the j curve effect and the u s agricultural trade balance according to the j curve theory following a currency depreciation there will be an initial deterioration of the trade balance before an improvement is realized this paper finds empirical evidence indicating the first segment of the j curve does exist for the u s agricultural trade balance a 10 depreciation of the u s dollar is estimated to lead a deterioration of the agricultural trade balance that will last for about nine months

the demand for borrowed reserves a switching regression model a microeconomic model of bank demand for borrowed reserves from the federal reserve is developed based upon constrained cost minimization the derived demand function was found to correspond to behavior appropriate to the unknown switchpoint switching regression problem when estimated parameters generally conformed to theoretical expectations the model was also tested for existence of switching regression behavior against a model similar to goldfeld and kane 12 significance exceeded 99 in all cases with the advent of reserve intermediate targeting it appears especially necessary to reinvestigate the behavior determining this important source of reserves with the advent of reserve intermediate targeting as of october 6 1979 it appears especially necessary to reinvestigate the behavior determining one source of these reserves borrowings from the discount window although the behavior of borrowed reserves has concerned researchers since the 1920s interest in the subject generally waned after 1970 the reason has much to do with the studies of polakoff 21 and goldfeld and kane 12 polakoff develops a structural model for discount window borrowing based upon the individual bank minimizing its costs among alternative borrowing sources adapting the seminal work of turner 29 goldfeld and kane extend and estimate polakoff s original model because of their well developed microeconomic theory seemingly accurate empirical adjustments and proxy variables and excellent all around empirical results goldfeld and kane s study is widely hailed as a leading study in the field of borrowed reserve demand evidence exists through studies such as keir 18 that the federal reserve continues to use this same basic model in this study a borrowed reserve demand function is derived using a constrained minimum cost setup included in the cost of discount window borrowing is an implicit cost function reflecting bank reluctance to borrow from the discount window caused by federal reserve surveillance the derived demand function found in section i conforms to behavior appropriate to a switching regression model in this case switching occurs dependent upon the size of the interest rate spread relative to an unknown switchpoint after making minor adjustments in section ii the model is estimated employing monthly data from 1955 78 these results and the tests for the existence of

interrelationships between monetary instruments and agricultural commodity trade discussion the evolving relationships of macroeconomic variables which chambers terms monetary instruments necessitates two quite different types of analyses the analysis of the evolving relationship of agricultural prices and hence utilization income etc and macroeconomic variables in a post harvest context within marketing year or across a few marketing years may be termed commodity analysis the analysis of the evolving relationship of macroeconomic variables and the long run equilibrium of the agricultural sector may be termed agricultural adjustment analysis much of commodity analysis is logically directed toward the domestic and foreign demand sectors the supply side of the livestock sector is also impacted by interest rate fluctuations in the short run much of this analysis utilizes a forecasting versus projection framework this analysis identifies marketing strategies for farmers procurement strategies for processing firms and strategies for hedging

the rational expectations approach to economic modelling abstract in the two decades since muth 1961 advanced the concept of rational expectations explorations of this conjecture have permeated all major areas of economic inquiry this paper suggests that conventional formulations of the rational expectations postulate violate the axiomatic basis of modem statistical theory by confounding objective and subjective notions of probability it is logically impossible to test the rationality of subjective expectations by comparison with observable frequencies if a rational expectations conjecture is simply imposed on a model conditions for identification of the model are more stringent than indicated in earlier literature an alternative model for aggregation of subjective expectations is proposed

exchange rate risk and u s agricultural trade flows this paper analyzes the effect of exchange rate risk on u s agricultural trade flows a model which incorporates exchange rate risk is applied to ten countries while exchange rate risk was not significant in the seven developed markets results indicate that the exchange rate variable adversely affected u s agricultural exports to the three developing countries used in the analysis these findings underscore the importance of exchange rate risk in developing countries trading behavior issues such as establishment of well developed financial and commodity markets in developing countries must be addressed in future research

