agricultural price instability a survey of competing explanations and remedies there are two explanations for agricultural price dynamics one follows cobweb logic and models fluctuations driven by expectation errors but emphasises that these expectations create complex dynamics and possibly chaos the other stems from the rational expectations tradition of dynamics driven by real shocks the empirical evidence tends to support the latter but is not conclusive the rational expectations model generates an optimal dynamic path from which no improvement can be expected from public intervention however if we take account of all the potential market failures in agricultural markets and especially in developing countries this conclusion might require some qualifications although an appropriate policy design for stability has still to be achieved this paper surveys the positive and normative literature on agricultural prices highlighting empirical evidence and identifying remaining unresolved issues

wheat storage and trade in an efficient global market domestic and international linkages in speculative stockholdings and trade of wheat are analyzed using a dynamic rational expectations model of the world wheat market dominated by the u s and the eu the results demonstrate the importance of endogenizing both storage and trade in studying commodity markets and suggest that past government stockholdings have not followed efficient market outcomes results indicate that elimination of the export enhancement program by the u s and of export restitution payments by the eu are unlikely to have a major impact on wheat exports from the two regions but will save millions of tax dollars in both regions

estimation of dynamic nonlinear rational expectations models of primary commodity markets with stochastic dynamic programming and disequilibrium maximum likelihood methods are combined to estimate a dynamic nonlinear rational expectations model of a market for a storable primary commodity the estimation model captures the inherently nonlinear structure of private stockholding dynamics the disequilibrium effects of government buffer stock intervention and the impact of price expectations and risk on private supply and stockholding decisions copyright 1993 by mit press

the effect of ethics on labor market success evidence from mbas abstract this paper empirically investigates the link between ethics earnings and gender using a self reported measure from a longitudinal survey of registrants for the graduate management admission test we find that ethical character is negatively associated with males wages for females however this relationship does not hold in addition using measures of the degree to which ethics is emphasized in business school curricula as an indicator for enhancement of individual ethical standards of graduates we investigate variation in the returns to an mba degree we find that the larger the degree to which males report that business education enhanced their ethical character the lower their wages holding other aspects of their education constant for females however enhanced ethics through business school is positively and significantly associated with returns to the mba degree more objective measures of ethics emphasis in business school curricula provide further support of these findings

heterogeneous human capital occupational choice and male female earnings differences human capital models have mainly focused on the rate of return to investment in a homogeneous stock of capital yet individuals have different initial attributes that determine comparative advantage in producing different types of human capital we find that mathematical ability is an important determinant of field choice for college students and that differences in earnings across fields are largely explained as a return to the use of scarce quantitative abilities in the production of each type of human capital the model successfully accounts for the observed male female differences in earnings and occupational choices of recent college graduates

volatility in wheat spot and futures markets 1950 1993 government farm programs seasonality and causality we explore how wheat spot and futures market volatility has been impacted by government farm programs during the 1950 1993 period we find that changing volatility in both markets is highly associated with changing farm programs the mandatory allotment programs of the 1950s and early 1960s 1 3 50 4 10 64 were associated with low volatility while the voluntary programs initiated in the mid 1960s seem to have induced high volatility 4 11 64 12 22 85 both market driven loan rates and conservation reserve programs appear to have helped volatility revert to lower levels since the mid 1980s 12 23 85 12 30 93 we also examine seasonality and causality in conjunction with the farm programs we explore how wheat spot and futures price volatility has been impacted by government farm programs many studies have examined the effects of various farm policies mckinnon 1967 blakeslee 1980 miranda and helmberger

consequences of discretion in the formation of commodities policy abstract in a simple model of endogenous primary commodity price support policy i policy is affected by private inventories and ii private inventories are affected by speculative attempts to forecast policy the interaction between these two forces is rich yielding bubbles and extrinsic volatility thus helping to explain some odd episodes observed in commodity markets in addition under some conditions a government that wishes to support the price but is unable to commit to future action may be impotent and a government that does not want to support the price may be trapped into doing so by speculative activity

