getting ppp right identifying mean reverting real exchange rates in panels abstract recent advances in testing for the validity of purchasing power parity ppp focus on the time series properties of real exchange rates in panel frameworks one weakness of such tests however is that they fail to inform the researcher as to which cross section units are stationary as a consequence a reservation for ppp analyses based on such tests is that a small number of real exchange rates in a given panel may drive the results in this paper we examine the ppp hypothesis focusing on the stationarity of the real exchange rates in up to 25 oecd countries we introduce a methodology that when applied to a set of established panel unit root tests allows the identification of the real exchange rates that are stationary our results reveal evidence of mean reversion that is significantly stronger as compared to that obtained by the existing literature strengthening the case for ppp

escaping poverty and becoming poor in 36 villages of central and western uganda abstract twenty four per cent of households in 36 village communities of central and western uganda have escaped from poverty over the past 25 years but another 15 per cent have simultaneously fallen into poverty a roughly equal number of households escaped from poverty in the first period ten to 25 years ago as in the second period the last ten years examined here however almost twice as many households fell into poverty during the second period as in the first period progress in poverty reduction has slowed down as a result multiple causes are associated with descent into poverty and these causes vary significantly between villages in the two different regions for nearly two thirds of all households in both regions however ill health and health related costs were a principal reason for descent into poverty escaping poverty is also associated with diverse causes which vary across the two regions compared to increases in urban employment however land related reasons have been more import

the economics of poverty traps and persistent poverty an asset based approach abstract longitudinal data on household living standards open the way to a deeper analysis of the nature and extent of poverty while a number of studies have exploited this type of data to distinguish transitory from more chronic forms of income or expenditure poverty this paper develops an asset based approach to poverty analysis that makes it possible to distinguish deep rooted persistent structural poverty from poverty that passes naturally with time due to systemic growth processes drawing on the economic theory of poverty traps and bifurcated accumulation strategies this paper briefly discusses some feasible estimation strategies for empirically identifying poverty traps and long term persistent structural poverty as well as relevant extensions of the popular foster greer thorbecke class of poverty measures the paper closes with reflections on how asset based poverty can be used to underwrite the design of persistent poverty reduction strategies

are some groups more vulnerable to macroeconomic shocks than others hypothesis tests based on panel data from peru abstract which socio economic groups are most vulnerable to welfare declines during a macroeconomic shock after clarifying the difference between poverty and vulnerability this paper presents an analytical framework and applies it to panel data from peru major findings are 1 households with better educated heads are less vulnerable 2 female headed households are no more vulnerable than male headed households 3 households with more children are more vulnerable 4 transfer networks that assist the poor in relatively stable periods do not protect them during a major shock unless they originate from outside peru and 5 peru s social security program is targeted neither to vulnerable nor to poor households but other transfer programs are better targeted

uncertainty in currency mispricing abstractdeclaring a currency to be mispriced is fraught with uncertainties in this article these uncertainties are explicitly recognized in a model of pricing a homogeneous commodity around the world this allows for a common driver of prices due to a base currency effect and country specific factors that lead to departures from absolute ppp on account of income differences local taxes and charges etc this approach leads to estimates of currency mispricing whose significance can be tested in the usual way using big mac prices we show that the approach has advantages over the popular big mac index to currency valuation

welfare dynamics in rural kenya and madagascar this paper presents comparative qualitative and quantitative evidence from rural kenya and madagascar in an attempt to untangle the causality behind persistent poverty we find striking differences in welfare dynamics depending on whether one uses total income including stochastic terms and inevitable measurement error or the predictable structural component of income based on a household s asset holdings our results suggest the existence of multiple dynamic asset and structural income equilibria consistent with the poverty traps hypothesis furthermore we find supporting evidence of locally increasing returns to assets and of risk management behaviour consistent with poor households defence of a critical asset threshold through asset smoothing

pathways into and out of poverty a study of rural household wealth dynamics in kenya this study identifies the factors associated with smallholder farm households that have risen out of poverty or descended into poverty between 1997 and 2007 in kenya the study uses data from a nationwide balanced panel of 1 275 households and data from detailed retrospective life history survey of 84 households that had experienced either an appreciable improvement or decline in their asset wealth over the 10 year panel period the results indicate that household welfare dynamics are associated with a disparate set of idiosyncratic and unexpected shocks such as death and chronic illness demographic factors proximity to infrastructural facilities as well as intergenerational wealth transfers