macroeconomic policy impacts on united states agriculture a simulation analysis abstract united states monetary and fiscal policies influence the domestic agricultural economy directly and through international linkages indirectly this study estimates the magnitude and statistical influence of coefficients relating u s macroeconomic policy to the u s agricultural economy through domestic and foreign markets specific objectives are to specify and estimate a general equilibrium quarterly econometric model of the u s macroeconomy and simulate the impact of federal deficit spending on real interest rates real exchange rates and net exports of agricultural products three hypotheses were tested the first hypothesis that an increase in federal deficit spending increases the real interest rate could not be rejected a 100 billion reduction in the u s deficit was estimated to reduce real interest rates by two percentage points or more the second hypothesis that an increase in real interest rate increases the real value of the u s dollar in foreign exchange markets had strong support and could not be rejected a third hypothesis that a rise in the real value of the dollar reduces net exports of u s farm products also could not be rejected results indicate that the u s agriculture would benefit from the lower exchange value associated with an optimal macroeconomic policy that policy initially made the overall u s economy perform less satisfactorily but that performance improves over time

discount window borrowing and federal reserve operating regimes i introduction the borrowing behavior of banks at the federal reserve s discount window is a component of most models of the monetary sector including the model used by the federal reserve 1 as several researchers have noted 2 however the policy importance of accurate predictions of borrowing behavior depends on the federal reserve s short run operating procedure if the federal reserve uses a federal funds rate target to control money growth as it did in the 1970s inaccurate predictions of borrowing behavior have no effect on money supply growth if the federal reserve uses a nonborrowed reserves target as is usually assumed for the october 1979 to october 1982 period or a borrowed reserves target as was used after october 1982 then poor predictions of bank borrowing are a potentially significant source of errors in controlling money 3 given the importance of accurate borrowing predictions to monetary control under current short run operating procedures admissions by the federal reserve that its borrowing equation poorly explains recent borrowing behavior are cause for concern 4 part of the problem may lie with inadequate allowance for differences in bank borrowing behavior under different operating procedures the choice of operating procedure determines not only the importance of accurate borrowing predictions but also affects borrowing behavior by affecting the stochastic process characterizing the spread between the federal funds rate and the discount rate 5 the standard model for aggregate borrowing typified by goldfeld and kane 1966 assumes a positive relationship between borrowing and the spread the optimizing model of individual bank borrowing decisions of goodfriend 1983 used by cosimano 1988 and dotsey 1989 among others suggests that borrowing also depends negatively on banks expectations about future levels of the spread specifically goodfriend s model of risk neutral banks predicts a larger impact on borrowing of a spread change that banks expect to be temporary than one that banks expect to be more persistent to the extent that banks predict future spreads using an autoregressive model changes in the stochastic process characterizing the spread should change the impact realizations of the spread have on borrowing 6 moreover if banks are risk averse changes in the operating procedures that produce less predictable spreads may affect both banks borrowing and excess reserve behavior 7 because the spread s stochastic behavior depends on the federal reserve s operating procedure borrowing behavior in turn should depend on the federal reserve s operating procedure consequently the federal reserve should not assume that the borrowing equation in its model is invariant to changes in operating procedure as goodfriend notes such an assumption is another example of the lucas critique bryant 1983 and dutkowsky and foote 1988 show that borrowing equations estimated during the period when the federal reserve targeted the federal funds rate produce poor forecasts of borrowing after the regime change of 6 october 1979 these papers do not however provide evidence on how the borrowing equation changed after october 1979 one purpose of this paper is to investigate whether bank borrowing behavior changed with changes in federal reserve operating procedures leading to estimated borrowing equations that differ significantly under different operating procedures in addition to the changes in operating procedures the federal reserve also changed the reserve accounting rules in february 1984 replacing lagged reserve accounting with contemporaneous reserve accounting although the effect of this switch on bank reserve management is difficult to predict the increased uncertainty about reserve needs and the decrease in information about the aggregate demand for reserves make it plausible that banks became more conservative affecting their excess reserve behavior and their discount window borrowing

