trade interdependence the international financial institutions and the recent evolution of sovereign debt renegotiations abstract this paper analyzes the effect of a debtor country s pattern of trade with commercial creditors home countries on the outcome of debt rescheduling negotiations the analysis reveals that a debtor country with more market power has greater leverage in a three way debt rescheduling negotiation that includes the debtor country its creditors and the international financial institutions ifis the paper also considers the effects of the ifi sovereign debt policy on the bargaining power of the parties in debt rescheduling negotiations two bargaining frameworks analyzed and compared in the paper represent the negotiation mechanism at different stages of the ifi sovereign debt policy evolution

hedging production risk with options the expected utility maximization problem is solved for producers with both price and production uncertainty who have access to both futures and options markets introduction of production uncertainty alters the optimal futures and options position and almost always makes it optimal for the producer to purchase put options and to underhedge on the futures market simulation results lend support to the practice of hedging the minimum expected yield on the futures market and hedging remaining expected production against downside price risk using put options the results are strengthened if the producer expects local production to influence national prices and if risk aversion is higher at low income levels

production under price uncertainty with imperfect time hedging opportunities in futures markets the use of futures markets for the purpose of hedging output subject to price uncertainty has been the focus of several recent studies danthine 4 feder just and schmitz fjs 5 and holthausen 7 argue that the producer s ability to sell output forward in the futures market i e to become a short hedger effectively insulates the optimal production decision from the effects of price uncertainty this result is in marked contrast to the standard treatment of production under price uncertainty e g sandmo 14 and batra and ullah 2 where output in the absence of hedging opportunities is an increasing function of the producer s expectation of the output s future spot price and a decreasing function of his degree of risk aversion and the amount of price risk it is important to note however that this optimality property of futures markets crucially relies upon the implicit assumption that producers are able to obtain perfect time hedges i e the delivery date of the futures contract coincides with the marketing date of the output in actuality of course this circumstance is quite rare due to institutional restrictions i e contracts traded on organized commodity exchanges have standardized maturities usually at three month intervals so that typically producers must either overhedge or underhedge temporally e g hedge output coming to fruition in four months with either a three month or six month futures contract this paper examines the implication of this reality for the optimal production and hedging decisions of producers and establishes that in general the optimality result does not hold in addition a more general model which does not make the

demand for prepared meals by u s households using the 1987 88 nfcs a heckman two stage procedure was used to estimate the demand for prepared meals by u s households prepared meals were defined as those ready to eat and those ready to cook households headed by younger more educated and time constrained managers were more likely to purchase prepared meals income elasticities ranged from 0 07 to 0 13 while own price elasticities ranged from 0 23 to 0 66 evidence exists to indicate that prepared meals and food away from home are substitutes the presence of teenagers in a household is positively associated with expenditures of prepared meals

the us retail demand for fish products an application of the almost ideal demand system the main objective is to address the limitations of past us fish demand research through the development of a variation of the almost ideal demand system model for disaggregate fish products at the retail level price and expenditure elasticities as well as elasticities of substitution between fish products and other protein commodities determined from this work may be used in the context of fisheries management and market development and promotion results indicate that with the exception of shellfish demand for the various fish products is relatively inelastic cross price elasticities are generally moderate while expenditure elasticities are large and positive for fresh fish and shellfish demographic effects especially geographical division season race occupation age sex household composition and price income interaction as a proxy for quality are highly significant variables

demand for food fats and oils the role of demographic variables and government donations a systems model of u s food fats and oils demand is estimated using quarterly time series data for the period 1962 87 demographic scaling is used to incorporate demographic variables and per capita government butter donations in addition to price income and demographic demand elasticities dietary fat intake elasticities are calculated for each of the demographic characteristics included in the study all of the five own price elasticities are statistically significant as are fifteen of the twenty cross price elasticities fourteen of the fifteen demographic elasticities are statistically significant

