on optimal contracts for central bankers and inflation and exchange rate targeting regimes this paper analyzes the issues of discretion and commitment in monetary policy under an exchange rate targeting regime neither a linear state contingent inflation contract for the central bank nor an explicit state contingent inflation target combined with a weight conservative central bank can now achieve the commitment equilibrium it is shown that a state contingent contract conditioned on the exchange rate and past output can implement the commitment equilibrium contracts conditioned on the exchange rate and inflation and on inflation and past output can also mimic the optimal rule under commitment

mexico s financial sector crisis propagative linkages to devaluation the sharp 1994 mexican peso devaluation was followed by a financial sector crisis forcing the mexican government to retake control of several banks and to grant substantial assistance to many others this paper tests several hypotheses concerning the impact of devaluation first event study methodology is used to test whether some sectors of mexican economy were devaluation gaining while others were devaluation losing second we test whether devaluation shocks were transmitted to the financial sector through the liability side versus the asset side of bank balance sheets our results indicate the importance of asset diversification

the erm and monetary integration in the european union an investigation of long run relationships this paper investigates the integration of eu money supplies for the erm period 1979q1 93q4 an estimating equation is derived from a simple equilibrium model of the eu money markets estimation is undertaken using the johansen maximum likelihood cointegration procedure the results show that those eu members with relatively low exchange rate premia against the dm are those whose variations in the money supply have been most sensitive to those of germany

how far down the path to free trade the importance of rice price stabilization in developing asia abstract international trade agreements are pushing the world in the direction of free trade but price stabilization which is inconsistent with completely free trade remains important in developing asia because of the large share of rice in economic output a policy of pure price stabilization for rice without consistent protection either subsidization or taxation can help to create the macroeconomic stability that is essential for sustained rapid economic growth by increasing the quantity and efficiency of investment throughout the economy pure price stabilization can also generate significant equity gains by protecting poor consumers and farmers from sharp fluctuations in prices while domestic commodity price stabilization schemes have a checkered history around the world the experience of asian countries in stabilizing rice prices offers more scope for optimism asian governments have been generally successful in stabilizing rice prices and there are several instances where this has been accomplished without sustained protection of either consumers or farmers however there is room for improved stabilization mechanisms that would lower the costs of intervention

liberalized trade and domestic price stability the case of rice and wheat in india abstract this paper analyzes the effects of liberalizing foodgrain trade on domestic price stability using a multi market equilibrium model in which the direction of trade is determined endogenously and world prices are sensitive to the amount traded by india simulation results demonstrate that contrary to popular belief freeing of trade by india leads to greater domestic price stability even though world prices are more volatile freeing of trade by india also leads to higher world price stability under liberalized trade variable levies subsidies are more effective in stabilizing domestic prices compared to buffer stocks it is therefore in india s interest to argue for non zero binding on import tariffs and export subsidies at the wto negotiations

credibility reputation and the mexican peso crisis a model emphasizing the tradeoff between the costs of changes of domestic interest rates and exchange rate stability is used to assess the role of credibility and reputational factors in the lead up to the december 1994 crisis of the mexican peso devaluation expectations are decomposed into the probability that the authorities do not truly put a high weight on exchange rate stability and the probability that an exogenous shock will make a devaluation the preferred policy estimates indicate that prior to the peso collapse there was no significant increase in devaluation fears and no perceived shift in the authorities policy preferences but the increase in the differential that occurred after the devaluation may have resulted from such a shift

economic fundamentals and self fulfilling crises further evidence from mexico abstract this paper considers a model of debt stabilization under a fixed exchange rate in which a currency crisis can develop as the result of self fulfilling speculation following a bifurcation in the behavior of economic fundamentals based on this theoretical framework and by exploiting the test developed by jeanne 1997 this paper provides evidence that self fulfilling speculation was at work in the 1994 mexican crisis in terms of fundamentals we show that the critical variables in generating the mexican crisis were the fast rise in us denominated public debt tesebonos the appreciated real exchange rate and the small rises in unemployment and primary deficit

impact of food inflation on poverty in the philippines abstract we simulate the impact of food inflation between june 2006 and june 2008 on poverty across different areas and between agricultural and non agricultural households we explicitly treat the spatial heterogeneity in food inflation and the differences in consumption and production patterns across households by merging household expenditure survey and price datasets at the provincial level or lower although some of the poor agricultural households may have escaped poverty the poorest of the poor whether they are in an agricultural household or not are severely and adversely affected by the food inflation

food security policy options for china lessons from other countries the authors gratefully acknowledge financial support from the world bank and australia s rural industries research and development corporation