impact of household consumption on co2 emissions danish household consumption increased by 58 over the period 1966 1992 while co2 emissions only increased by 7 using decomposition analysis we investigated the global co2 impact of danish household consumption from 1966 to 1992 our conclusion is that overall growth in private consumption but not changes in the composition of consumption is the key to understanding the increase in co2 emissions however the effect of growth in private consumption has been partly offset by substantial energy conservation in the energy supply and manufacturing sectors

apples to kangaroos a framework for developing internationally comparable carbon emission factors for crop and livestock products abstract consumption based greenhouse gas accounting which encompasses emissions from a nation s domestic final consumption as well as emissions embodied in imports is gaining favor in the climate change literature for its effectiveness and consideration of equity unfortunately the calculation of emissions embodied in the trade of agricultural food products is hindered by a lack of consistent and comparable emission factors food import quantities for every country are readily available through the united nations food and agriculture organization unfortunately the carbon emission factors necessary to calculate the embodied emissions in imported foods are largely unavailable or unreliable for many countries on top of this different methodologies for determining carbon emission factors provide varying estimates based on different assumptions the differences in these assumptions and methodologies can mean that attempts to compare and combine emissions based on factors from different countries become less of a comparison of apples to apples and more of an apples to oranges or even apples to kangaroos exercise this study proposes a method to combine the food and agriculture organization s available greenhouse gas data production data and agricultural yields and scaling it against benchmarks in the literature to estimate a time series of crop and livestock carbon emission factors that are internally consistent within the food and agriculture organization s data set and comparable from nation to nation the framework provided is then used to produce a sample set of carbon emission factors for chinese agricultural import suppliers to determine the embodied greenhouse gases in china s food imports

promises and pitfalls in environmentally extended input output analysis for china a survey of the literature abstract as the world s largest developing economy china plays a key role in global climate change and other environmental impacts of international concern environmentally extended input output analysis ee ioa is an important and insightful tool seeing widespread use in studying large scale environmental impacts in china calculating and analyzing greenhouse gas emissions carbon and water footprints pollution and embodied energy this paper surveys the published articles regarding ee ioa for china in peer reviewed journals and provides a comprehensive and quantitative overview of the body of literature examining the research impact environmental issues addressed and data utilized the paper further includes a discussion of the shortcomings in official chinese data and of the potential means to move beyond its inherent limitations

impact of macroeconomic policies upon agricultural trade and international agricultural development international commodity markets in the early 1980s have experienced a severe cyclical downturn high real rates of interest have discouraged stock holding and disinflation has caused asset market participants to shift out of commodities into financial assets this is only the most recent bout of turbulence since we passed from the stable bliss of the 1950s and 1960s the basic question is whether this instability results from a seemingly unending series of shocks or is there a more general basic explanation which transcends individual events

credit constraints interest rates and agricultural prices although there are some earlier contributions the paper by schuh the exchange rate and u s agriculture touched off a controversy within the agricultural economics profession that has yet to be resolved in its original form the controversy centered around whether or not exchange rates had a significant effect on u s agricultural prices exports and farm income later the argument seems to have moved one step further back along the logical line to a question of whether or not monetary phenomena can have real effects thus to some extent agricultural economists interested in this issue have polarized themselves into two camps that closely resemble what for lack of a better term might be called keynesians and non keynesians this paper is not an attempt to settle this dispute indeed if observations based on developments in macroeconomics offer any guide i think that the dispute is based upon such fundamentally different perceptions of the world that no single paper or series of papers will ever settle the issue rather in this paper i want to discuss what i perceive to be one of the key issues in this debate are agricultural prices more flexible than nonagricultural prices my choice of this topic is somewhat personal and i choose it mainly because i feel that if monetary variables are going to have real effects these effects can only be short run in nature and are best explained by differential price adjustments the argument is simple suppose you have two goods a and b and suppose that good a is priced administratively a la gardiner means while good b s price is perfectly flexible now suppose further that the money supply is artificially inflated in the current instances the price of a will not adjust instantaneously while the price of b is free to adjust if the price of b does adjust as a result of an increase in the money s pply then manipulation of the money supply has caused a real change since the price ratio between a and b changes in this case therefore we can also expect other real changes in the economy but such effects should be only short run in nature the real effects set in motion by the relative price change should ultimately be self correcting under the usual ceteris paribus assumptions since even administered prices have to adjust in the long run to maintain entrepreneurial profitability however even if such issues of relative flexibility are not a central element in the discussion that is germane to the present paper and the associated controversy the general belief that agricultural prices are more flexible than nonagricultural prices is firmly rooted in the stylized facts of agricultural economics moreover the high degree of instability of agricultural prices is often given as the primary argument for extensive government interference in the agricultural economy in what follows i will first offer a brief survey of some of the studies of the effects of monetary phenomena on u s agricultural prices exports and incomes in this part of the paper i specifically exclude papers of what i think of as the is inflation neutral with