the time pattern of hedging and the volatility of futures prices the paper proposes a multi period model of hedging which allows for a futures position to be revised within the cash market holding period within this framework we assess the robustness of the two period theory of hedging when generalized to many periods we characterize the normal time path of a hedge and the way it is affected by the requirement that futures accounts mark to market daily finally we show how the resolution of production uncertainty over time affects hedging behavior and determines the volatility of futures prices in the large literature on hedging in futures markets the principal analytical accounts of hedging are framed in a two trade date setting an agent commits himself now to a future purchase or sale of a good whose cash price later is uncertain this risk is hedged by purchase or sale of an appropriate number of futures contracts and holding this futures position until the cash transaction is realized in the present paper we formulate a multi period model of hedging which allows for the futures position to be revised within the cash market holding period the resulting analysis captures an important institutional reality that is absent in a two trade date model namely the fact that the day to day fluctuations of the futures price will generate a series of random cash flows over the period during which a futures position is held this is due to the requirement that futures accounts mark to market daily within this framework we address a number of issues first we assess the robustness of the two period theory of hedging when generalized to many periods second we characterize the normal time path of a hedge and contrast futures and forward contracts from the perspective of an individual hedger finally we show how the resolution of production uncertainty over time affects hedging behaviour and determines the volatility of futures prices while the literature on asset demand in a multiperiod setting is large futures markets are specifically treated in a limited number of studies grauer and litzenberger 1976 are concerned principally with characterizing the relation of spot and futures prices in a market for a storable periodically produced commodity they offer a rationale for positive stock holding in markets where spot price exceeds the futures price richard and sundaresan 1980 are also concerned primarily with characterizing price behaviour since they posit identical consumers in equilibrium individual holdings of futures are zero there is no hedging activity in the sense that we understand it breeden 1980b analyzes the optimal futures position sizes in a multiperiod setting his framework is more general than ours in that his is a multi good multi asset model where preferences

methods for selecting the optimal dynamic hedge when production is stochastic a dynamic hedging problem with stochastic production is solved the optimal feedback rules recognize that future hedges will be chosen optimally based on the most current information the resulting distribution of revenue is analyzed numerically this analysis enables the hedger to select his appropriate level of risk aversion

household food demand in burkina faso implications for food policy abstract chronic food production deficits since the early 1970s have prompted policymakers of burkina faso to emphasize technological research with the goal of increasing the production of the most consumed locally grown cereals sorghum millet and maize meanwhile urban consumers have been developing preferences for rice and wheat cereals that are primarily imported this study estimates demand relationships among food items in ouagadougou burkina the results of the estimation suggest that prices income household composition education marital status and urbanization were jointly important in explaining household expenditure allocations both local and imported cereal consumption responded positively to an income increase however incremental income changes would lead to relatively greater consumption of locally produced cereals by low income households whereas high income households would consume relatively more wheat and rice the household model is then used to demonstrate its relevance in addressing food policy issues by forecasting the levels of urban grain demand under alternative income and demographic scenarios with increased production due to advances in technology the urban demand levels do not exhaust the rural surplus of local cereals but deficits persist in the rice wheat sector the results underscore the importance of technological research since burkina could become self sufficient in at least the production of sorghum millet and maize

allocation of time for meal preparation in a transition economy abstract the decision of how much time to allocate to meal preparation is an endogenous variable to be determined by the opportunity cost of time preference between market and nonmarket goods and leisure and household production technology using consumer survey data collected in bulgaria in 1997 this study measured the effect of household income on the amount of time allocated to meal preparation after controlling the effects of demographic socio economic and other characteristics of households we used the first hurdle dominance model to distinguish non meal preparers from meal preparers since the overall pattern of allocating time between market work household activity and leisure in a particular country is likely to be conditional on the stage of its economic development this study presents a unique opportunity to assess the rationality of the time allocation behavior of consumers in an economy in transition from a centrally planned to a market oriented system results showed that household income did not influence the decision of how much time to allocate to meal preparation while the insignificant linkage between income and time allocation to meal preparation could be due to the differences in preference and household production technology it can be also attributed to the legacy of four decades of a central planning system and underdeveloped food manufacturing and service industries

