adoption of new tobacco varieties in greece impacts of empirical findings on policy design abstract greece is a major international tobacco producer flue cured tobacco varieties constituted the major alternative crop to greek farmers growing certain oriental tobacco varieties diffusion of flue cured tobacco was rapid due to its high yields and the depressed market for certain oriental tobacco varieties currently the common organisation of the tobacco market is undergoing substantial changes and the farmers response will be a vital factor of success a portfolio selection model reveals that the major factors influencing the adoption decision of tobacco growers are the size of the farm measured in annual work units the farm s proximity to urban centres the farm s diversification and the farmer s age the number of contacts with institutions is surprisingly inversely related to adoption future tobacco policies impinging on factors influencing decisions to adopt new varieties or production practices may be more cost effective

the turning black tide energy prices and the canadian dollar the authors revisit the relationship between energy prices and the canadian dollar in the amano and van norden 1995 equation which shows a negative relationship such that higher real energy prices lead to a depreciation of the canadian dollar

estimating intertemporal allocation parameters using synthetic residual estimation we present a novel structural estimation procedure for models of intertemporal allocation this is based on modelling expectations errors directly we refer to it as synthetic residual estimation sre the flexibility of sre allows us to account for measurement error in consumption and for heterogeneity in intertemporal allocation parameters an investigation of the small sample properties of the sre estimator indicates that it dominates generalized method of moments gmm estimation of both exact and approximate euler equations in the case when we have short panels and noisy consumption data we apply sre to two panels drawn from the panel study of income dynamics psid and estimate the joint distribution of the discount factor and the elasticity of intertemporal substitution we reject strongly homogeneity of the discount factor and the elasticity of intertemporal substitution we find that on average the more educated are more patient and less willing to substitute intertemporally than the less educated within education strata patience and willingness to substitute are positively correlated 2010 the review of economic studies limited

interval risk aversion the conventional measures of absolute and relative risk aversion are appropriate for measuring preferences locally but because they rely on differential calculus they cannot accurately capture attitudes towards high stakes risks involving potentially large changes in wealth eisenhauer 2006 has recently proposed an alternative approach which avoids the use of calculus the present article extends that work in two ways first the pratt arrow coefficient of absolute risk aversion is generalized into a measure of interval risk aversion suitable for analysing preferences over risks of any magnitude and a corresponding interval measure of relative risk aversion is constructed from preference and risk parameters without explicit reference to initial wealth or income second the new measures are applied to survey data from the bank of italy to illustrate their empirical applicability to large scale risk

post reform forestland markets in china land markets developed rapidly in china after agricultural land tenure reforms but not after forest reforms we surveyed farmers in three provinces to examine the post reform forestland markets and options to strengthen them using household choice experiments we estimate land market demand and supply under alternative contractual arrangements our findings are consistent with the currently thin markets but also suggest that alternative institutional and contractual conditions could support broader participation in land markets strengthening property rights on forestland emerges as an especially effective possible policy instrument we illustrate its predicted effects on equilibrium rental rates and market participation

survey measures of risk aversion and prudence this paper utilizes a thought experiment conducted by the bank of italy to estimate absolute and relative risk aversion along with absolute and relative prudence for a broad cross section of italian households upper and lower bounds are calculated for each parameter and comparisons are made across socio demographic groups evidence is found of decreasing absolute risk aversion decreasing absolute prudence increasing relative risk aversion and increasing relative prudence

the household responsibility system in china s agricultural reform a theoretical and empirical study the emergence and eventual prevalence of the household responsibility system which replaces the production team system as the unit of production and income distribution has brought about dramatic changes in china s rural areas since 1979 this institutional change has resulted in remarkable growth in agricultural productivity however in the literature on collective farms a theory that is capable of explaining the causes and effects of this change is yet to be developed the formal theory about collective economies developed so far by ward domar sen oi and clayton bradley maurice and ferguson cameron bonin chinn israelsen putterman and others suggests that the allocation of resources in a collective farm is efficient at least in