consumer response to maize market liberalization in urban kenya abstract the elimination of consumer food subsidies associated with structural adjustment in africa has been widely thought to exacerbate food insecurity for low income consumers this article determines how urban maize consumption and expenditure patterns have responded to the liberalization of the maize and maize meal markets in kenya the article decomposes changes in maize meal prices attributable to changes in maize grain prices and maize milling margins results are obtained through two random household surveys in nairobi the first having been conducted before and the second after liberalization the main finding of the study is that maize market liberalization has conferred substantial benefits to urban consumers the combined saving to nairobi consumers from lower maize milling costs has been roughly us 10 1 million each year about the same amount that the government of kenya allocates annually to agricultural research results also indicate that the former consumer subsidies conferred through the official marketing channel were untargeted and actually inversely related to household income the subsidies on sifted meal also served to entrench a non competitive market structure that inhibited the development of a lower cost informal milling system these findings are consistent with research results from other eastern and southern african countries showing that the negative effects of eliminating food subsidies in the state marketing system have been largely compensated by relaxing controls on private grain trade which has increased consumers access to less expensive grain products distributed through informal markets

is the evidence for ppp reliable a sustainability examination of the stationarity of real exchange rates abstract some recent time series studies testing the stationarity of real exchange rates rers produce conflicting results using nonlinear unit root tests and recursive analysis this paper tests whether the evidence on the stationarity of rers is sensitive to different numeraire currencies different sample periods covering regional and global crises and the inclusion of countries with different levels of economic or regional integration the results indicate that evidence for a stationary rer could be substantially sensitive to sample period changes but not so for the currencies of the countries involved in forming the euro area we also find that financial crises have a notable impact on testing the stationarity of rers depending on the numeraire currency used we discuss the policy implications of the findings

impact of plasma arc reforming deployment on economic performance of a commercial coal to liquids process abstract coal remains integral to the supply of energy in many parts of the world despite the associated negative effects on the environment plasma arc reforming has the potential of making coal to liquids processes cleaner by reducing its greenhouse gas footprint however the chances of adoption without a clear understanding of how the process modification would affect economic performance are slim in this study financial models were built using an existing commercial coal to liquids process as a reference case economic analyses were done to evaluate the impact of deploying a plasma arc reformer on financial performance of a coal to liquids process in building the financial models the possibility of the introduction of a carbon tax was taken into consideration the results show that deploying plasma arc reforming reduces the oil price required for break even from 89 bbl to 82 bbl achieves a positive project npv and exceeds the hurdle rate for similar projects in the process it reduces vulnerability to the introduction of a carbon tax the requirement for extra low carbon electricity can be a hurdle to implementation however the alternative carbon tax related charges are less desirable overall it was concluded that the deployment of plasma arc reforming to coal to liquids processes is value adding the project demonstrates that by implementing a cleaner production initiative it is possible to reduce greenhouse gas emissions of coal to liquids without significantly losing shareholder value

how does gender affect the adoption of agricultural innovations why do men and women adopt agricultural technologies at different rates evidence from ghana suggests that gender linked differences in the adoption of modern maize varieties and chemical fertilizer result from gender linked differences in access to complementary inputs this finding has important policy implications because it suggests that ensuring more widespread and equitable adoption of improved technologies may not require changes in the research system but rather introduction of measures that ensure better access for women to complementary inputs especially land labor and extension services

the measurement of inflation a stochastic approach the stochastic approach to index number theory views each commodity price change as an independent observation on the underlying rate of inflation so that inflation can be estimated by averaging over all the prices this article extends the approach by a allowing for sustained changes in relative prices b showing the link with divisia index numbers and c deriving standard errors for the inflation estimates the results are illustrated with australian data

an ordered tobit model of market participation evidence from kenya and ethiopia do rural households in developing countries make market participation and volume decisions simultaneously or sequentially this article develops a two stage econometric method to test between these two competing hypotheses regarding household level marketing behavior the first stage models the household s choice of whether to be a net buyer autarkic or a net seller in the market the second stage models the quantity bought sold for net buyers sellers based on observable household characteristics using household data from kenyan and ethiopian livestock markets we find evidence in favor of sequential decision making the welfare implications of which we discuss