the testing and estimation of complete demand systems on household budget surveys a recent demand system aids is extended to include family size explicitly and then estimated on indian budget data the estimation using non linear fiml is performed first on pure time series and then on pooled cross section data within and across equation restrictions are imposed and tested the principal results include u a significant price and family size effects on the budget share of an item b sensitivity of test results on homogeneity and symmetry to i rural urban data ii time series cross section and iii inclusion omission of family size c considerable difference between pure time series and pooled cross section estimates and d difference between the expenditure responses of the rural and urban consumer

socioeconomic factors affecting dietary status an appraisal this paper is to identify selected studies which have contributed to the present knowledge on socioeconomic characteristics of households and dietary status studies of the socioeconomic factors influencing dietary status have undergone significant change in recent years because of developments in statistics and household decision theory in the latter case households utilize various inputs for example food as purchased and the labor of household members to produce diets with varying features including nutrient compositions as indicated by the work of basiotis et al 1983 blanciforti green and lane davis et al 1982b sanderson and sexauer this framework provides a systematic rationale for the incorporation of socioeconomic variables into integrated statistical analyses of food consumption and dietary status more specifically the scope of traditional consumer demand theory has been significantly increased by household economic decision theory in addition permitting explicit incorporation of socioeconomic variables in engel and full demand systems this theory makes a plausible linkage between food intake and dietary status since household economics merely extends rather than refutes the intrinsic utility maximization properties of traditional demand theory the engel and demand systems relationships postulated linking socioeconomic characteristics food expenditure and dietary status are admitted by the theory stigler and b cker as will be demonstrated research results are accumulating on household size household income and expenditure nutrient levels in household food supplies and individual diets efficiency of food use away from home food consumption and use of convenience foods however studies of the relationship between socioeconomic characteristics of households and or individuals and nutrient availability and or dietary intake levels have produced varyingly conclusive results among other factors these varying results can be attributed to a different measures of diet quality and b differences in individual food intake versus food disappearance data further diet quality has been assessed directly units of nutrients available or consumed as well as indirectly expenditure levels on food the dietary components studied most frequently are food energy protein calcium iron vitamins a and c riboflavin thiamin and niacin however recently studies have given less attention to thiamin riboflavin niacin and vitamin c and instead have investigated vitamin b6 and magnesium in the near future this list of target dietary components will probably include cholesterol sodium dietary fiber zinc and copper this extension will occur for two reasons a consumer interest in these dietary components and b availability of survey data on these dietary components e g the u s department of agriculture s usda 1985 continuing survey of food intake by individuals and the 1987 88 nationwide food consumption sur

household demand for convenience and nonconvenience foods states the budget shares are generally more responsive to prices than to real total expenditure additionally the quantities demanded of convenience and nonconvenience foods are generally more sensitive to changes in income and own prices than to changes in cross prices with regard to demographic variates primary users of convenience foods are white households with employed household managers less than 35 years of age

hedging with price and output uncertainty abstract this paper extends mckinnon s analysis of hedging with price and output uncertainty to the general case where preferences are not necessarily quadratic and probability distribution not necessarily normal

a demand systems analysis of food commodities by u s households segmented by income using the 1987 88 nationwide food consumption survey twelve food commodity groups were analyzed according to household poverty status parameter estimates were used to obtain subsistence expenditures own price elasticities expenditure elasticities and income elasticities own price elasticities were similar between the income groups for most commodities however income elasticities were consistently higher for the lower income group the use of average estimates of price and income elasticities for the population as a whole for the projection of individual commodity demands is not likely to be successful if notable changes are evident in income distribution

demand for beef and chicken products separability and structural change several studies have indicated that the recent shift from beef to poultry in consumption is not entirely caused by changes in rela tive prices or income braschler chavas dahlgran hudson and vertin moschini and meilke frank thurman most studies of structural change have focused on red meat consumption only thurman has looked closely at the poultry market and no one has considered poultry products yet the mix of chicken products marketed changed dramat ically during the last twenty years and should have influenced aggregate meat demand the share of broiler slaughter marketed as whole birds declined from 74 in 1965 to 28 in 1985 while cut up parts and processed chick en products increased from 26 to 72 whole birds are inferior goods and cut up parts and processed chicken are normal goods haidacher et al the shift in chicken prod uct mix away from whole birds should have increased the preference for total chicken in this article two related questions are ad dressed first do consumers allocate expendi tures among meats by animal origin or by product type second does disaggregation of meat into products in a meat demand model give insight into the causes of structural