modeling expectations of bounded prices an application to the market for corn the presence of farm programs should directly affect the expectations of producers this paper analyzes the formation of price expectations when price supports constitute an effective lower bound on the distribution of the expectations we first investigate what the expected price would be if the usual rational expectations formula is used this leads to a relationship that is not estimable we suggest two alternatives one based on a tobit approximation and the other based on a perfect prediction of when the support is going to be effective using a simplified model of the u s corn market the methodology is demonstrated and compared to an alternative method of using futures prices as the expectation of harvest price the analysis of supply response for the major u s field crops is made difficult due to government intervention in these markets this intervention has been characterized by the use of price supports acreage diversion storage incentives etc during the last thirty years many studies have analyzed producer behavior in the presence of governmental involvement such studies have typically been concerned with modeling the effect of supports and diversions in an ex post sense rather than with how producers used the knowledge of farm programs to form their expectations if producers are rational economic agents their expectations of harvest prices should be conditioned both by free market forces and the type and degree of governmental intervention in the market of course farm programs have varied in nature and extent during the past thirty years and it is doubtful that any structural model could capture their complexities in this paper we attempt to introduce rational expectations in a simplified model of the u s corn market in essence we focus on the formation of price expectations when price supports constitute an effective lower bound on the distribution of the expectations we proceed by developing a theoretical model that connects the rational expectations model with a model of bounded price variation it is shown that one representation that may characterize the corn market is a triangular structural system with endogenous switching a full information maximum likelihood estimator is proposed for the system next an empirical model is specified and estimated the model is evaluated in comparison to an augmented model that contains a futures price so that some inferences may be made concerning the rational expectations model s success in summarizing relevant market information expectations under bounded prices consider a market that may be represented by a simple supply and demand system q a pt a2w el supply function pt b qt b2xt e2t demand function 1 where p and q represent market price and quantity w and x represent supply and demand shifters and p represents the rational expectation of product price at the time production decisions are made note that this system has a familiar recursive structure when the expected price variable is specified in terms of one or more lagged prices when the restricted reduced form of the structural system is solved for in terms of the expected price and this expression is used to replace pj wallis 1980 then models similar to those of goodwin and sheifrin 1982 and shonkwiler and emerson 1982

economic instability in agriculture the contributions of prices government programs and exports in the first edition of foundations of farm policy 1970 p 343 i stated that the major long term problem of commercial farms is not labor mobility low resource returns or low income but rather is instability sources of instability have been traced to domestic macroeconomic policies by schultz to exchange rates by schuh and to each of those and farm output by firsh serious gaps remain in our knowledge of sources of instability however the purpose of this paper is to estimate sources of instability in u s farm income over time with special attention to the role of prices exports and government payments and commodity programs variation in production and utilization provide estimates of statistically appropriate stocks in aggregate and for feed grains soybeans and wheat

imperfect competition and exchange rate pass through in the food processing sector imperfect competition has become an important dimension of international trade theory helpman and krugman product differentiation and economies of scale are explicitly incorporated in the new trade theory policy prescriptions following from these models hinge critically on underlying assumptions particularly the form of strategic firm behavior competitive cournot or bertrand unfortunately these models do not lend themselves easily to empirical testing also little empirical information exists on the strategic behavior of firms in international markets thus various models and tests on different aspects of imperfect competition in trade have been proposed and implemented one form of imperfect competition in international trade that has received attention re