the effects of commodity price stabilization programs in this paper the authors analyze the effects of commodity programs in which the government attempts to support and stabilize price through open market purchases and sales specifically they as sess the effects of such programs on the u s soybean market using a rational expectations model that allows for private storage expected price responsive production and arbitrary support and release price s a salient feature of the model is that private storage and product ion behavior adjusts to changes in government policy stochastic simu lations of the market model demonstrate that price stabilization prog rams can reduce long run market price and destabilize producer revenu e copyright 1988 by american economic association

a social contract account for csr as an extended model of corporate governance ii compliance reputation and reciprocity this essay seeks to give a contractarian foundation to the concept of corporate social responsibility csr meant as an extended model of corporate governance of the firm whereas justificatory issues have been discussed in a related paper sacconi l 2006b this journal in this essay i focus on the implementation of and compliance with this normative model the theory of reputation games with reference to the basic game of trust is introduced in order to make sense of self regulation as a way to implement the social contract on the multi fiduciary model of corporate governance this affords understanding of why self regulation meant as mere recourse to a long run strategy in a repeated trust game fails two basic problems for the functioning of the reputation mechanism are examined the cognitive fragility problem and the motivational problem as regards the cognitive fragilities of reputation which result from the impact of unforeseen contingencies and from bounded rationality the paper develops the logic and the structure that self regulatory norms must satisfy if they are to serve as gap filling tools with which to remedy cognitive limitations in the reputation mechanism the motivation problem then arises from the possibility of sophisticated abuse by the firm developed in this case is an entirely new application of the theory of conformism and reciprocity based preferences the result of which is that the stakeholders refuse to acquiesce to sophisticated abuse on the part of the firm

comparing solution methods for dynamic equilibrium economies this paper compares solution methods for dynamic equilibrium economies the authors compute and simulate the stochastic neoclassical growth model with leisure choice using undetermined coefficients in levels and in logs finite elements chebyshev polynomials second and fifth order perturbations and value function iteration for several calibrations the authors document the performance of the methods in terms of computing time implementation complexity and accuracy and they present some conclusions about their preferred approaches based on the reported evidence

price stabilization using buffer stocks abstract the price stabilization problem is stated and solved for a nonlinear cobweb model with government stocks it is shown that if the storage capacity for the commodity is sufficiently large then there exists a simple stabilization policy called the keep supply at equilibrium kse policy such that the equilibrium price is a global attractor for the corresponding closed loop system in addition it is shown that if the government approximates the equilibrium supply with the average supply stabilization is guaranteed we refer to this policy as keep supply at average ksa

how much of commodity price behavior can a rational expectations storage model explain a rational expectations competitive storage model was applied to the u s corn market to assess the aptness of this framework in explaining monthly price behavior in an actual commodity market relative to previous models extensive realism was added to the model in terms of how production activities and storage costs are specified by modeling convenience yield backwardation in prices between crop years did not depend on the unrealistic assumption of zero ending stocks our model generated cash prices that were distributed with positive skewness and kurtosis and mean and variance that increased over the storage season comparable to the persistence and the occasional spikes observed in commodity prices futures prices were generated as conditional expectations of cash prices at contract maturity and the variances of futures prices exhibited realistic time to maturity and seasonal patterns model realizations of cash and futures prices over many years were used to demonstrate the wide variety of price behaviors that could be observed in an efficient market with a similar market structure implying that economic and policy implications drawn from short historical samples of prices could be misleading

modelling market fundamentals a model of the aluminium market the standard approach to modelling primary commodity markets under rational expectations is to relate the commodity price to the production and consumption surprises i e the innovations on the equations using the world aluminium market we show how this approach can be modified so that both the price and stock can be written in terms of one or more market fundamentals which reflect the supply demand balance on the market this approach allows joint estimation of production consumption stock demand and price equations subject to cross equation restrictions it may be seen as a formalization of the approach adopted by metals industry analysts

