potential implications of a special safeguard mechanism in the world trade organization the case of wheat the special safeguard mechanism both quantity and price based was key in the july 2008 failure to reach agreement in the world trade organization wto negotiations under the doha development agenda a stochastic simulation model of the world wheat market is used to investigate the effects of the special safeguard mechanism as expected the quantity based safeguard is found to reduce imports raise domestic prices and boost mean domestic production in the countries that implement it however rather than insulating developing countries in those regions from price volatility the quantity based safeguard increases domestic price volatility largely by restricting imports when domestic output is low and prices are high the quantity based safeguard shrinks average wheat imports nearly 50 percent in some regions and global wheat trade falls by 4 7 percent the price based safeguard discriminates against lower price exporters and contributes to producer price instability

asymmetric loss and herding behaviour of exchange rate forecasters evidence from south africa this study examines the asymmetry of the loss function for private forecasters in exchange rate forecasts of the south african rand it tests rationality under the possibility of an asymmetric loss function the results indicate less evidence of asymmetry for a horizon of 1 month but considerable evidence of asymmetry for a horizon of 3 months however the shapes of the distributions formed by estimated asymmetry parameters of sub samples for each forecaster are symmetric regardless of the forecast horizons which implies that these forecasters do not herd or antiherd in fact the results of our empirical herding test show that forecasters neither herd nor antiherd which is in sharp contrast to recent findings on antiherding for foreign exchange rates in emerging market economies our findings provide consistent evidence for a recent suggestion that antiherding might result in the rejection of rationality even under asymmetric loss functions our findings also suggest that central bank transparency m

scale economies and the volume of trade in this paper we split the number of actual years of schooling into five components effective years repeated years skipped years inefficient routing years and dropout years estimation of earnings equations using these explanatory variables produces some interesting empirical and theoretical results the main empirical finding is that the concepts of actual and effective years of schooling that are usually used in the estimation of earnings equations are statistically inferior to our classification both concepts pro

on the loss function of the bank of canada a note abstract based on the approach advanced by elliott et al elliott g komunjer i timmermann a 2005 estimation and testing of forecast rationality under flexible loss review of economic studies 72 1107 1125 we studied whether the inflation and output growth projections published by the bank of canada are consistent with an asymmetric loss function current year projections provide no signs of asymmetry but next year projections do the hypothesis of rationality of the projections can be rejected under symmetric loss but not under asymmetric loss

rationality testing under asymmetric loss abstract this paper shows that if agents have an asymmetric loss function standard empirical tests for the rationality of their expectations are in general invalid we further show that under a popular class of asymmetric loss functions the linex family a valid test can be carried out by estimating an appropriate arch in mean model the contrast between the standard test and our arch m test is illustrated using the goldsmith nagan forecasts of us treasury bill yields

regional integration in china a statistical model abstract we illustrate that a statistical model can be used to gauge the degree of market integration the model is applied to the case of china which is undergoing transition from a central planning to a market economy and there is a growing interest as to the evolution of its market integration

the convergence of profits in the long run inter firm and inter industry comparisons this paper considers the extent to which the short run dynamic behavior and long run equilibrium levels of profitability differ among firms within the same industry movements in profits are modeled in terms of firm specific deviations from average industry profits and industry specific deviations from economy wide average returns applied to a sample of 217 large u k firms 1951 77 the results suggest that considerable heterogeneities exist within most industries that is most firms profitability experience differs considerably from those of their closest rivals copyright 1987 by blackwell publishing ltd

economies of scale and the volume of intra industry trade abstract using a model of monopolistic competition with traded and non traded goods this paper establishes a positive link between scale economies the volume of intra industry trade and the share of trade in total production these results are consistent with empirical findings

testing the rationality of doe s energy price forecasts under asymmetric loss preferences this paper examines the rationality of the price forecasts for energy commodities of the united states department of energy s doe departing from the common assumption in the literature that doe s forecasts are based on a symmetric underlying loss function with respect to positive vs negative forecast errors instead we opt for the methodology of elliott et al 2005 that allows testing the joint hypothesis of an asymmetric loss function and rationality and reveals the underlying preferences of the forecaster results indicate the existence of asymmetries in the shape of the loss function for most energy categories with preferences leaning towards optimism moreover we also examine whether there is a structural break in those preferences over the examined period 1997 2012

globalization trade and income my purpose in this paper is to address two questions that confront our discipline repeatedly these days first what is a useful classification of the symptoms and the determinants of globalization a phase used in a remarkable variety of contexts to economists globalization is generally thought of as the increasing internationalization of the production distribution and marketing of goods and services the term is used less precisely in the popular literature perhaps best exemplified by kenichi ohmae s book the borderless world and when used loosely it invokes a wide variety of political sociological environmental and economic trends that are the concern of media attention almost daily however one defines globalization it is surely a development that is having a profound impact on the subject of economics as a whole and ought to have on the field of international economics in particular my second purpose is to ask how globalization is affecting our profession s view of theory and empirical work in international economics traditional trade theory was concerned with a set of fairly well defined questions regarding the determinants of trade the pattern of trade and the welfare consequences of various trade policy instruments the last two decades and perhaps the last decade in particular has led to a much wider interpretation of what living in an open economy means the change that is occurring on a wide range of economic social scientific and

trade effects of scale economies evidence from four eu countries abstract this paper investigates the empirical relationship between the magnitude of scale economies and trade scale economies are directly estimated from a non linear translog production function system these estimates are then introduced in an original supply demand export model the application of this model to four eu countries indicates that exports unambiguously rise with the degree of scale economies these results support schmitt and yu s econ lett 74 2001 127 theoretical expectations

