price distortions in agriculture and their effects an international comparison the central thesis of this paper is that agricultural pricing policies pursued by developing countries produce effects which are diametrically opposite to those produced by the pricing policies of many developed countries and that the policies of both are costly in terms of global welfare in general the agricultural sector in developing countries is heavily taxed while that in the developed countries receives substantial price protection the effects of agricultural price distortions on output consumption trade and rural employment are estimated for nine countries in addition the effects of price distortions on the distribution of income between producers and consumers on government revenue and foreign exchange and the net social losses of the policies are calculated the results indicate that there are large income transfers and impacts on migration from the rural to the urban sector in developing countries and from the urban to the rural sector in developed economies

alleviating transitory food crises in sub saharan africa international altruism and trade the donor community has responded to unexpected or transitory drops in domestic food production in many countries in sub sabaran africa an empirical framework estimates and analyzes the correlation between this food aid and domestic production both emergency food aid and commercial imports are used to offset the effects of negative output shocks in sub saharan african countries the major recipients of global emergency food aid on average every one ton drop in cereal production is offset by the delivery of 0 8 tons of cereal and dairy products from abroad over four years most food aid arrives within a year of a shock and correlation of shocks over time along with the differences between crop years and calendar years may explain the link between aid and production the economic and political considerations also determine the global response to the emergency food needs of countries in africa the international response is not contingent on the form of government or the level of political and human rights violations poorer countries and those with well established nonemergency food aid programs receive larger amounts of emergency aid when needed food aid has long helped low income countries to sustain domestic food supplies and cope with transitory food insecurity and it has also been used to accelerate agricultural development and increase food production but food aid has been heavily criticized in the past decade on several grounds first it has been charged that the international response to food crises is slow meager and inefficient a related accusation suggests that countries granting emergency food aid disciriminate on the basis of the political and economic orientation of the recipient country second food aid has been thought to discourage domestic food production thus leading to long term dependence on donors finally it has

on the transmission of world agricultural prices two questions are asked about the relationship between domestic prices and world prices of agricultural commodities are variations in world prices transmitted to domestic prices domestic prices are regressed on world prices in various forms taking into account the possible effects of exchange rates and inflation the empirical analysis is based on data from the food and agriculture organization of the united nations for 58 countries from 1968 78 and for the countries of the european community from 1961 85 the results show that most of the variations in world prices are transmitted and that they constitute the dominant component in the variations of domestic prices

implications of agricultural trade liberalization for the developing countries abstract the developing countries as a group could expect to experience only small welfare gains if they chose not to actively participate in agricultural trade liberalization and relied solely on the benefits of partial liberalization in the oecd countries participation along the lines of the dunkel package with the developing countries reducing positive assistance by less than the developed countries would yield gains of the order of us 20 billion more comprehensive participation in trade liberalization involving reductions of both positive and negative protection would almost triple these welfare gains while some developing countries do not gain from trade liberalization even with full participation the number of such countries and the magnitude of their losses are greatly reduced

price relations between export and domestic rice markets in thailand abstract many rice importing countries argue that rice exporting nations isolate their domestic markets through the use of stabilization pricing policies which cause international rice markets to become excessively volatile for the argument to hold any weight price transmission between exporting countries domestic and export markets should be unidirectional whereby export prices are driven by domestic prices but domestic prices are not affected by export prices the study tests the hypothesis on thailand traditionally the world s largest rice exporter the results from the causality tests are not entirely clear however the results from the impulse response functions show that while the shocks originating in the domestic market are higher in magnitude in the export market in the short run the shocks originating in the export market are more persistent in the domestic market this suggests that although thailand s domestic policies are somewhat effective in the immediate months after the shock they allow price transmission from its export market to transfer over to its domestic market in the long run the results therefore imply that thailand s domestic pricing programs are not heavily distorting world rice markets

market integration and price transmission in consumer markets of developing countries abstract world prices for agricultural commodities surged in 2006 08 and then again in 2011 12 in many developing countries consumer prices for staple foods such as bread and rice mirrored these movements this paper examines whether prices in urban consumer markets within developing countries are co integrated with prices in world agricultural commodity markets using a single equation error correction model we examine the response of consumer prices for wheat rice maize and sorghum to changes in world market prices and exchange rates in urban centers of the developing world analyzing over 60 country commodity pairings we find that developing countries consumer markets are co integrated with world markets yet we also find that the transmission of changes in both world prices and real exchange rates to domestic consumer prices is not high and that the movement of domestic consumer prices to new equilibrium with world prices after a shock to the latter is relatively slow