the hedging of an uncertain future foreign currency cash flow this paper derives the optimal hedge of an uncertain unknown quantity future foreign currency cash flow this more general optimal hedge includes the traditional hedge for a certain known quantity future foreign currency cash flow as a special case the optimal hedge is found to be unbounded and determined by firm specific conditions including the variance of the expected cash flow and the correlation of that future cash flow with actual exchange rate movements simulated optimal hedge values are found for u s based multinational firms possessing s dm cash flows using exchange rate data for the 1981 1987 period special cases in which the optimal hedge ratio equals zero and one also are identified and we show that cash flow uncertainty can strongly affect the effectiveness of hedging

household consumption of food away from home total expenditure and by type of food facility consistent with prior expectations based on household production theory household income time value size and composition and the environment in which production and consumption occurred were all important determinants of total household expenditures on food away from home however the importance of these factors varied by type of food facility conventional restaurants fast food facilities and other commercial establishments decomposition of the tobit elasticities indicated the differential importance of market participation effects of household size income and time value by level of the variable and by type of food facility

on the relation between reschedulings and bank value the effect of developing country loan reschedulings on large u s banks is investigated using an event study methodology the major finding concerns the evolving nature of the impact of loan reschedulings during 1978 80 reschedulings had a positive effect on bank returns in contrast to the negative impact found for the 1981 83 period an explanation for these results is provided by a model of the rescheduling process that recognizes the noncompetitive aspects of rescheduling negotiation copyright 1989 by american economic association

demographic variables in demand analysis in this paper the authors discuss five procedures for incorporating demographic variables into theoretically plausible demand systems translating scaling and the gorman reverse gorman and implicit prais houthakker procedures these five procedures are used to incorporate a single demographic variable the number of children in a household into the generalized ces demand system using household budget data for the united kingdom for the period 1966 1972 excerpt

multiperiod production with forward and option markets production and hedging in both forward and options markets are analyzed for forward looking firms that maximize expected utility in the presence of unbiased forward and options prices it is shown that such firms will use options as hedging instruments this result contrasts with the conclusions from studies that assume myopic behavior and occurs because forward looking agents care about the effect of future output prices on profits from future production cycles simulations support the theoretical results and show how the introduction of an options market influences the optimal forward position

optimal bidding and hedging in international markets this paper examines the optimal bidding and hedging decisions of a risk averse contractor for a construction project abroad we show that currency options play no role as a hedging instrument when the contractor has a quadratic utility function however if the contractor is prudent currency options are used for hedging purposes prudence thus generates a hedging demand for currency options when foreign exchange exposure is uncertain contrary to the conventional wisdom we show that currency hedging may have perverse effects on the contractor s bidding behavior in a canonical example with negative exponential utility functions we demonstrate that the possibilities for the contractor to bid more aggressively in the absence of currency hedging are not factitious

the demand for dairy products structure prediction and decomposition this article presents an analysis of the demand for dairy products first the structure of dairy product demand is estimated using the household food consumption survey data under the assumption of a two stage budgeting procedure a complete demand system for food incorporating demographic effects is estimated next using the demand relations estimated from cross section data prediction interval tests utilizing time series data are performed for milk and butter last factors affecting consumption are classified into economic and demographic effects and a decomposition of the causes of changes in demand over time is performed

