada

independent central banks low inflation at no costs a widely held view suggests that politically independent central banks bring about relatively low and stable inflation rates a more debated question is whether one has to pay for this good outcome with more real instability in his seminal contribution kenneth rogoff 1985 suggests that an independent and inflation averse central bank reduces average inflation but as a result increases output variability the conservative central banker reduces the inflation bias due to the time inconsistency problem but stabilizes less however alesina and summers 1993 do not find that at least within the oecd countries more independent central banks are associated with more variability of growth or unemployment thus they conclude that independent central banks bring about low inflation at no apparent real costs the point of this paper is to provide theoretical underpinnings to this finding which is in contrast to rogoff 1985 2 the basic idea is that one can isolate two sources of output variability one is the economic variability induced by standard exogenous shocks that monetary policy is supposed to stabilize for instance money demand shocks or supply shocks the second source of variability is political or more generally policy induced this is the variability introduced in the system by the uncertainty about the future course of policy for instance alesina 1987 studies the effect of uncertain electoral outcomes in a model where the two contending parties have different preferences over inflation and unemployment an inflation averse independent central banker does not stabilize as much the economic variability in order to keep inflation low and stable this is rogoff s point however by insulating monetary policy from political pressures an independent central bank can reduce the political variability the overall effect of independence on output variability is thus ambiguous this result is consistent at least prima facie with the evidence in alesina and summers 1993 on the lack of correlation between centralbank independence and output variability in fact it is possible that when the politically induced output variability is predominant a more independent central bank reduces average inflation and the variance of output

market integration an application to international trade in cotton agricultural commodities are differentiated frequently by quality or country of origin this paper proposes two complementary tests bivariate price regressions and hedonic index estimation as methods to identify whether differentiated products are amenable to treatment as a homogenous commodity these price linkage tests represent necessary rather than sufficient conditions for aggregation and must be supplemented by information on market structure analysis of the international cotton market suggests a distinction between extra long and other staple lengths but not by country of origin after controlling for staple length

green revolution land reform and household income distribution in the philippines income of agricultural households consists of returns to labor capital and land from farming supplemented mainly by labor earnings from nonfarm sources agricultural technology affects farmers income through its effect on factor demands and factor prices which in turn induce changes in the allocation of farmers own resources to different uses income from farming is also affected by village institutions such as land tenure which governs the distribution of income between landlords and tenants as well as resource allocations

spatial price discrimination in agricultural product procurement markets a computational economics approach significant transport costs and spatially distributed supply and processing create oligopsony power in agricultural markets price discrimination expressed in the form of partial or complete absorption of freight charges by processors is often observed in these environments but we understand little about how these pricing decisions are made analytical approaches are often intractable as an alternative we propose a computational economics approach to analyze a general spatial competition model and study firms choices of spatial pricing policy instead of the commonly presumed free on board pricing we find that buyers choose price discrimination either through uniform delivered pricing or through partial freight absorption

evaluating the integration of contiguous discontinuous markets this paper applies the concepts of structural models of markets market integration and market discontinuity to show that discontinuous markets alter the integration characteristics of continuous markets when analyzing systems of contiguous markets some of which are discontinuous it appears that the continuous markets are less well integrated when the discontinuous markets are operating than when they are not operating

dynamic equilibrium in markets for perennial crops a dynamic equilibrium model for perennial crop markets is formulated price expectations are formed according to perfect foresight and both the age composition of the crop and the optimal rotation are determined endogenously the model is applied to the california alfalfa market the calculated long run equilibrium acreage is quite close to average acreage over the base period the results also exhibit cyclical fluctuations in acreage with a six percent coefficient of variation thus cyclical behavior can arise from technical characteristics of the production process as well as from imperfectly formed expectations or random exogenous shocks

a variance components approach to food grain market integration in northern nigeria a variance components methodology is developed for joint tests on a sample of time series of prices for seasonal differences in the price integration of markets the approach requires a statistically adequate number of observations for each market within seasons characterized by constancy of transactions costs among markets the model is applied to eighteen months of weekly grain prices for twenty two villages in northern nigeria results suggest that markets are not well integrated in the six months covering the harvest period implications are drawn for research on market performance in the region

spatial pricing with differentiated products this paper generalizes analysis of spatial pricing policies to cases in which oligopolists produce differentiated products it is shown that spatial price discrimination through freight absorption is affected by the number of competitive firms the extent to which their products are substitutes and by the locations such firms adopt in the market it is further shown however that spatial price discrimination may be the consequence of collusive agreements or of attempts to anticipate competitors actions the simple spaceless foundations of current policies on spatial pricing need to be reexamined but this reexamination must take into account interconnections between producers the extent to which their products are differentiated and their locations

causality tests in livestock markets bivariate time series models and related topics of exogeneity and granger causal orderings have received much attention from economists over the last decade examples in the macroeconomic literature include relationships between money and income sims 1972 feige and pearce money and interest rates pierce and wages and prices geweke 1975 in agricultural markets research in this area includes the sorting out of leads and lags between farm wholesale and retail prices heien miller acreage allotments and acreage supply response weaver and alternative price quotes for eggs bessler and schrader the methods used in these studies are empirical because they allow the data to specify the dynamic relationship between two variables economic theory is used only to suggest the variables to be related often theory is ambiguous on the explicit lead lag relationships between important variables and the variables themselves in such cases one can or must rely on strictly empirical methods burks discusses the complementary relationship between empirical and theoretical methods in scientific investigations agriculturalists interested in explaining producer behavior and forecasting livestock price and quantity movements have long grappled with problems of leads and lags attempts to explain short run movements in live cattle and hog inventories or slaughter levels using price variables have at times yielded unsatisfactory results for example shortrun quantity response to price change was found to be negative for cattle nelson and spreen myers havlicek henderson however a positive relation begins to appear with longer lengths of run the theory of optimal investment under risk explains this type of relationship that is treating cattle as both investment goods and as final products will generate the negative short run response of quantity to price such theory however will not be explicit about the particular lead lag relationships to be encountered most modern theories of decision making under risk suggest that such lags are dependent upon subjective probabilities of individual economic agents if one is unwilling to accept the existence of a rational probability following definetti then he will not be able to specify a priori the explicit leads and lags in a particular investment problem one must look at the data and infer such relationships this paper examines the lead lag relationships between livestock prices and various causal variables suggested by theory it explicitly tests the exogeneity of cattle on feed cattle slaughter and income on live cattle prices and the exogeneity of sow farrowings hog slaughter and income on live hog prices although explicit dynamic multivariate models are not formulated the paper s results do provide background evidence useful for their ultimate construction granger and newbold 1977 chap 7