spatial market efficiency and policy regime change seemingly unrelated error correction model estimation we investigate the degree to which the wheat markets of france germany and the united kingdom are in spatial equilibrium and how reforms to the cap affect the speed of convergence to the longrun relationship due to the interrelationship among these markets and the nonstationarity of our data we introduce a seemingly unrelated regression augmented dickey fuller and error correction methodology we argue this methodology is more efficient than ordinary cointegration and error correction models empirically we find strong evidence of efficient spatial markets and conformity to the law of one price market liberalization reforms in the eu increased the comovement of domestic and world wheat prices our post uruguay round price transmission elasticity was 0 183

the global food crisis and guatemala what crisis and for whom summary international food prices rose sharply during 2006 08 precipitating the global food crisis we analyze the welfare effects of changes in prices over categories of households in guatemala and find three surprising results the first is that the transmission of international into domestic prices was quite modest the second is that most farm households are net buyers of food implying that they lost from rising prices the third is that farm households represent two thirds of all poor households losing from rising food prices stressing the importance of production for home consumption in sheltering the poor from the crisis

geography matters international trade patterns and the indirect land use effects of biofuels this article investigates the relationship between international trade patterns and the global distribution of coarse grain production responses to market developments in the united states our null hypothesis is that world markets are fully integrated rendering the geographic persistence of bilateral trade flows irrelevant in the global production response to a change in us prices the alternative hypothesis allows price transmission to vary along with the intensity of competition among countries in specific markets using data from 1975 to 2002 we reject the null hypothesis our work has direct implications for the analysis of the global land use impacts of biofuel mandates

sugar prices labor income and poverty in brazil this paper assesses the impact that a potential liberalization of sugar regimes in oecd countries could have on household labor income and poverty in brazil the authors first estimate the extent of price transmission from world markets to 11 brazilian states to capture the fact that some local markets may be relatively more isolated from changes in world prices they then simultaneously estimate the impact that changes in domestic sugar prices have on regional wages and employment depending on worker characteristics finally they measure the impact on household income of a 10 percent increase in world sugar prices results suggest that workers in the sugar sector and in sugar producing regions have better employment opportunities and experience larger wage increases more interestingly households at the top of the income distribution experience larger income gains due to higher wages whereas households at the bottom of the distribution experience larger income gains due to movements out of unemployment

liquidity risk in stock returns an event study perspective we examine in an event study context what factors affect the relative performance of stocks during liquidity crises we find that market risk measured by the market beta is not a good measure of expected abnormal stock returns on days with liquidity crises instead abnormal stock returns during liquidity crises are strongly negatively related to liquidity risk measured by the co movement of stock returns with market liquidity the degree of informational asymmetry and the ownership structure of the firm also help to explain abnormal stock returns on crisis days our findings have important implications for managing the liquidity risk of equity portfolios

commercial policy variability bindings and market access abstract protection unconstrained by rules often varies substantially over time rules based disciplines such as wto tariff bindings and bindings on market access in services constrain this variability we examine the theoretical effects of such constraints on the expected cost of protection and offer a formalization of the concept of market access emphasizing both the first and second moments of the distribution of protection as an illustration we provide a stylized examination of uruguay round bindings on wheat

agricultural price transmission elasticity importance of controlling for unobserved common factors a voluminous amount of the literature estimates price transmission from world markets to domestic markets ignoring unobserved factors that commonly affect domestic markets this article reevaluates the long run and short run transmission elasticity of world food price shocks to domestic markets using a common factor framework that takes unobserved common factors that are correlated with regressors into consideration in the estimation annual price data for rice wheat and maize for a panel of developed and developing countries that are observed over the period of 1960 2007 are used the results from a common factor framework to those that do not account for common factors are then compared our findings suggest that ignorance of common factors is likely to result in upwardly biased elasticity estimates

impacts of economic reform in poland incidence and welfare changes within a consistent framework the costs of shortages and rationing are not captured by standard consumer price indices thus the change in real gdp per capita is an overestimate of welfare losses in transition economics in this study virtual prices are used to calculate new cost of living indices clis the results for polant show that from 1987 to 1992 the cli ignoring the rationing effects is biased upward from 1 53 to 3 71 percentage points per year compared to the estimates of welfare loss that neglect the rationing effects during the prereform period the estimated welfare losses that reflect the rationing are reduced by 50 using hausman virtual prices and by 75 using external proxy virtual prices

effects of macroeconomic policies on sectoral prices the effect of macroeconomic policies on the relative prices of internationally traded and domestic goods has been the subject of extensive study analysis of the way in which these policies then affect prices at the sectoral level is complicated by the beterogeneity of sectoral production even the prices of single products usually are determined by both domestic and traded components we present a framework which first traces the influence of macropolicy on the relative prices of exports imports and home goods it then accounts for each sector s degree of tradability which is based on the importance of trade in sectoral income and the influence of macroeconomic policy on sectoral prices to illustrate the use of this approach it is applied to a simulation of trade liberalization in argentina our results suggest that economywide policies had substantial negative effects on both the real exchange rate and the incentives to agricultural exports in an open economy the prices of tradable products are determined by world prices nominal exchange rates and taxes the prices of products which are not tradable are determined by domestic supply and demand which are themselves influenced by the actions and policies of the government some very important economic decisions depend on the price of tradables relative to that of nontradables the real exchange rate we examine here the way in which broader government policies affect the real exchange rate and through it prices at the sectoral level