interest rate linkages in the eurocurrency market contemporaneous and out of sample granger causality tests abstract this paper examines linkages among major eurocurrency interest rates during 1994 2002 eurocurrency interest rate causal linkages are found to be much stronger with additional allowance for contemporaneous causality test results than the inference based solely on granger causality tests the impact of u s interest rates is clearly not dominant in the eurocurrency markets while the japanese interest rates are found to be quite influential german interest rates both cause and are caused by several other eurocurrency interest rates by contrast interest rates on the new currency the euro do not have a substantial influence on other eurocurrency interest rates which underscores its emerging status

price stabilization and impacts of trade liberalization in the southeast asian rice market abstract a global rice model using a partial equilibrium framework is used to investigate the impact of trade liberalization in major rice trading countries of southeast asia focusing on the price stabilization mechanism that has long been adopted by governments in indonesia malaysia and the philippines the simulation results suggest that the removal of state trading enterprises in these three countries would lower their domestic prices by as much as 34 but increase the world prices by about 20 when free trade liberalization is realized in 2020 domestic prices decline further in indonesia and the philippines leading to an increase in their imports which are estimated to be as much as 4 5 million tons the impact on domestic prices however is absorbed nearly evenly among indonesia the philippines thailand and vietnam

domestic and international impacts of the rice trade policy reform in the philippines abstract faced with high domestic rice prices that have fueled inflation above the 2018 target and penalized poor consumers the most the government of the philippines has decided to abandon the quantitative restrictions on imports and replace them with tariffs this paper uses a global rice model based on a partial equilibrium framework to assess the possible impacts of this reform on imports production consumption and prices in contrast with past similar studies we address three key concerns i the heterogeneity in farm price across 16 regions in response to the combined effect of the tarriffication and the average historical trend in productivity increase at 1 5 between 2001 and 2018 ii the differentiation of imports by origin partly due to the different tariffs applied to countries within and beyond the association of south east asian nations and iii the effect on domestic prices in third countries the simulation results suggest that the reform would increase imports by 2 47 million tons 20 7 in 2019 we also find a large decline in farm prices and retail prices respectively by php 6 1 kg 30 1 and php 7 6 kg 17 4 in 2019 that explains an increase in rice consumption we estimate the fall in total inflation at 1 2 in 2019 but less over time further the large fall in farm prices in 2019 is shared quite evenly among regions in the short term but returns to pre reform levels in the near term using a higher price elasticity of supply for one region obtained from panel data surveys we show a more pronounced decline in production than the national average such differentiated results confirm the relevance of using a regionally disaggregated model to design more targeted policies we also show a slight increase in world prices which led to small increases in the domestic prices of south and southeast asian rice markets while this reform is largely pro poor consumers policy makers would need to use the additional tariff revenue to help rice growers either increase their competitiveness and modernize their rice production or shift to other crops

multiple equilibria and currency crisis evidence for korea abstract this paper estimates a non linear model that allows for multiple equilibria using data on korea during the currency crisis in 1997 results suggest that korea may have been vulnerable to self fulfilling speculation as early as january 1997 an extended phase of multiple equilibria started in october 1997 the fundamentals for korea remained in this crisis zone until march 1998 korea briefly entered a multiple equilibria zone again in may and june 1998 before stabilizing in july 1998 results are supportive of roles for weakness in fundamentals and for self fulfilling beliefs in explaining currency crises

does agricultural trade liberalization increase risks of supply side uncertainty effects of productivity shocks and export restrictions on welfare and food supply in japan abstract agriculture is the focus of much contention in free trade negotiations the japanese government is against liberalizing the rice trade on the grounds that it would threaten national food security in the events of such shocks as crop failure and embargoes trade liberalization is expected to make the japanese economy more dependent upon food imports and thus more susceptible to these risks using a computable general equilibrium model with a monte carlo simulation we quantify the welfare impacts of productivity shocks and export quotas by major rice exporters to japan and found little evidence of japan suffering from such shocks

exchange rate stabilization in the erm identifying european monetary policy reactions abstract we develop the structural var models for european countries france denmark and germany during the erm period to examine the monetary policy reactions especially the within erm exchange rate stabilization in addition to analyzing the impulse responses and variance decomposition we present the full monetary reaction function in an interpretable manner without introducing additional assumptions the results suggest some asymmetry in exchange rate stabilization non german exchange rate stabilization is stronger than german exchange rate stabilization but do not support the hypothesis that german monetary policy was independent of the erm