a benefit cost analysis of u s agricultural trade promotion subsidies for nonprice export promotion can harm domestic consumers by increasing price in the domestic market and by diverting funds from domestic market promotion taking these consumer impacts into account we find that federal expenditures for nonprice export promotion of farm products may be too high

pricing and storage of field crops a quarterly model applied to soybeans this paper considers the role of competitive storage in markets for annually harvested field crops a quarterly model is presented that considers the allocative role of storage both within and between crop years rational price expectations are endogenous variables calculated by a recursive method forward stochastic simulations using the model generate data that can be used to characterize the distributions of the variables in the base case the model is assigned parameter values from a quarterly econometric model of the u s soybean market the results shed light on the distributions of the quarterly variables including the rational price expectations and show how these distributions are affected by changes in the carrying charge

china s foreign trade and climate change a case study of co2 emissions abstract the globalization of trade has numerous environmental implications trade creates a mechanism for consumers to shift environmental pollution associated with their consumption to other countries carbon leakage exerts great influences on international trade and economy applying an input output approach the paper estimates the amount of carbon dioxide co2 embodied in china s foreign trade during 1997 2007 it is found that 10 03 26 54 of china s annual co2 emissions are produced during the manufacture of export goods destined for foreign consumers while the co2 emissions embodied in china s imports accounted for only 4 40 1997 and 9 05 2007 of that we also estimate that the rest of world avoided emitting 150 18 mt co2 in 1997 increasing to 593 mt in 2007 as a result of importing goods from china rather than manufacturing the same type and quantity of goods domestically during 1997 2007 the net additional global co2 emissions resulting from china s exports were 4894 mt then the paper divides the trade embodied emissions into scale composition and technical effect it was found that scale and composition effect increased the co2 emissions embodied in trade while the technical effect offset a small part of them finally its mechanism and policy implications are presented

us bilateral trade equations forecasts and structural stability in this paper actual recent us trade values are compared with out of sample forecasts using a standard specification for real bilateral trade value equations though fairly accurate on average there are large bilateral errors a battery of coefficient stability tests indicates significant instability more often for imports over the forecast period and more often for exports over the latter part of the estimation period thus standard bilateral trade equations appear to violate the basic regression assumption of stability and may be of little use for forecasting

measuring financial asset return and volatility spillovers with application to global equity markets we provide a simple and intuitive measure of interdependence of asset returns and or volatilities in particular we formulate and examine precise and separate measures of return spillovers and volatility spillovers our framework facilitates study of both non crisis and crisis episodes including trends and bursts in spillovers and both turn out to be empirically important in particular in an analysis of sixteen global equity markets from the early 1990s to the present we find striking evidence of divergent behavior in the dynamics of return spillovers vs volatility spillovers return spillovers display a gently increasing trend but no bursts whereas volatility spillovers display no trend but clear bursts

exchange rate effects on inputs and outputs in canadian agriculture in a seminal piece of work schuh demonstrates using a single market partial equilibrium model that exchange rates have a large impact on the price received for farm products he argued that the overvalued u s dollar reduced export demand and the domestic price of u s grains since then much of the work on estimating the impact of exchange rate changes on agriculture has implicitly assumed that inputs to the agricultural sector come from the nontraded sector we argue this assumption can result in an error in the estimation of the effects of exchange rates in an examination of the passthrough of changes in the us cdn exchange rate we find the data from 1975 to 1989 are consistent with the hypothesis of a complete passthrough of exchange rates for many important variable inputs to canadian agricultural production this analysis indicates that while exchange rates may have had significant impacts on the return to fixed factors and farm income they have had little effect on grain production in the case of livestock feeding in canada exchange rate devaluations may actually reduce production and reduce the return to fixed factors because inputs especially grain are more tradeable than outputs finally we examine the potential welfare impact on nontradeables such as land from changes in the exchange rate theoretical model

asymmetric volatility transmission in international stock markets abstract the transmission mechanism of price and volatility spillovers across the new york tokyo and london stock markets is investigated the asymmetric impact of good news market advances and bad news market declines on volatility transmission is described by an extended multivariate exponential generalized autoregressive conditionally heteroskedastic egarch model using daily open to close returns we find strong evidence that volatility spillovers in a given market are much more pronounced when the news arriving from the last market to trade is bad a before and after october 1987 crash analysis reveals that the linkages and interactions among the three markets have increased substantially in the post crash era suggesting that national markets have grown more interdependent