worldwide acreage and yield response to international price change and volatility a dynamic panel data analysis for wheat rice corn and soybeans this study estimates a worldwide aggregate supply response for key agricultural commodities namely wheat rice corn and soybeans by employing a newly developed multi country crop and calendar specific seasonally disaggregated model with price changes and price volatility applied accordingly the findings reveal that although higher output prices serve as incentives to improve global crop supply as expected output price volatility acts as a disincentive depending on the crop the results show that own price supply elasticities range from about 0 05 to 0 40 output price volatility however has negative correlations with crop supply implying that farmers shift land other inputs and yield improving investments to crops with less volatile prices simulating the impact of price dynamics since 2006 we find that price risk has reduced the production response of wheat in particular and to a lesser extent rice thus dampening price incentive effects the simulation analysis shows that the increase in own crop price volatility during the 2006 2010 period has dampened yield by about 1 2 for the crops considered

optimal food price stabilization in a small open developing country in poor countries most governments implement policies aiming to stabilize the prices of staple foods which often include storage and trade measures insulating their domestic market from the world market it is of crucial importance to understand the precise motivations and efficiency of those interventions because they can have consequences worldwide this paper addresses those issues by analyzing the case of a small open developing country confronted by shocks to both the crop yield and foreign price in this model government interventions may be justified by the lack of an insurance market for food prices considering this market imperfection the authors design optimal public interventions through trade and storage policies they show that an optimal trade policy largely consists of subsidizing imports and taxing exports which benefits consumers at the expense of producers import subsidies alleviate the non negativity of food storage in other words when stocks are exhausted subsidizing imports prevents domestic price spikes one striking result an optimal storage policy on its own is detrimental to consumers since its stabilizing benefits leak into the world market and it raises the average domestic price by contrast an optimal combination of storage and trade policies results in a powerful stabilizing effect for domestic food prices

measuring the effects of price controls using mixed complementarity models abstract government involvement in managing domestic prices of energy and other commodities is a major issue in emerging economies we examine one aspect of the problem price controls when governments set or cap prices we show how a mixed complementarity problem mcp formulation can be used to model and assess the impacts of price controls in multi sector economic equilibrium models both the gains from deregulation and the consequences of imposing new or altering existing regulations can thus be measured we present three distinct models that capture different price control situations firms have to meet demand and receive an implicit subsidy demand rationing occurs due to an associated price control constraint and subsidies limit demand rationing we present an approach to measuring the effects on the equilibrium in the first case and the levels of disequilibrium induced by price controls in the other cases we also show how to determine the most efficient allocation program when a government engages in rationing we illustrate the cases described by these models using markets that have or had price controls

hedging grain price risk in the sadc case studies of malawi and zambia abstract we use simulation methods to examine the results of hedging maize food security imports into malawi and zambia on the south african exchange safex results show that hedging using either futures or options can spread import costs over time thereby reducing variability and also possibly generating lower average costs these benefits are increased if hedging only takes place when local prices are at less than import parity and also if the hedge is levered however problems will remain so long as intra regional transport costs remain high

the gender pay gap beyond human capital heterogeneity in noncognitive skills and in labor market tastes abstract focused on human capital economists typically explain about half of the gender earnings gap for a national sample of mbas we account for 82 percent of the gap by incorporating noncognitive skills for example confidence and assertiveness and preferences regarding family career and jobs those two sources of gender heterogeneity account for a quarter of the explained pay gap with half due to human capital variables and the other quarter due to hours worked and current job characteristics female mbas appear to pay a penalty for good citizen behavior choosing jobs that contribute to society and characteristics higher ethical standards