production hedging and speculative decisions with options and futures markets this paper analyzes production hedging and speculative decisions when both futures and options can be used in an expected utility model of price and basis uncertainty when futures and option prices are unbiased optimal hedging requires only futures options are redundant options are used together with futures as speculative tools when market prices are perceived as biased straddles are used to speculate on beliefs about price volatility and to hedge the futures position used to speculate on beliefs about the expected value of the futures price mean variance analysis in general is not consistent with expected utility when options are allowed one extension of sandmo s expected utility model of the competitive firm under price uncertainty considers the use of futures or forward contracts danthine holthausen and feder just and schmitz show that without basis uncertainty the optimal output level is not affected by price risk also with an unbiased futures price the optimal hedging level of the competitive firm is the full hedge while a biased futures price will result in a partly speculative hedge related works include batlin who allows for basis risk in the form of imperfect time hedging paroush and wolf and antonovitz and nelson who consider basis risk with the simultaneous availability of futures and forward contracts grant honda losq newbery and stiglitz and rolfo who allow for production uncertainty chavas and pope who allow for production uncertainty and hedging costs and karp who considers the problem in a dynamic setting this paper provides a further extension of this analysis by allowing options as a means of coping with price risk with the introduction of commodity options on futures for many commodities in the 1980s this problem appears relevant to a number of production settings especially in agriculture specifically this paper considers the simultaneous choice of a production level and of hedging levels of futures and options within the general expected utility model the model allows for basis uncertainty but the production process is assumed to be nonstochastic

the preferred hedge instrument abstract the optimal choice of hedging instruments in futures and option markets is analyzed for a risk averse exporting firm that maximizes expected utility assuming unbiased futures and options prices optimal output and hedging decisions are derived it is shown that futures will unequivocally be preferred to options this preference for futures continues even if their price is adversely biased provided the bias is not too strong

congressional politics of financing the international monetary fund we address the question of how international public goods are financed by analyzing voting in the u s congress on legislation to increase the u s contri bution to the international monetary fund imf we argue that legislators are more likely to vote in favor of an increase 1 the more campaign contributions they obtain from banks that specialize in international lending and 2 the greater the share of high skilled proglobalization workers in their districts the first argu ment supports the inference that a financially strong imf mitigates the risks of international lending to the benefit of the lending banks the second reflects our claim that voters view the imf as a positive force for global economic integration that following stolper samuelson reasoning benefits high skilled workers lastly we analyze imf loan decisions and find modest support for the claim that imf policy reflects the interests of major international banks overall our results sug gest that private actors within the united states have individual stakes in funding the imf the primary mandate of the international monetary fund imf or fund is to safeguard the stability of the global financial system an international public good the imf obtains the resources it needs for its stabilization operations from mem ber governments with large members contributing most of the funds in this arti cle we analyze the politics of funding the imf from the perspective of its largest contributor the united states rather than treating the united states as a single entity with a unified national interest at the fund we consider the preferences of political actors within the united states who exert power over financing the

the forward looking competitive firm under uncertainty under realistic circumstances forward looking risk averse firms will produce more than risk neutral firms and a mean preserving spread of the price distribution will increase risk averse firms production these results depend on firms realizing that prices of inputs required for production in subsequent periods are contemporaneously correlated with output prices this study rationalizes previously unexplained real world behavior such as the spreading of sales over time and short run production or storage at an expected loss the present findings imply that empirical work should not assume nor should it find a monotonic relationship between output and the level of risk or of risk aversion

demand for food in myanmar burma abstract aggregate quarterly time series data from 1975 to 1987 on government procurement prices and open black market prices were used in estimating an almost ideal demand system aids and double log models for consumption of foodstuffs in myanmar the results from the aids model were superior to those from the double log models the estimated income elasticity of demand for non meat foodstuffs was high even for low quality rice which has been shown to be an inferior good in other asian countries the income elasticities for the non cereals groundnut oil sesame oil pulses potato and onion are positive and less than one contrary to expectation the income elasticities for all meat items are low own price elasticities for most foodstuffs were less than one the estimated cross price elasticities indicate the complementary nature of the basic food items to rice a brief analysis of the effects of taxing myanmarese rice exports and subsidising consumers indicated that there are net costs to government unevenly distributed welfare gains to consumers and welfare losses to farmers