why a stubborn conservative would run a deficit policy with time inconsistent preferences a conservative government in favor of a low level of public consumption knows that it will be replaced by a government in favor of a larger level of public consumption we show that the resulting level of public consumption is in between the levels the two governments would choose if each were in power both in the present and in the future in particular we show that if the conservative government is more stubborn in a particular sense than the succeeding government the conservative government will borrow more than it would had it remained in power in the future

the extent of the market examines the classical theory of the market in this paper authors consider the role of price market determination price movement in competitive and monopolistic markets extension of commodity markets

price transmission analysis a flexible methodological approach applied to european pork and lamb markets the study of spatial price relationships helps to explain market performance and their degree of integration applying only one method of analysis may not be flexible enough to account for the complex interactions of prices in separated markets this paper complements usual cointegration tests with a description of dynamic features and patterns of causality among price series the method proposed is applied to study spatial pork and lamb prices relationships within the eu in the period 1988 1995 the results indicate that european markets for both commodities are integrated not only in the long run but in the short run as well although the price transmission process is more efficient in the porkmeat industry

pricing efficiency in centralized and noncentralized markets pricing efficiency in centralized markets is compared with that in noncentralized markets on the basis of a price formation model centrally discovered prices are hypothesized to adjust more slowly to equilibrium but to have lower unpredictable variability than noncentrally discovered prices these hypotheses are borne out strongly in market experiments mean squared error is found to be lower in centralized than in noncentralized trading suggesting centralized markets are the more price efficient

geographic markets causality and railroad deregulation this paper presents an approach to defining a market using the notion of instantaneous causality the market for which the approach is empirically implemented is the flour market in the united states over the period january 1979 through october 1982 one anomaly over this period was the deregulation of railroad rates in october 1980 the empirical results based on three spatially diffuse cities suggest that the market is national in scope and that after railroad deregulation the price interrelationship between cities was strengthened

how integrated is the indian wheat market abstract applying the momentum threshold autoregressive m tar model due to enders and granger enders w and granger c w j 1998 unit root tests and asymmetric adjustment with an example using the term structure of interest rates journal of business and economic statistics 16 3 pp 304 311 this article examines the relationship between the various prices of wheat quoted at different market centres in four indian states we find evidence of m tar asymmetric adjustments of wheat prices indicating that price signals within states are transmitted over time in an asymmetric manner this type of price adjusting behaviour is consistent as to how price differentials may respond to poor dissemination of knowledge regarding market conditions and high transactions costs the results offer important policy implications

possible adverse effects of increasing block water tariffs in developing countries ture in which a commodity is priced at a low initial rate up to a specified volume of use block then at a higher or several increasingly higher rates for additional blocks used the ordinary household municipal water bill in developing countries is often calculated on some sort of ibt structure and donor organizations and consultants continue to recommend this practice for town and city water systems the majority of world bank sponsored water tariff studies conducted since 1970 for example have recommended the use of increasing block water tariffs there are two commonly accepted justifications for using ibts the first based on a rationale of equity is that ibts should assist low income households and ensure an equitable allocation of the costs of water production and distribution the argument in this case is that low income households use less water than high income households because they have fewer water using appliances and are less likely to have large lawns and gardens an ibt results in higher marginal prices to the customer and thus higher average prices for higher income households the price of water in the initial block may be set very low usually at a subsidized rate to ensure that the poor are not discouraged from using the amount of water considered essential for human needs typically estimated at 25 50 liters per capita per day the price of water in the initial block is thus sometimes termed the lifeline rate the second justification for ibt structures is that the higher prices charged beyond the initial block discourage extravagant water use and promote water conservation both these justifications for ibts assume that each household has

political shocks and public debt the case for a conservative central bank revisited abstract we explore the dynamics of public debt and optimal institutions in the presence of political shocks arising from electoral uncertainty under commitment optimal stabilization is established by combining an inflation target with a debt target the inflation target should be contingent on the political shocks while the debt target forces the government to fully absorb the political shocks in the period in which it occurs in the absence of such inflation and debt targets but with monetary commitment a conservative central bank enhances stabilization an even more conservative central bank is optimal if monetary policy cannot commit

testing market integration a model of spatial price differentials for a tradable good is proposed which avoids the inferential dangers of received methods using static price correlations the proposed method also extracts more information on the causes of price differentials from the same data the method is illustrated using monthly rice price data for postindependence bangladesh including the very substantial regional price shocks during the 1974 famine impediments to market integration are indicated

on market integration and liberalisation method and application to ethiopia the article suggests further improvements in the methodology to analyse market integration it provides corrections to and methodological extensions of recent work in this journal it also presents a way of applying market integration techniques to the analysis of shocks such as market liberalisation and war the method is applied to the effects of liberalisation and the end of the civil war on food markets in ethiopia the conclusion is that liberalisation had important effects on the long run and short run integration of food markets