smallholder market participation concepts and evidence from eastern and southern africa abstract this paper reviews the evidence on smallholder market participation with a focus on staple foodgrains i e cereals in eastern and southern africa in an effort to help better identify what interventions are most likely to break smallholders out of the semi subsistence poverty trap that appears to ensnare much of rural africa the conceptual and empirical evidence suggests that interventions aimed at facilitating smallholder organization at reducing the costs of intermarket commerce and perhaps especially at improving poorer households access to improved technologies and productive assets are central to stimulating smallholder market participation and escape from semi subsistence poverty traps macroeconomic and trade policy tools appear less useful in inducing market participation by poor smallholders in the region

impacts in uganda of rising global food prices the role of diversified staples and limited price transmission this study assesses the potential impact of rising world food prices on the welfare of ugandan households while uganda experienced sharply higher food prices in 2008 as a landlocked food exporting country the causes of those price changes were mainly regional and indirect rather than directly transmitted from global markets using trade volumes food prices and household survey data we describe how uganda unlike some other countries is partially shielded from direct impacts of global food price movements although the majority of ugandans are net food buyers the adverse impact at household level of rising global prices is moderated by the relatively large quantity and range of staples consumed that come from home production moreover several of these are not widely traded some population groups in uganda are vulnerable to rising food prices however primarily those for whom maize is an important staple including those dependent upon humanitarian relief and the urban poor only a relatively small group of ugandan households will benefit directly and immediately from rising food prices the significant net sellers of food crops constituting between 12 and 27 of the population in this assessment we do not estimate the level and extent of wider second round effects from these higher prices jel classification q18 r22

the morning after explaining the slowdown in japanese growth in the 1990s abstract this paper uses a var to investigate four possible explanations of the extended slump in japanese economic activity over the 1990s the absence of bold and consistent fiscal stimulus the limited room for expansionary monetary policy due to a liquidity trap overinvestment and debt overhang and disruption of financial intermediation the results indicate that all of these factors played a role but that the major explanation is disruption in financial intermediation largely operating through the impact of changes in domestic asset prices on bank lending

economic mobility and poverty dynamics in developing countries this study provides an introduction to this special issue of the journal of development studies on economic mobility and poverty dynamics in developing countries in addition to providing a conceptual framework it outlines how the contributions fit into the extant literature a series of regularities emerge across these studies the poor consist of those who are always poor poor at all dates and those who move in and out of poverty with the latter group tending to be strikingly large such movements in and out of poverty are apparent when looking at poverty in either absolute or relative terms changes in returns to endowments can be a potent source of increased incomes finally seemingly transitory shocks can have long term consequences the study concludes by drawing out the policy implications of these regularities

global oil prices and local food prices evidence from east africa it is widely believed that oil prices impact food prices in developing countries yet rigorous evidence on this relationship is scarce using maize and petrol price data from east africa we show that global oil prices do affect food prices but primarily through transport costs rather than through biofuel or production cost channels we find that global oil prices transmit much more rapidly to the pump and then to local maize prices than do global maize prices suggesting that the immediate effects of correlated commodity price shocks on local food prices are driven more by transport costs than by the prices of the grains themselves furthermore we present suggestive evidence that for markets furthest inland changes in world oil prices have larger effects on local maize prices than do changes in world maize prices

the economic significance of national border effects to address the economic significance of national border effects this paper provides evidence on two fundamental questions 1 do large border effects arise because of high perceived price wedges between foreign and domestic products or because imports and domestic goods are very close substitutes and 2 if price wedges are important do they reflect distortionary barriers to trade or do they arise from nondistortionary factors such as differences in transactions costs or product characteristics i conclude that while border effects may imply barriers welfare costs and a role for policy distortions are probably not as substantial as initial border results suggested jel f1