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

four approaches to commodity market stabilization a comparative analysis the effects of four alternative price stabilization programs for soybeans are compared using a rational expectations model and simulation for a given government expenditure subsidized private storage is the most efficient way to stabilize market price for a given deadweight loss a program of direct payments is the most efficient stabilizer of the effective farm price this program does not stabilize market price all four programs including a buffer stock program and one involving both direct payments and buffer stocks tend to destabilize quasi rent programs that involve an initial build up of stocks increase producer benefits and hurt consumers

interindustry wage differentials and the gender wage gap using data from the march 1988 current population survey the authors find that the wages of female workers differ significantly by industry even when the analysis controls for workers productivity related characteristics although these interindustry wage differentials are at least as large as men s and are highly correlated with them as well there are statistically significant differences between the two of the overall gender wage gap the average female worker earns about 65 as much as the average male worker 12 22 can be explained by differences between the patterns of interindustry wage differentials of men and women and 15 19 by differences in the distribution of male and female workers across industries thus the combined industry effects explain about one third of the overall gender wage gap

the economic role of commodity storage one of the earliest and most successful exainples of economic policy is the oftquoted biblical account of joseph s interpretation of the pharoah s dream joseph foretold that seven years of abundant harvests would precede seven years of drought and recommended that the pharoah accumulate grain during the good years since that time the central role of storage in stabilising the economy in the face of exogenous disturbances has been obvious but our understanding of the nature of that role has not greatly advanced without divine assistance in forecasting stochastic production the storage decision is considerably more complex than the one joseph faced and the role of storage quite different in fact several commonly held impressions about the role of storage of commodities such as grains are incorrect rather than stabilising production storage actually accentuates its variability rather than causing a mean price preserving decrease or a mean output preserving decrease in the dispersion of price storage generally causes a more complex modification of the distribution of price rather than being most effective at eliminating short falls in consumption storage actually is more effective at eliminating the incidence of exceedingly high consumption in this paper we explore the role of storage in a model where production is stochastic and both production and storage are performed by competitive profitmaximisers who form rational expectations about the returns to their activities we derive the subtle but very important interactions among production price expectations and storage which simpler models cannot capture finally we make a comparative statics assessment of the distributional implications of storage these results while confirming the importance of the specification of the demand function and the supply elasticity identified in recent analytical studies e g wright i979 and newbery and stiglitz i979 are surprisingly favourable to consumers considering the asymmetric nature of the effects of storage on consumption and price storage is simply a productive activity one that transfers a commodity from one period to the next like other forms of production it is costly the total cost of storing an amount st from period t to period t i is as of period t i

the vulnerability of price stabilization schemes to speculative attack this paper examines the effects of government attempts to stabilize the prices of commodities by use of buffer stocks agricultural goods subject to supply uncertainty as well as depletable resources are considered in each case it is shown that the resulting rational expectations competitive equilibrium contains a speculative attack a situation where the entire government stock is suddenly purchased by previously inactive speculators the analysis is applied to the historical attempt to peg the gold price which caused the attack of 1968 the insights gained and the methodology developed also apply to the various international agreements to impose bans on commodity prices which have been proposed by the united nations conference on trade and development

government target price intervention in economies with incomplete markets the target price deficiency payment program is among economists favorite examples of costly government intervention in competitive markets dubbed the brannan plan after president truman s secretary of agriculture this program pays producers any positive difference between a given target price and the prevailing market price for their output in a world of certainty and perfect competition such an intervention benefits producers hurts consumers as taxpayers and causes a net harberger triangle welfare loss these implications are not only standard fare in economics lecture halls they have become conventional wisdom in contemporary policy discussions for example the 1986 economic report of the president states income support programs by inhibiting the efficient operation of agricultural markets can impose extra costs on consumers and taxpayers that exceed the amount of income transferred to farmers when such losses occur the programs are doing more than redistributing income they are wasting valuable economic resources that could be used to make everyone better off the object of this paper is to show that these conclusions do not extend to a stochastic production economy with incomplete contingent claim markets in the latter setting the distributional and welfare implications of a brannan plan can be reversed producers can be made worse off consumers can be made better off and with nonstochastic compensation all agents can be made better off the conditions under which these outcomes occur include producer risk aversion and low price and income elasticities of demand all well known characteristics of staple food markets in which target price programs are actually employed e g markets for wheat corn and rice like many other equilibrium analyses of resource allocation