official credits to developing countries implicit transfers to the banks this paper investigates the impact on the wealth of bank share holders on the transfer of official resources to the debtor countries the main aim was to derive actual estimates of increases in shareholder wealth following important news concerning future transfers from the multilaterals to the debtor nations the main result is that stock market expects virtually all additional resources provided to debtor countries to be used for debt service to commercial banks while the estimated magnitude of these effects are informative the emphasis should be on the direction of these effects as they are robust to overestimation problems clearly official resources provided to debtor countries do devolve to creditor banks however the debtor countries should at least gain in so far as the reduction of a debt overhang eliminates investment distortions the results stem from the fact that some of the monies provided by the multilaterals are specifically earmarked for debt service or are in the form of general balance of payments support that the developing countries can use for private debt service official creditor resources that are specially provided to finance development projects are less likely to be allocated to bank debt service

the economic effects of client losses on otc bank derivative dealers evidence from the capital market this paper investigates the economic impact of client derivatives losses on otc derivatives dealers its focus is on the capital marketers reaction to losses suffered by four end users of otc derivatives products arranged with bankers trust new york evidence is provided on the impact of these end user losses on bankers trust itself as well as whether these losses produced any systemic or contagion effects extending to other major bank otc derivatives dealers finally the paper investigates whether possible systemic effects may be associated with bank specific characteristics such as the level of derivatives exposure counterparty risk and reliance on trading income copyright 1996 by ohio state university press

export flexibility and currency hedging this article studies the behavior of an export flexible firm under exchange rate uncertainty we show that the separation theorem holds if selling exclusively in the domestic market is suboptimal even under the most unfavorable spot exchange rate otherwise the firm s optimal output depends on its preferences and on the underlying uncertainty we further show that the full hedging theorem holds only when the firm always finds it optimal to sell its entire output in the foreign market otherwise export flexibility introduces a convexity into the firm s foreign exchange risk exposure which calls for the use of currency options for hedging purposes

estimation of complete demand systems from household budget data the linear and quadratic expenditure systems in this paper we explore two issues in empirical demand analysis the estimation of complete systems of demand equations using household budget data section i and the incorporation of demographic characteristics into such systems section ii although there are numerous studies which use time series data to estimate complete demand systems and many which estimate engel curves from household budget data there are virtually none which combine budget data from different periods to estimate complete systems since each budget study corresponds to a single price situation one might conjecture that estimation of complete systems would not be possible unless budget studies were available from a large number of periods this is incorrect in section i we argue that interesting complete demand systems can be estimated from a small number of budget studies despite the limited price variability represented in such data to demonstrate this we use budget study data for two periods to estimate a pair of related demand systems the familiar linear expenditure system les and a quadratic expenditure system qes a generalization of les in which the demand equations are quadratic in total expenditure the inclusion of demographic variables in the analysis of household consumption patterns is desirable because there are likely to be systematic differences in the consumption behavior of households with different demographic characteristics but the effects of demographic characteristics have seldom been studied within the framework of complete demand systems in section ii we propose translating as a general method for incorporating demographic variables into complete systems of demand equations this method has not previously been discussed as a general technique for bringing demographic variables into demand systems although it has been employed in several studies to improve the estimates of the les and the qes presented in section i we reestimate these two systems using translating to incorporate family size

wife s employment food expenditures and apparent nutrient intake evidence from canada the increase in women working outside the home has had important economic effects one effect involves food expenditures both in terms of patterns of eating out and the types of foods prepared in the home with consequent effects on nutrient availability this study examines the effect of wife s employment on an extensive set of variables describing food behavior the variables include the share of food in total expenditure the share of food away from home fafh in the food budget price paid per calorie and the per capita availability of twelve nutrients the results are of potential interest for food policy for nutrition education and for programs which aim to affect the nutrient composition of food eaten outside the home restaurant food fast food school meals etc in ad

the role of multilateral institutions in the market for sovereign debt creditor country governments have an interest in avoiding defaults by sovereign debtors because default sanctions may be costly to their citizens as a result a standard bargaining model predicts that debtors do not repay in equilibrium even if the threat of sanctions is credible on the part of the banks by contracting with a third party such as a multilateral institution with some degree of independence creditor country governments can precommit not to intervene in equilibrium when debt renegotiation occurs the sovereign receives a subsidy from the multilateral agency the model is used to interpret recent debt reduction operations