primary commodity prices co movements common factors and fundamentals the behavior of commodities is critical for developing and developed countries alike this paper contributes to the empirical evidence on the co movement and determinants of commodity prices using nonstationary panel methods we document a statistically significant degree of co movement due to a common factor within a factor augmented var approach real interest rate and uncertainty as postulated by a simple asset pricing model are both found to be negatively related to this common factor this evidence is robust to the inclusion of demand and supply shocks which both positively impact on the co movement of commodity prices

zombie lending and depressed restructuring in japan this paper explores the role that misdirected bank lending played in prolonging the japanese macroeconomic stagnation that began in the early 1990s the investigation focuses on the wide spread practice of japanese banks of continuing to lend to otherwise insolvent firms we docu ment the prevalence of this forbearance lending and show its distorting effects on healthy firms that were competing with the impaired firms the paper by hoshi 2000 was the first to call attention to this phenomenon and its ramifi

prices rise faster than they fall output prices tend to respond faster to input increases than to decreases this tendency is found in more than two of every three markets examined it is found as frequently in producer goods markets as in consumer goods markets in both kinds of markets the asymmetric response to cost shocks is substantial and durable on average the immediate response to a positive cost shock is at least twice the response to a negative shock and that difference is sustained for at least five to eight months unlike past studies which documented similar asymmetries in selected markets gasoline agricultural products etc this one uses large samples of diverse products 77 consumer and 165 producer goods accordingly the results suggest a gap in an essential part of economic theory as a start on filling this gap the study finds no asymmetry in the resonse of an individual decision maker a supermarket chain to its costs but it finds above average asymmetry where a cost shock is filtered through a fragmented w

the permanent income hypothesis estimation and testing by instrumental variables the permanent income hypothesis with rational expectation is restated estimated and tested by an instrumental variables technique on the postwar u s aggregate time series data the hypothesis is accepted on a consumption series which includes service flows from consumer durables if the consumption series is the one in the national income and product accounts the hypothesis is decisively rejected an explanation is suggested to reconcile the conflicting test results

market structure and cyclical fluctuations in u s manufacturing the relevance of imperfect competition for models of economic fluctuations has received increased attention from researchers in both macroeconomics and industrial organization the authors outline a new methodology for estimating industry markups of price over marginal cost and the influence of market structure on cyclical movements in total factor productivity measures of industry concentration import competition and unionization are important for explaining markups in some industry groups much of the estimated markup of price over marginal cost is accounted for by noncapital fixed costs finally the authors show that their estimated margins fluctuate substantially over the cycle in particular markups are countercyclical especially in concentrated durable goods industries copyright 1988 by mit press

investigation of production sales and inventory relationships using multicointegration and non symmetric error correction models the accumulated sum of a stationary series is called integrated if a linear combination of some of the integrated series is stationary it is said to be cointegrated this paper presents empirical results on inventories to consider the possibility of a deeper form of cointegration called multicointegration which is introduced in granger and lee 1989 a vector integrated series is multicointegrated if the accumulated sum of its stationary cointegrated linear combination is again cointegrated with itself inventory which is the accumulated sum of production minus sales is probably cointegrated with production and sales the empirical results generally support the presence of multicointegration of production and sales in many u s industries and industrial aggregates the results also favour the non symmetric error correction model providing evidence that the strength of attraction is different on both sides of the attractor a modified s s rule for inventory control is investigated in the context of a non symmetric error correction model and the results generally do not support the s s rule sufficient evidence is found to conclude that multicointegration is a useful concept in the area of inventory determination

the effects of ncpb marketing policies on maize market prices in kenya the government of kenya pursues maize marketing policy objectives through the national cereals and produce board ncpb which procures and sells maize at administratively determined prices and stores maize as a contingency against future shortages a private sector marketing channel competes with the ncpb this article estimates the effects of ncpb activities on the historical path of private sector prices in kenyan maize markets between 1989 and 2004 the analysis is carried out using a reduced form vector autoregression model var estimated with sparse data and imposing only minimal identification restrictions results show that ncpb activities have stabilized maize market prices in kenya reduced price levels in the early 1990s and raised average price levels by roughly 20 between 1995 and 2004 over the past decade the price raising activities of the ncpb have transferred income from urban consumers and a majority of small scale farm households that are net buyers of maize to a relatively small number of large and small scale farmers who are sellers of maize