the economic returns to an mba because mba programs require work experience before admittance prior wages can be exploited to disentangle the return to the degree from unobserved productivity we find that controlling for individual fixed effects generally reduces the estimated returns to an mba particularly for those in top programs however for full time mba students attending schools outside of the top 25 the estimated returns are higher when we control for individual fixed effects we show that there is some evidence that those who take the gmat but do not obtain an mba are stronger in dimensions such as workplace skills that are not easily measured

the dynamics of business ethics and economic activity the authors model the agency relationship between managers and investors through socialization ethical managers develop internalized norms that prevent them from acting opportunistically unethical managers lack these norms higher ethical standards on the part of managers increase economic activity in the short run however increased economic activity increases opportunities to profit from unethical behavior eroding ethical standards over the long run when this rate of erosion is high cycling of ethics and economic activity emerges otherwise ethics and economic activity converge to a stable long run limiting value

testing rational expectations in primary commodity markets the standard method used to test the rational expectations hypothesis reh in primary commodity markets is by means of a structural approach in this paper a parsimonious vector error correction model in the price and stock equation is derived that maintains almost complete information of the underlying structural model the empirical section utilizes 1955 2000 us copper data to investigate the properties of the model extended to the macroeconomic variables the estimation results are statistically robust and are in keeping with economic theory three different results are found i price adjustments depend on the short run dynamic of the stock equation whereas the long run dynamic is statistically rejected ii the over identification restrictions including the test for the reh are not rejected iii the forecast simulations on price are well performed

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

transitions career and family life cycles of the educational elite among life s most vital transitions are those concerning family and career we decide when and whom to marry how many children to have whether to further our education and which occupations and jobs to pursue fundamental aspects of these transitions began to change around the early 1970s for the college educated generally and for women in particular the median age at first marriage among college graduate women which had been stable at about 22 5 years old from the 1950s to the early 1970s for birth cohorts from the 1930s to about 1950 increased by 2 5 years between 1972 and 1979 for birth cohorts from about 1950 to 1955 the fraction of women not having a first birth by around 40 years old increased from 20 percent for those graduating in the early 1960s to 28 percent for those graduating in the 1970s college graduate women greatly increased their education in professional schools the fraction female among first year law and medical school students for example was 10 percent in 1970 but rose to 40 percent by 1990

alternative approaches to cost containment in a cap and trade system we compare several emissions reduction instruments including quantity policies with banking and borrowing price policies and hybrid policies safety valve and price collar using a dynamic model with stochastic baseline emissions the instruments are compared under the design goal of obtaining the same expected cumulative emissions across all options based on simulation analysis with the model parameterized to values relevant to proposed us climate mitigation policies we find that restrictions on banking and borrowing including the provision of interest rates on the borrowings can severely limit the value of the policy depending on the regulator chosen allowance issuance path although emissions taxes generally provide the lowest expected abatement costs a cap and trade system combined with either a safety valve or a price collar can be designed to provide expected abatement costs near those of a tax but with lower emissions variance than a tax consistently a price collar is more cost effective than a safety valve for a given expected cumulative emissions outcome because it encourages inexpensive abatement when abatement costs decline

swimming upstream trends in the gender wage differential in the 1980s using michigan panel study of income dynamics data for 1979 and 1988 we analyze how a falling gender wage gap occurred despite changes in wage structure unfavorable to low wage workers the decrease is traced to gender specific factors which more than counterbalanced changes in measured and unmeasured prices working against women supply shifts net of demand were unfavorable for women generally and hurt high skilled more than middle and low skilled women by analyzing wages we find support for the notion of a gender twist in supply and demand having its largest negative effect on high skilled women