impacts of liberalizing trade in the world rice market a multi product quadratic programming model is used to investigate impacts of trade liberalization on the world rice market recognizing product differentiation and allowing substitution among various rice types and qualities model simulations predict a large increase in both trade volumes and prices for all rice types and a significant welfare gain for most rice exporters and importers japan south korea philippines taiwan and brazil would be the major importers trade liberalization would increase total u s export revenue by 109 movement to free trade by japan has significant effects on world rice trade and on japanese rice production

impact of rice tariffication on japan and the world rice market the uruguay round agreement of the world trade organization wto and other trade agreements such as nafta and mercosur have contributed to the increase in u s and world rice trade since 1994 rice however continues to be one of the most highly protected agricultural commodities with current tariff rates in several developing countries ranging from 50 to 230 protectionist policies for rice include tariffs tariff rate quotas state trading and various domestic government programs amponsah colyer and jolly before implementation of the uruguay round agreement japan and south korea maintained an almost complete ban on rice imports to begin opening these markets the uruguay round provided special minimum market access ma rules with the goal of eventually shifting to tariffication the grace period for tariffication was set at six years for japan 1995 to 2000 and ten years for south korea 1995 to 2004 south korea received additional time for tariffication and a lower

export liberalization and household welfare the case of rice in vietnam vietnam has rapidly become one of the three largest rice exporters in the world in spite of a binding export quota this article uses a multimarket spatial equilibrium model to examine the effect of further liberalization on regional rice prices household data are then used to calculate the welfare impact of these price changes on different household groups the results suggest that although rice export liberalization would raise food prices and exacerbate regional inequality it would also increase average real income and reduce slightly the incidence and severity of poverty we explore several explanations of these apparently paradoxical results

tariff rate quotas structural and stability impacts in growing markets abstract this paper examines several aspects of tariff rate quotas trq as adopted during tariffication of agricultural policies under the uruguay round of gatt quota rents and non tariff barrier effects may remain under trqs contrary to the objectives of the tariffication process further price stability impacts of a trq are more complex than those for either tariffs or quotas and under certain circumstances trqs may be more stabilizing than either case since trqs truncate domestic production distributions much like price bands policies this complexity results from the possibility of regime switching and may reflect behavior under either a tariff a quota or a combination of cases a trq policy may affect the timing of import decisions based on incentives created under quota allocation procedures envisioned for this institution it may also allow increased imports as demand growth occurs because the quota is not necessarily a binding constraint this means the above quota tariff is the critical policy instrument an empirical study of philippines pork imports illustrates these issues

trade liberalization and national food security rice trade between bangladesh and india abstract following a poor harvest in late 1997 and a massive flood in 1998 private sector traders in bangladesh imported several million metric tons of rice from india this paper presents evidence that this trade made possible by separate trade liberalizations in india and bangladesh in the early 1990s augmented domestic supplies and stabilized prices in bangladesh at import parity levels letters of credit data indicating the participation of hundreds of importers and a close correlation of price movements across the two countries suggest that the trade was competitive a risk of co incident crop shortfalls in the two countries remains though these have occurred rarely in the past two decades bangladesh imports from alternative sources would also enhance food availability if another production shortfall occurs but these imports face higher transport costs and would involve far fewer importing firms given the economies of scale of shipments by sea the positive contribution of trade liberalization to short run food security in bangladesh in recent years does not minimize the importance of increased agricultural productivity and rural economic growth to provide rural poor households with sufficient incomes to acquire food nonetheless the bangladesh experience shows that trade liberalization offers potential benefits for national food security by enabling a rapid increase of food supplies following domestic production shortfalls

policy coherence and food security the effects of oecd countries agricultural policies there have been important changes to agricultural policies in many oecd countries over the past decade and the international spill over effects of support and protection have diminished now would be a good time to eliminate remaining distortions and put in place more efficient alternatives including social safety nets and tools to help farmers manage risk this would lock in the benefits of reform and simultaneously address charges of policy incoherence in the context of high food prices new issues have emerged with potential implications for food security they include export restrictions the use of biofuel mandates and the opportunities and threats presented by increased foreign investment in agriculture on these issues as well as in terms of conventional support mechanisms policies in emerging economies in particular the briics are increasingly important a pro active agenda for policy coherence would involve not just eliminating policies that distort trade but also enacting positive measures to increase food availability for example by raising agricultural productivity using resources sustainably and eliminating waste and over consumption across countries there are important gains to be realised from knowledge sharing and from multilateral action to provide global public goods not least smoother functioning of the multilateral trading system