exchange rate economics is always and everywhere controversial abstractthis article reviews the major developments in the recent literature on exchange rate economics it is argued that the link between the exchange rate and economic fundamentals is breaking new ground evidence indicates that alternative analytical frameworks such as the new open economy macroeconomics and exchange rate arrangements such as the euro have their theoretical and analytical elegance but are proving empirically very difficult to implement the role of methodological advances and alternative fundamental instruments such as world commodity prices is also highlighted

burgernomics the economics of the big mac standard abstract in the course of ppp research much of the debate over the validity has been over the choice of an appropriate basket for making purchasing power comparisons the different compositions of goods and services in these baskets across countries have resulted in arguments against their usefulness for ppp purposes this problem is augmented by the existence of productivity differentials in traded and non traded goods across countries therefore we consider the use of the big mac as the international monetary standard as being a more palatable alternative it is produced locally in over 80 countries around the world with only minor changes in recipe and thus has the flavour of the perfect universal commodity our results indicate that the big mac index is surprisingly accurate in tracking exchange rates over the long term which is consistent with previous ppp research findings we subsequently enhance our ppp comparisons by taking into account the productivity differentials between countries and excluding non traded goods from the big mac index to derive the no frills index

production costs of global conventional and unconventional petroleum abstract concerns about the costs of developing oil and gas from conventional and unconventional formations have led many commentators to assume that increasing prices are in the offing and may be a limiting factor for economic growth historically production costs have fluctuated as influenced by the cost increasing effects of depletion versus the cost reducing effects of technological progress this paper aims to review several methods for assessing current and long term costs despite the uncertainty of such estimation evidence shows that production costs in the foreseeable future might not increase dramatically and actually could decrease as petroleum development methods improve and additional supplies come online recent examples include the commercially viable production of unconventional oil and gas resources that has kept energy prices contained

poverty livelihood and class in rural south africa abstract using data from a national living standards survey undertaken in late 1993 this paper disaggregates and explores the economics of livelihood generation and class in rural south africa in an effort to contribute to the ongoing and vociferous debate in south africa about poverty and its alleviation pursuant to the suggestion of participants in a recent participatory poverty assessment this paper analyzes what might be termed the class structure of poverty after exploring the range of claiming systems and livelihood tactics available in rural south africa the paper offers a first look at who the poor are by disaggregating the rural population into discrete livelihood strategy classes non parametric regression methods are used to then estimate and graphically explore the nature of the livelihood mapping between endowments and real incomes in addition to identifying those endowment combinations that map to consumption levels below the poverty line the asset basis of poverty the topography of the estimated livelihood mapping helps identify the constraints that limit household s ability to effectively utilize their assets and endowments these results suggest that poverty is a matter of not only having few assets but also of constraints which limit the effectiveness with which those assets are used and poverty and livelihood policy needs to be designed accordingly

the overvaluation of renminbi undervaluation we evaluate whether the renminbi rmb is misaligned relying upon conventional statistical methods of inference a framework built around the relationship between relative price and relative output levels is used we find that once sampling uncertainty and serial correlation are accounted for there is little statistical evidence that the rmb is undervalued even though the point estimates usually indicate economically significant misalignment the result is robust to various choices of country samples and sample periods as well as to the inclusion of control variables

deviations from purchasing power parity under different exchange rate regimes do they revert and if so how abstract we propose an empirical model for deviations from long run purchasing power parity ppp that simultaneously accounts for three key features i adjustment toward ppp may occur via nominal exchange rates and relative prices at different speeds ii different exchange rate regimes may generate regime shifts in the structural dynamics of ppp deviations iii nonlinear reversion toward ppp in response to shocks this empirical framework encompasses and synthesizes much previous empirical research using over a century of data for the g5 countries we provide evidence that long run ppp holds the relative importance of nominal exchange rates and prices in restoring ppp varies over time and across different exchange rate regimes and reversion to ppp occurs nonlinearly at a speed that is fairly consistent with the nominal rigidities suggested by conventional open economy models