japan s financial crisis and economic stagnation the recent japanese economic experience has been dismal growth has collapsed deflation has taken hold and the financial system is in shambles we begin our story by documenting the macroeconomic troubles that appear to have triggered the collapse of japan s financial sector we argue however that the macroeconomic factors alone are not likely to explain the full extent of the problems in the japanese financial system we then turn to the sector specific factors that are facing the japanese banks insurance companies and government financial institutions which together constitute roughly three quarters of the financial system finally we provide estimates of the size of the losses that have been accumulated and review the steps necessary to resolve the problems promptly so that the losses stop growing the estimated losses from japan s financial system problems which presumably will be borne by taxpayers eventually are huge even our fairly conservative estimate suggests the full cost to the taxpayers is at least 20 percent of japan s gdp the sheer size of the cost along with the interaction among the related economic problems has made a decisive resolution of the problems politically difficult

food versus fuel what do prices tell us abstract sorting out the impacts of biofuels on global agricultural commodity prices is impossible without turning to data and distinguishing between the short run versus the long run impacts using time series prices on fuels and agricultural commodities the aim is to investigate the long run cointegration of these prices simultaneously with their multivariate short run interactions results indicate no direct long run price relations between fuel and agricultural commodity prices and limited if any direct short run relationships in terms of short run price movements sugar prices are influencing all the other agricultural commodity prices except rice with sugar the number one world input for ethanol results indicate increased ethanol production is potentially influencing short run agricultural commodity prices overall results support the effect of agricultural commodity prices as market signals which restore commodity markets to their equilibria after a demand or supply event shock

nonlinearities in the u s corn ethanol oil gasoline price system we use a smooth transition vector error correction model to assess price relationships within the u s ethanol industry monthly ethanol corn oil and gasoline prices from 1990 to 2008 are used in the analysis results indicate the existence of long run relationships among the prices analyzed strong links between energy and food prices are identified

non performing loans prospective bailouts and japan s slowdown abstract the delay in the government bailout of the financial sector played a key role in japan s slowdown during the 1990s and early 2000s this argument is articulated in a general equilibrium model in which the government provides deposit insurance to the financial sector the existence of non performing loans combined with a delay in the bailout leads to a persistent decline in economic activity consistent with japan s experience the decline in output is caused not only by a fall in investment but also by a decline in labor and total factor productivity

modelling trends in food market integration method and an application to tanzanian maize markets abstract pushed by increasing availability of price data and extensive market liberalisation efforts in many developing countries research on food market integration has evolved rapidly over the last two decades empirical methods to measure market integration diverged in two directions on the one hand there is the parity bounds model pbm using a switching regressions technique while on the other hand the use of threshold autoregressive tar models has been proposed this article provides a discussion on the two methods and argues that tar models are better able to capture the dynamics of the arbitrage process underlying interconnected markets furthermore we extend the standard tar model to include a time trend in both the threshold and the adjustment parameter using weekly maize price data on seven selected markets in tanzania we illustrate how both transaction cost and the speed of adjustment have changed during the nineties

entrepreneurial enterprises endogenous ownership and the limits to firm size this paper develops a simple model of entrepreneurial enterprises the analysis differs from traditional work on entrepreneurship by analyzing why entrepreneurial activities are typically conducted in small firms owned by the entrepreneur i argue that ownership incentives are an advantage of small firms when the probability of success of an economic activity becomes small if becomes costly for large firms to commit to strong incentives and small worker owned firms emerge the paper discusses application of the theory to innovation wild cat oil exploration restaurants and retail trade professional practices salesmen and franchising