crash risk of the euro in the sovereign debt crisis of 2009 2010 the economic political instability of a country which is tied to its credit risk often leads to sharp depreciation and heightened volatility in its currency this paper shows that not only the creditworthiness of the euro area countries with weaker fiscal positions but also that of the member countries with more sound fiscal positions are important determinants of the deep out of the money euro put option prices which embedded information on the euro crash risk during the sovereign debt crisis of 2009 2010 we also find evidence of information flow from the sovereign credit default swap market to the currency option market during the crisis

estimating the structure of agricultural investment a stochastic coefficients approach two approaches a flexibie accelerator model and a stochastic coefficients alternative are used to estimate the structure of aggregate agricultural investment structural estimates of the adjustment rates for each model differ the stochastic coefficients model however performs better in out of sample forecasting

the information content of discount rate announcements what is behind the announcement effect abstract a considerable volume of research shows that asset prices respond to changes in the federal reserve s discount rate while several competing hypotheses have been advanced to explain the market s response to discount rate announcements comparatively little effort has been made to differentiate among alternative hypotheses the result is an abundance of evidence establishing that asset prices respond to discount rate announcements but little if any agreement about why markets respond this article attempts to fill a void in the literature by pointing out how competing hypotheses differ and by constructing tests explicitly designed to differentiate among competing explanations the evidence suggests that the market s reaction to discount rate changes is purely an announcement effect i e a reaction to new information contained in the announcement that the direct effect of discount rate changes on market rates is nil that the announcement effect is invariant to the federal reserve s operating procedure and that generally speaking changes in the discount rate do not signal a change in monetary policy the announcement effect appears to vary with both the nature and extent of the information that the announcement of a discount rate change is believed to contain

daily pricing of emerging market sovereign cds before and during the global financial crisis abstract in this paper we study the determinants of daily spreads for emerging market sovereign credit default swaps cdss over the period april 2002 december 2011 using garch models we find first that daily cds spreads for emerging market sovereigns are more related to global and regional risk premia than to country specific risk factors this result is particularly evident during the second subsample august 2007 december 2011 where neither macroeconomic variables nor country ratings significantly explain cds spread changes second measures of us bond equity and cdx high yield returns as well as emerging market credit returns are the most dominant drivers of cds spread changes finally our analysis suggests that cds spreads are more strongly influenced by international spillover effects during periods of market stress than during normal times

agricultural ch4 and n2o emissions of major economies consumption vs production based perspectives abstract agriculture is one of the most important sectors for global anthropogenic methane ch4 and nitrous oxide n2o emissions while much attention has been paid to production side agricultural non co2 greenhouse gas anghg emissions less is known about the emissions from the consumption based perspective this paper aims to explore the characteristics of agricultural ch4 and n2o emissions of global major economies by using the latest emission data from the food and agriculture organization corporate statistical database faostat and the recently available global multi regional input output model from the world input output database wiod the results show that in 2014 the 42 major economies together accounted for 60 7 and 65 0 of global total direct and embodied anghg emissions respectively the consumption based anghg emissions in the us japan and the eu were much higher than their production based emissions while the converse was true for brazil australia and india the global average embodied anghg emissions per capita was 0 7 t co2 eq but major developing countries such as china india indonesia and mexico were all below this average value we find that the total transfer of embodied anghg emissions via international trade was 622 4 mt co2 eq 11 9 of the global total china was the largest exporter of embodied anghg emissions while the us was the largest importer most developed economies were net importers of embodied emissions mexico us china us china eu china japan china russia brazil eu india eu and india us formed the main bilateral trading pairs of embodied emission flows examining consumption based inventories can be useful for understanding the impacts of final demand and international trade on agricultural ghg emissions and identifying appropriate mitigation potentials along global supply chains