exploring poverty traps and social exclusion in south africa using qualitative and quantitative data abstract recent theoretical work hypothesises that a polarised society like south africa will suffer a legacy of ineffective social capital and blocked pathways of upward mobility that leaves large numbers of people trapped in poverty to explore these ideas this paper employs a mix of quantitative and qualitative methods novel econometric analysis of asset dynamics over the 1993 98 period identifies a dynamic asset poverty threshold that signals that large numbers of south africans are indeed trapped without a pathway out of poverty qualitative analysis of this period and the period 1998 2001 more deeply examines patterns of mobility and confirms the continuation of this pattern of limited upward mobility and a low level poverty trap in addition the qualitative data permit a closer look at the specific role played by social relationships while finding ample evidence of active social capital and networks these are more helpful for non poor households for the poor social capital at best helps sta

differential risk exposure and stochastic poverty traps among east african pastoralists in the pastoraland agropastoralsystems of east africa s arid and semi arid lands asal climatic shocks price volatility disease outbreaks and widespread violence beget frequent disruption of already fragile livelihoods last year s drought dramatically demonstrates that intense suffering recurs regularly in the asal in spite of significant humanitarian aid flows this article explores why that might be we draw on preliminary results of an ongoing quarterly survey in six sites in northern kenya seventeen years herd history data collected from boran pastoralists in southern ethiopia desta five years seasonaldata on land use and herd management decisions among gabra pastoralists in northern kenya mcpeak 2000a b and three years transactions level data on livestock markets in northern kenya barrett et al in the interest of brevity we present only a synthesis of findings from these and related studies that suggest how differences in pastoralists ubiquitous risk exposure create and sustain structuralpoverty traps from which many asal pastoralists are having a difficult time escaping

is the relationship between prices and exchange rates homogeneous empirical tests of purchasing power parity ppp are implicitly based on the conditions of symmetry and proportionality of the price coefficients we investigate a separate condition which we term homogeneity specifically while there may be factors that drive a wedge between prices and exchange rates when these factors are held constant we would expect a change in exchange rates to be associated with a proportional or homogeneous change in prices to test for the existence of homogeneity in prices we conduct two experiments first we apply a time varying coefficient procedure to nine euro area countries as well as the euro area as a whole during the monthly sample period 1999 m1 to 2011 m3 second we apply the same procedure to the same group of countries plus canada japan and mexico over the longer period 1957 m4 to 2011 m3 we find that averages of the price coefficients corrected for specification biases are uniformly homogeneous in the long run providing strong support for ppp

quantile unit root test and ppp evidence from 23 oecd countries abstractapplication of six different univariate unit root tests to real effective exchange rates of 23 oecd countries supports their stationarity or purchasing power parity theory ppp only in five countries a result consistent with previous research that is known as ppp puzzle however descriptive statistics of each effective rate reveals a clear sign of non normal distribution to account for this we use quantile unit root test which allows impact of different shocks to be realized at different quantiles when we applied this new test to the same rates number of countries in which ppp is supported increased to 16 apparently incorporating effects of shocks improves testing efficiency and provides more support for the ppp and reduces the severity of the puzzle

the purchasing power parity debate originally propounded by the 16th century scholars of the university of salamanca the concept of purchasing power parity ppp was revived in the interwar period in the context of the debate concerning the appropriate level at which to re establish international exchange rate parities broadly accepted as a long run equilibrium condition in the post war period it first was advocated as a short run equilibrium by many international economists in the first few years following the breakdown of the bretton woods system in the early 1970s and then increasingly came under attack on both theoretical and empirical grounds from the late 1970s to the mid 1990s accordingly over the last three decades a large literature has built up that examines how much the data deviated from theory and the fruits of this research have provided a deeper understanding of how well ppp applies in both the short run and the long run since the mid 1990s larger datasets and nonlinear econometric methods in particular have improved estimation as deviations narrowed between real exchange rates and ppp so did the gap narrow between theory and data and some degree of confidence in long run ppp began to emerge again in this respect the idea of long run ppp now enjoys perhaps its strongest support in more than 30 years a distinct reversion in economic thought