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

unfair trade the increasing gap between world and domestic prices in commodity markets during the past 25 years the early literature on international trade has debated extensively the constraints facing exporting countries in the major commodity markets this article goes one step further by suggesting that the final demand for these products can not have increased because the declines in world commodity prices were not transmitted or were transmitted imperfectly to domestic consumer prices in contrast upward movements in world prices were clearly passed on to domestic prices as a result the spread between world and domestic prices almost doubled in all major commodity markets during 1975 94 this asymmetry seldom discussed in the literature does not seem to be caused at least systematically by changes in trade and tax policies or factors such as transport processing and marketing costs this article argues therefore that a special effort should be made to better understand the transmission from world to domestic prices especially the role of large international trading companies that may have the capability to influence such spreads through one or several stages of processing in most major commodity markets

agricultural trade distortions during the global financial crisis the authors are grateful for financial support from the australian research council rural industries research and development corporation and world bank

a macroeconomic analysis of agricultural terms of trade in turkey 1952 90 a two sector model of terms of trade tot determination is developed and tested using time series data for turkey empirical results support the structuralist flex price agriculture fix price industry models tot is found to be sensitive to changes in nominal demand and the exchange rate rising nominal demand turns the tot in favour of the agricultural sector provided that there are no supply constraints in the industrial sector if industrial supply is constrained by import bottlenecks then aggregate demand expansion turns the tot in favour of the industrial sector devaluation turns the tot against the agricultural sector primarily via the cost push factors in the industrial sector

the political economy of agricultural protection east asia in an international perspective kym anderson and yujiro hayami allen and unwin australia japan research centre australian national university london sydney boston 185 pp

coffee market liberalisation and the implications for producers in brazil guatemala and india the standard approach to modelling the relationship between world and producer prices of coffee does not incorporate the effects of changing government policies and market structures these changes have led to large structural breaks in the relationship between the prices implying the standard estimates are biased we model coffee prices in brazil guatemala and india allowing for the structural breaks and show that the liberalisation of coffee markets has benefited producers substantially both in terms of a higher share of the world price of coffee and higher real prices this suggests that calls to re regulate coffee markets may be misplaced

exchange rate alignment and producer support estimates pses for india this article examines the effects of exchange rate alignment during 1985 2002 on agricultural producer support estimates pses for india based on several time series techniques the equilibrium exchange rate of the indian rupee and the corresponding misalignment of the actual rate are estimated and applied to recent pse calculations our results show that the exchange rate was substantially misaligned before a financial crisis and macroeconomic reform in the early 1990s with subsequent indirect effects on the pses we find a relatively high pass through of exchange rate movements to domestic agricultural prices so that removal of the exchange rate misalignment would have improved incentives to indian farmers during this period more recently this indirect exchange rate effect is smaller than the direct effect in the pses indicating the dominance of sectoral specific policies over economy wide policies

the effects of rising food prices on poverty in mexico we evaluate the impact of the rise in food prices during 2006 2008 on the poverty and extreme poverty rates in mexico we concentrate on the poor s consumption of staple foods and analyze the change in their consumption brought about by changed prices we also allow households receiving income from the farming and livestock sector to benefit from increases in prices of food products we find a modest increase in poverty using 2006 2007 prices however there is a daunting effect on the poor once the 2008 prices are taken into account after considering the positive effects of public policies announced in 2008 such as reduced taxes and tariffs on food products and greater subsidies to the extremely poor the poverty rate measured through consumption increases from 25 to 33 5 and the extreme poverty rate from 10 58 to 16 given the increase in food prices further analysis using the theory of optimal taxes suggests policies oriented towards relieving the food price pressure on the mexican poor should aim at lowering the prices of eggs vegetable oil milk and chicken

has world cereal market instability increased abstract this paper argues that world cereal prices are good indicators of the state of world cereal markets it tests whether real prices for wheat rice and maize exhibit deterministic or stochastic trends concluding that the underlying trends are most likely deterministic after appropriate deterministic detrending the paper tests for increased variance of the residuals of real cereal prices finding that there does not appear to be evidence for increased year to year price instability tests for increased intra year price variability also reject the hypothesis of increased variability discussion of recent changes in the pattern of world cereal production and trade suggests that these conclusions are not contrary to observed trends