u s corn exports the role of the exchange rate abstract time series econometric methods are applied to monthly observational data over the period 1978 1992 on real exchange rates real corn prices corn export sales and corn export shipments for the united states in sample fit and out of sample forecast results are used to discern whether exchange rates have elicited systematic responses in u s corn prices sales and shipments and whether the dynamic transmission mechanisms tying these variables together have changed over time a structural break appears to have occurred in early 1985 no cointegration is found between exchange rates price sales and shipments in either sub period influences are all short run or between stationary variables the role of the exchange rate appears to have moderated in the post 1985 period implications for policy analysis are discussed

dynamic interdependence of sovereign credit default swaps in brics and mist countries abstractthis article examines the interactions of emerging markets sovereign credit default swaps cds using a generalized vector autoregressive framework and principal component analysis we find significant spillover effects within the two groups of emerging markets under study using the principal component analysis we show that global financial market factors are important drivers of brics and mist sovereign cds spreads variability focusing on the forecast error variance decomposition most of the spillover effects are documented among the emerging markets cds brazil and mexico contribute the largest net directional spillovers to the other emerging markets studied highlights there exist significant cds spillover effects for mist and brics countries mexico dominates the spillover effects within the mist group while brazil dominates the spillover effects within the brics group as determined by principal component analysis global financial market factors are important drivers of brics and mist sov

the effects of lower reserve requirements on money market volatility in late 1990 the federal reserve eliminated reserve requirements on nonpersonal time deposits and required reserves fell by about 10 billion an almost 20 percent reduction in early 1992 reserve requirements against transaction accounts were lowered from 12 percent to 10 percent releasing an additional 3 5 billion of required reserves 1 these reductions by lowering total reserve balances potentially could increase reserve market volatility impeding the implementation of monetary policy and possibly spilling over into other markets this paper examines the effects of reserve requirements on market volatility and on the central bank s ability to achieve shortrun policy objectives although a number of earlier studies have examined the effects of reserve requirements on the effectiveness of monetary policy our approach differs in two important respects first we focus on the ability to achieve short run objectives second we provide empirical estimates of the likely effects of lower reserve requirements the central bank cannot directly achieve its long run objectives of output and price stability so it uses policy rules to set shortand intermediate run targets for certain economic variables such as interest rates or monetary aggregates consistent with its long term goals 2 the central bank cannot however perfectly control shortor intermediate run targets so it also relies on a set of operational rules operational rules are used to set instruments such as reserve requirements the discount rate and openmarket operations in order to achieve the shorter run targets previous studies such as ira kaminow 1977 jeremy siegel 1981 ernst baltensperger 1982 richard t froyen and kenneth j kopecky 1983 and brian r horrigan 1988 focused exclusively on longer term objectives of monetary policy in contrast we focus on the shortterm goals of monetary policy in addition we provide empirical estimates of the impact that changes in reserve requirements are likely to have on volatility in the money market previous studies were largely theoretical and therefore could only show that the impact of a change in policy depended on various unknown parameters of a particular model

effects of exchange rate changes on u s agriculture a dynamic analysis an econometric model of the wheat corn and soybean markets is used to examine the dynamic effects of exchange rate fluctuation on u s commodity markets exports and agricultural prices are found to be sensitive to movements in the exchange rate while domestic factors such as disappearance and inventories are less sensitive but still responsive dramatic short run adjustments in prices and exports are followed by less dramatic but significant longer run adjustments thus the hypothesis of elastic response to the exchange rate seems particularly relevant for the short run

quo vadis mrio methodological data and institutional requirements for multi region input output analysis abstract in order to understand wider sustainability impacts of consumption and to successfully promote and implement sustainable consumption and production policies there is a need to capture the whole life cycle impact of products and services across international supply chains multi region input output mrio databases are a well described and suitable foundation for global sustainability analyses addressing a wide range of policy and research questions in this paper we reflect on the reasons for the recent boom in mrio compilation summarise the current state of development and discuss future options for mrio analysis we list in detail the requirements for efficient and effective mrio research and propose systemic and institutional changes we deliberately try to go beyond existing ambitions for mrio compilation and thus intend to stimulate discussion and to lay out the options for the future of mrio research