a monte carlo based decision support tool for assessing generation portfolios in future carbon constrained electricity industries abstract this paper presents a novel decision support tool for assessing future generation portfolios in an increasingly uncertain electricity industry the tool combines optimal generation mix concepts with monte carlo simulation and portfolio analysis techniques to determine expected overall industry costs associated cost uncertainty and expected co 2 emissions for different generation portfolio mixes the tool can incorporate complex and correlated probability distributions for estimated future fossil fuel costs carbon prices plant investment costs and demand including price elasticity impacts the intent of this tool is to facilitate risk weighted generation investment and associated policy decision making given uncertainties facing the electricity industry applications of this tool are demonstrated through a case study of an electricity industry with coal ccgt and ocgt facing future uncertainties results highlight some significant generation investment challenges including the impacts of uncertain and correlated carbon and fossil fuel prices the role of future demand changes in response to electricity prices and the impact of construction cost uncertainties on capital intensive generation the tool can incorporate virtually any type of input probability distribution and support sophisticated risk assessments of different portfolios including downside economic risks it can also assess portfolios against multi criterion objectives such as greenhouse emissions as well as overall industry costs

exchange rates and individual good s price misalignment evidence of long horizon predictability although purchasing power parity fundamentals in general have only weak predictability currency misalignment may be indicated by price differentials for some individual goods which could then have predictive power for subsequent re evaluation of the nominal exchange rate we collect good level price data to construct deviations from the law of one price and examine the resulting price misalignment model s predictive power for the nominal exchange rates between the u s dollar and two other currencies the japanese yen and the u k pound we find that the slope coefficients and r squares of in sample forecasting regressions for almost all goods in our data increase with the forecast horizon for the bilateral exchange rates between the u s dollar and the japanese yen and the u s dollar and the u k pound the results of tests for out of sample superior predictive ability suggest that our price misalignment model outperforms a random walk model either with or without drift for the u s dollar vis a vis the japanese yen at the 5 percent level of significance over long horizons

how does gender affect the adoption of agricultural innovations the case of improved maize technology in ghana why do men and women adopt agricultural technologies at different rates evidence from ghana suggests that gender linked differences in the adoption of modern maize varieties and chemical fertilizer result from gender linked differences in access to complementary inputs this finding has important policy implications because it suggests that ensuring more widespread and equitable adoption of improved technologies may not require changes in the research system but rather introduction of measures that ensure better access for women to complementary inputs especially land labor and extension services

quantile unit root test and the ppp in africa abstractin this study we apply the quantile unit root test and revisit the purchasing power parity ppp in 20 african countries using real effective exchange rates over the period 1971q1 to 2012q4 while traditional unit root tests fail to reject unit root hypothesis in most of the countries results from quantile unit root test reject unit root null hypothesis in ghana mauritius niger south africa and togo providing support for the ppp at least in these five countries we further estimate the half life based on quantile autoregressive qar model to be about 4 57 7 96 quarters 1 2 year

many borrow more save and all insure implications for food and micro finance policy abstract among policy makers researchers and micro finance practitioners alike there is much discussion on the role of micro finance for alleviation of poverty this paper focuses on the linkages between access to credit savings and insurance services and household food security what is the role of micro finance in the overall mix of policy instruments what types of financial services are demanded by the poor and which are offered by micro finance institutions mfis hence which are the gaps in financial products we present a conceptual framework that addresses these questions and provide a synthesis of the empirical results of a multi country research program in ten african and asian countries we conclude that insurance can be considered as the missing third of micro finance during the 1990s and that the mfi s outreach to the poor can be improved by offering savings credit and insurance products that enhance the poor s ability to bear risks applied research on the poor s preferences as well as bold experimentation with new financial products appear to be particularly promising in making progress towards that goal since insurance services are difficult to be offered except for easily observable idiosyncratic risks precautionary savings services can be a valuable insurance substitute in particular for the poorest

revisiting purchasing power parity in oecd this study revisits purchasing power parity theory ppp in the 34 oecd countries during january 1994 august 2013 we use a new panel stationary test with both sharp breaks and smooth shifts a novel approach to panel unit root testing proposed by bahmani oskooee et al 2014 the results indicate that the ppp holds in half of the 34 oecd countries these results indicate the importance of proper modelling of both sharp breaks and smooth shifts in real effective exchange rate series of oecd countries