when minority labor migrants meet the welfare state life cycle employment of minority labor migrants who entered norway in the early 1970s diverges from that of natives immigrant employment was nearly complete during early years but declined to 50 by the year 2000 compared to 87 for a native comparison group we find that immigrant employment is particularly sensitive to the business cycle and that economic downturns of the 1980s and 1990s accelerated their labor market exit we trace part of the decline to migrants being overrepresented in shrinking industries but we also identify welfare disincentives that contribute to poor life cycle employment performance of immigrants with many dependent family members

identifying price linkages a review of the literature and an application to the world market of cotton this paper reviews the literature of price linkages and examines the degree to which cotton prices are linked it also tests whether such linkages have improved over the last decade it concludes that the degree of linkage has improved over the last decade while the main source of this improvement appears to be a result of short run price transmission and to a lesser extent long run co movement

market integration and spatial price transmission in grain markets of turkey this paper examines whether the grain market of turkey is cointegrated with the world grain market using an error correction model we analyse the response of producer prices of wheat barley mai

agricultural diversification and policy reform the impact of risk on agriculture and the alternative ways of dealing with it has captured the attention of economists and policy makers for a long time in recent years the issue has gained renewed interest many countries have started policy reforms aimed at liberalizing domestic markets removing quantitative restrictions on trade and opening up their economies to international trade opportunities as this process develops producers in different region of the world will start facing increased price variability arising from world market fluctuations as up to now mainly due to government marke interventions domestic producer prices have varied substantially less than international ones hazell et al 1990 schiff and valdes 1992 hence risk and price risk in particular will most probably be at the core of the implementation problems associated with policy reform packages it is well known that diversification of the production mix can be a particularly efficient mechanism for diminishing the impact of risk on producers welfare in this regard different public policies may help to deepen diversification in agriculture public investment in irrigation being the most important example however since many of these policies entail a significant use of resources an important policy question concerns the impact that trade and macro reform may have on risk in agricultural activities and on the endogenous diversification response by producers the main objectives of this paper are to 1 review the problem of price risk in agriculture especially in the case of domestic markets facing international price fluctuations 2 examine the potential role for diversification as a way of diffusing price risk and 3 analyze the interaction between the process of trade and macro reform price risk and agricultural diversification it is important to mention at the outset that the risk perspective the one adopted in this paper is just one of the many angles from w this abstract was borrowed from another version of this item

grain price and volatility transmission from international to domestic markets in developing countries summary understanding the sources of domestic food price volatility in developing countries and the extent to which it is transmitted from international to domestic markets is critical to help design better global regional and domestic policies to cope with excessive food price volatility and to protect the most vulnerable groups this paper examines short term price and volatility transmission from major grain commodities to 41 domestic food products across 27 countries in africa latin america and south asia we follow a multivariate garch approach to model the dynamics of monthly price return volatility in international and domestic markets the period of analysis is 2000 through 2013 in terms of price transmission we only observe significant interactions from international to domestic markets in few cases to calculate volatility spillovers we simulate a shock equivalent to a 1 increase in the conditional volatility of price returns in the international market and evaluate its effect on the conditional volatility of price returns in the domestic market the transmission of volatility is statistically significant in just one quarter of the maize markets tested more than half of rice markets tested and all wheat markets tested volatility transmission seems to be more common when trade imports or exports are large relatively to domestic requirements

implications of higher global food prices for poverty in low income countries in many poor countries the recent increases in prices of staple foods raise the real incomes of those selling food many of whom are relatively poor while hurting net food consumers many of whom are also relatively poor the impacts on poverty will certainly be very diverse but the average impact on poverty depends upon the balance between these two effects and can only be determined by looking at real world data results using household data for ten observations on nine low income countries show that the short run impacts of higher staple food prices on poverty differ considerably by commodity and by country but that poverty increases are much more frequent and larger than poverty reductions the recent large increases in food prices appear likely to raise overall poverty in low income countries substantially

how vulnerable are arab countries to global food price shocks this paper presents new estimates of pass through coefficients from international to domestic food prices by country in the middle east and north africa the estimates indicate that despite the use of food price subsidies and other government interventions a rise in global food prices is transmitted to a significant degree into domestic food prices in many countries in the middle east and north africa although cross country variation is significant in nearly all countries domestic food prices are highly downwardly rigid the finding of asymmetric price transmission suggests that not only international food price levels matter but also food price volatility high food pass through tends to increase inflation pressures where food consumption shares are high domestic factors often linked to storage logistics and procurement have also played a major role in explaining high food inflation in the majority of countries in the region