the impact of oecd biofuels policies on developing countries oecd countries biofuels policies derived from energy and environmental legislation and activated by high oil prices were the primary cause of not only the sudden spike in grain and oilseed prices in 2007 2008 but also of the ensuing price volatility even though developing countries have a comparative advantage in biofuels production they were shut out of rich countries biofuel markets by trade discriminating biofuels policies developing countries would not have been able to take full advantage of the price spike in the short run anyway given the low supply elasticities and the long time required for biofuel production to come online unlike for corn ethanol the controversy over the right price of food is misplaced and policy makers should instead focus on improving biofuels policies which like their counterpart agricultural policies in previous decades have damaged the welfare of developing countries

transactions costs and nonlinear adjustment in real exchange rates an empirical investigation eolquilibrium models of real exchange rate determination in the presence of transactions costs imply a nonlinear adjustment process toward purchasing power parity ppp conventional cointegration tests which ignore the effect of transactions costs may be biased against the long run ppp hypothesis our results using both monthly data for the interwar period and annual data spanning two centuries clearly reject the linear framework in favor of an exponential smooth transition autoregressive process the systematic pattern in the estimates of the nonlinear models provides strong evidence of mean reverting behavior for ppp deviations and helps explain the mixed results of previous studies

the behavior of commodity prices in ethiopia in an attempt to identify price stabilization strategies and rationalize public intervention in buffering markets this article investigates the intertemporal dynamics of commodity prices in ethiopia a classical rational expectation model is modified to account for seasonal correlation of shocks model predictions are reduced to computable periodic threshold autoregression several nonlinearity tests are applied to detect threshold effects a regime switching normalized maximum likelihood method is formulated to estimate thresholds and threshold autoregression parameters using monthly data from ethiopia for the period 1996 2006 the result indicates the presence of periodic price thresholds that could be formed as a result of speculative storage comparison of price movements below and above thresholds indicates that prices are more correlated below the thresholds than above them however the effect on error variance is not very strong temporal arbitrage which is the gross return from speculative storage appears to be modest the long and short term implications of the findings are discussed within the context of ongoing policy debates

commodity prices and growth in africa a frican economies export primary commodities and most export little else policymakers as well as economists and historians of african economic development have seen these exports as both a hope and a curse the following parable tells the story once upon a time a servant of the ruler discovered a miraculous plant which grew readily in that country and whose seeds could be woven into fine cloth so desirable was this fabric that it became prized all over the world and fetched a high price after two score years the plant accounted for most of the country s trade with the world the ruler ordered the peasants to grow the plant paid them only a fraction of its price and he and his nobles became fabulously wealthy because the ruler wished to be remembered as a great ruler and as the father of his country he used his wealth to build a great army and brought machines from foreign countries to make the fine goods that previously could only be obtained from foreign merchants but the machines often broke down and the goods that they made were of poor quality and after the ruler died they were left to rust under the ruler s successor there was a war in a foreign land where the plant also grew so that there was a great shortage and its price increased threefold in only three seasons the new ruler spent his newfound riches on fantastic extravagance while immense sums were expended on public works after the manner of the east and on productive works carried out in the wrong way or too soon not even the threefold increase in prices could support these expenditures and the country soon found itself deeply in debt when the war ended and the price fell the country could no longer pay the interest on its debt or borrow more money even after it had sold its only useful public work to a foreign power so that power sent a mission to the country the publication of whose report from which the above

the prebisch singer hypothesis a reappraisal independent of stationarity hypotheses time series behaviour of the relative price of primary commodities raul prebisch i950 and hans singer i950 believed that the long term trend of primary commodity prices was negative the latter in an interesting discussion of the above quandary pp 482 3 viewed rises in primary commodity prices as purely temporary sources of surplus that offered short lived opportunities to increase industrial investment these opportunities were missed by private investors who instead increased primary sector investment in such circumstances because all private activity tends to be governed by the price