assessing global computable general equilibrium model validity using agricultural price volatility computable general equilibrium cge models are commonly used for global agricultural market analysis concerns are sometimes raised however about the quality of their output since key parameters may not be econometrically estimated and little emphasis is generally given to model assessment this article addresses the latter issue by developing an approach to validating cge models based on the ability to reproduce observed price volatility in agricultural markets we show how patterns in the deviations between model predictions and validation criteria can be used to identify the weak points of a model and guide development of improved specifications with firmer empirical foundations

improving fiscal policy in the eu the case for independent forecasts are official output forecasts biased we point out that official forecasts of output dynamics are crucial to the assessment of cyclically adjusted budget balances and provide evidence that in some euro area countries biased forecasts have played a thus far neglected role in generating excessive deficits we suggest that the forecast bias may be politically motivated and that forecasts produced by an independent authority would be better than in house ministry of finance forecasts for the purpose of monitoring budget formation and budget outcomes lars jonung and martin larch

why has trade grown faster than income trade of the oecd countries has grown faster than income during the postwar period this paper tests a number of different hypotheses for the observed growth in the trade income ratio for small open economies increases in real output and international reserves as well as declines in tariff rates are associated with growth in the ratio there are important differences in the behavior of the trade ratio across time and country size

homogeneous profit tax effects for heterogeneous firms in most countries profit taxation is probably much more relevant nowadays than trade liberalisation when it comes to firm level decisions about investment empirically firms are quite heterogeneous with regard to fixed costs the composition of assets tangible versus intangible machinery versus buildings etc and the financing of investments then even uniform changes in profit tax instruments cause heterogeneous responses of firm level effective tax rates and hence after tax profits we argue that with similar profit margins firms would then require pre tax profits to differ as well governments change statutory profit tax rates and by virtue of firms heterogeneity they cause stark selection effects which are mainly related to heterogeneous fixed rather than variable costs we compute costs of capital for a large sample of firms to illustrate how homogeneous changes in tax instruments hit firms differently using bureau van dijk s orbis database we illustrate that the effects of changes in statutory instruments have relatively large systematic variance components across industries within countries and also relatively large ones of firms within industries and countries

assessing the prudence of economic forecasts in the eu we estimate the eu commission loss preferences for major economic forecasts of 12 member states based on a recently proposed method by elliott komunjer and timmermann 2005 the paper provides evidence of asymmetries in the underlying forecast loss preference of the commission that tend to vary across member states in some cases our results show that eu forecasts tend to display a rather optimistic picture for main economic variables e g government balance thus allowing a certain degree of leeway in the fiscal adjustment path towards the medium term objective of close to balance or in surplus of the recently revised stability and growth pact over the period of our sample 1970 2004 this apparent asymmetry in the underlying loss preferences tends to deter prudent advice over economic policy lastly we provide an analysis on the trade off between loss and distribution asymmetries for which simulation results show that the testing method is robust in the presence of skewness copyright 2009 john wiley sons ltd

evaluating japanese corporate executives forecasts under an asymmetric loss function abstract we examine asymmetry in the loss function of japanese corporate executives in their output growth forecasts and test for rationality of the forecasts under the assumption of a possibly asymmetric loss function we find evidence of asymmetry and support for rationality under an asymmetric loss function

can rational stubbornness explain forecast biases this paper examines whether the rational jumpiness stubbornness hypothesis can explain forecast biases using a dataset of professional gdp forecasts for the g7 countries over the period 1989 2010 we find evidence supporting the rational stubbornness hypothesis specifically forecasters underreact more when large forecast revisions are highly indicative of low forecast ability underreaction is less likely when the size of forecast revisions is unrelated to ability these findings are consistent with the hypothesis that forecasters choose to smooth gdp forecasts to maximize their perceived ability

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

a dual approach to evaluating research benefits in the presence of trade distortions we present a new approach for evaluating the welfare consequences of technical change a major feature is its ability to incorporate multiple distortions and multiple sources of technical change in interrelated markets a modified balance of trade function provides money measures of welfare change in terms of producer profits consumer expenditures and tax revenues alternative specifications of technical change are presented to capture the effects of differences in the form of technical change in an illustrative numerical example the approach is applied to a case involving two distortions and technical changes in two related markets the example shows that the approach is reasonably easy to use and that accounting correctly for price distortions can have important implications for research benefit measures

the dynamics of company profits an international comparison 1 profits and the process of competition dennis c mueller 2 modelling persistent profitability paul a geroski 3 the persistence of profits in the united states dennis c mueller 4 the persistence of profits in us manufacturing industries ioannis kessides 5 the persistence of profitability in canada r shyam khemani and d m shapiro 6 persistence of corporate profits in the federal republic of germany joachim schwalbach and talat mahmood 7 the persistence of profits in france frederic jenny and andre paul weber 8 the persistence of profits in japan hiroyuki odagiri and hideki yamawaki 9 the persistence of profits in the uk john cubbin and paul a geroski 10 the persistence of profits international comparison hiroyuki odagiri and hideki yamawaki 11 the persistence of profits in perspective paul a geroski and dennis c mueller

estimation and testing of forecast rationality under flexible loss in situations where a sequence of forecasts is observed a common strategy is to examine rationality conditional on a given loss function we examine this from a different perspective supposing that we have a family of loss functions indexed by unknown shape parameters then given the forecasts can we back out the loss function parameters consistent with the forecasts being rational even when we do not observe the underlying forecasting model we establish identification of the parameters of a general class of loss functions that nest popular loss functions as special cases and provide estimation methods and asymptotic distributional results for these parameters this allows us to construct new tests of forecast rationality that allow for asymmetric loss the methods are applied in an empirical analysis of imf and oecd forecasts of budget deficits for the g7 countries we find that allowing for asymmetric loss can significantly change the outcome of empirical tests of forecast rationality