liquidity spillovers in sovereign bond and cds markets an analysis of the eurozone sovereign debt crisis at the end of 2009 countries in the eurozone euro area began to experience a sudden divergence of bond yields as the market perception of sovereign default risk increased the theory of complete markets suggests that sovereign debt and credit default swap cds credit spreads should track each other closely in addition liquidity risk should be priced into both instruments in such a way that buying exposure to the same default risk is identically priced we use a time varying vector autoregression framework to establish the credit and liquidity spread interactions over the 2009 2010 crisis period we find substantial variation in the patterns of the transmission effect between maturities and across countries our major result is that for several countries including greece ireland and portugal the liquidity of the sovereign cds market has a substantial time varying influence on sovereign bond credit spreads this evidence is of particular importance in the current policy context

an empirical examination of the link between monetary policy and us agricultural commodity exports 1989 an empirical examination of the link between monetary policy and us agricultural commodity exports applied economics vol 21 no 2 pp 155 173

neutrality of inflation in the agricultural sector abstract the paper considers the effect of inflation on the relative prices of products traded in auction markets prices of us agricultural products are used for the period 1951 1981 since agricultural products are widely traded the real forces of supply and demand specific to agriculture are represented by foreign agricultural prices the exchange rate is entered as a separate variable influencing domestic agricultural prices trade between the usa and the ten countries included in the federal reserve board s trade weighted dollar is considered the empirical results are consistent with the hypothesis that inflation did not alter relative agricultural prices when the real forces of supply and demand and the exchange rate are held constant

the role of co2 embodiment in us china trade abstract this study examines the influence of us china trade on national and global emissions of carbon dioxide co2 the three basic questions are as follows 1 what amount of co2 emissions is avoided in the us by importing chinese goods 2 how much are co2 emissions in china increased as a result of the production of goods for export to the us and 3 what are the impacts of us china trade on global co2 emissions our initial findings reveal that during 1997 2003 1 us co2 emissions would have increased from 3 to 6 if the goods imported from china had been produced in the us 2 about 7 14 of china s current co2 emissions were a result of producing exports for us consumers and 3 us china trade has increased global co2 emissions by an estimated 720 million metric tons we suggest that the export of us technologies and expertise related to clean production and energy efficiency to china could be a win win strategy for both countries for reducing their trade imbalance and mitigating global co2 emissions improved international accounting methodologies for assigning responsibility for co2 emissions must be designed to account for the dynamic nature of international trade

exchange rate effects on agricultural exports transaction level evidence from pakistan this article examines the effects of domestic currency depreciation on agricultural exports from pakistan including the responses of price and quantity margins it uses highly disaggregated firm level data that contains the exchange rates of the actual currencies of invoicing at the transaction level the study finds that the currency depreciation positively affects both intensive and extensive margins the intensive margin increase in agricultural exports operates mainly through prices whereas the response of quantities is relatively smaller moreover depreciation improves the extensive margins of firms and products and expands the client base in existing markets these responses vary widely across firms exporting experience trade orientation sectoral and spatial distribution exchange rate regimes and invoicing currencies

exchange rate effects on the relationship between fdi and trade in the u s food processing industry the effect of exchange rates on international trade and more specifically on agricultural trade flows has been documented by several studies most studies agree that an appreciation depreciation in the value of the u s dollar hurts helps u s agricultural exports an appreciation of the u s dollar raises the cost of u s products to foreign buyers and reduces their purchases 2 although neglected early on the effect of exchange rate risk as measured by its volatility on trade flows was also found to be negative arize pick parallel to this literature were the devel

term structure views of monetary policy under alternative models of agent expectations abstract term structure models and many descriptions of the transmission of monetary policy rest on the empirical relevance of the expectations hypothesis small differences in the perceived policy reaction function in var models of agent expectations strongly influence the relevance in the transmission mechanism of the expected short rate component of bond yields mean reverting or difference stationary characterizations of interest rates require large and volatile term premiums to match the observable term structure however short rate descriptions that capture shifting perceptions of long horizon inflation evident in survey data support a more substantial term structure role for short rate expectations