land rental development via institutional innovation in rural jiangsu china previous studies have demonstrated that there are two important preconditions for encouraging land rental in agriculture out migration and the enhancement of security and transferability of land rights focusing on the latter we scrutinize the impacts of institutions aimed at facilitating land use dynamism particularly the rural shareholding cooperatives rscs which have been established recently at the local level in rural china in general we find that rscs can pave the way for the extension of property rights to farmland and promote more efficient land use patterns using survey data collected from 300 village committees in rural jiangsu province we estimate the effectiveness of rscs in encouraging land rental our analysis reveals that rscs can serve as intermediate agents for reducing transaction costs associated with exchange of land use rights and thereby not only encourage land rental consolidation activities but also enable the entry of non farm household entities into the farm business

human capital producer education programs and the adoption of forward pricing methods using a sample of 509 kansas producers we evaluate factors affecting adoption of forward pricing methods we focus on producers human capital accumulation and its effect on adoption of forward pricing techniques probit models are employed to evaluate producers participation in educational programs and their forward pricing adoption decisions tobit models are employed to evaluate individual levels of adoption of these techniques in the marketing of wheat corn grain sorghum soybeans and cattle

labor income and risky assets under market incompleteness evidence from italian data abstract theory suggests that uninsurable income risk induces individuals to accumulate assets as a precautionary reserve of value most assets however bear rate of return risk that can be diversified only if every asset is traded by a large number of individuals and arbitrage is frictionless using italian micro data we find evidence of income and asset risks that affect consumption italian households are particularly well insured against illness but not against job losses moreover we detect a positive yet weak effect of asset holding on the variability of consumption streams across households

interest rates and currency prices in a two country world abstract this paper is a theoretical study of the determination of prices interest rates and currency exchange rates set in an infinitely lived two country world which is subject both to stochastic endowment shocks and to monetary instability formulas are obtained for pricing all equity claims nominally denominated bonds and currencies and these formulas are related to earlier closely related results in the theories of money finance international trade

modeling returns and volatility transmission between oil price and us nigeria exchange rate article i nfo this paper models returns and volatility transmission between oil price op and us nigeria exchange rate exr consequently it provides five main innovations i it analyzes op and exr using the recently devel oped test by narayan and popp 2010 np which allows for two structural breaks in the data series ii it employs the narayan and liu 2011 nl garch unit root test to evaluate robustness of np test iii it con siders the newly developed var garch model to capture the spillover effects in the returns and volatility of op and exr iv it modifies the var garch model to account for structural breaks obtained from the np procedure and v using the results obtained from the var garch model it examines the optimal weights of holding oil and foreign exchange fx assets and also computes the hedging ratios in the presence of oil risk based on the np and nl tests it finds robust structural breaks that coincide with the period of global fi nancial crisis as well as period of fx crisis in nigeria also it establishes a bidirectional returns and spillover transmission between oil and fx markets finally its findings reveal evidence of hedging effectiveness involving oil and fx markets in nigeria and thus the inclusion of oil into a diversified portfolio of fx will improve its risk adjusted return performance

household saving micro theories and micro facts in this survey we review the recent theoretical and empirical literature on household saving and consumption the discussion is structured around a list of motives for saving and how well the standard theory captures these motives we show that almost all of the motives for saving that have been suggested in the informal saving literature can be captured in the standard optimizing model particular attention is given to recent work on the precautionary motive and its implications for saving and consumption behavior we also discuss the behavioral or psychological approach that eschews the use of standard optimization techniques and focuses instead on direct consideration on saving we provide a section on facts who save and how much we then discuss informally the recent decline in the u s saving rate and whether the theory is of much use in understanding this and other changes in aggregate saving rates over time we do not find any convincing explanation for the change in saving rates we also discuss some analyses of saving behavior over the life cycle addressing such questions as whether households save enough for retirement and whether the consumption patterns of older households can be rationalized within a simple life cycle model we also review a great number of studies of the consumption euler equations based on our analysis of the studies cited we conclude that there is still mixed evidence that consumption is excessively sensitive to income we also examine in depth the recent empirical literature on the precautionary motive we conclude that although some households do seem to have a significant precautionary motive at some points in their life cycle this motive is not so strong empirically as some investigators suggest

oil prices and the rise and fall of the us real exchange rate abstract questions of the relative importance of real vs monetary shocks in explaining exchange rate movements still have no widely accepted answer despite their importance both for the research agenda and for policy questions we examine this issue using a variety of empirical techniques for the us effective exchange rate we find that a stable link exists between oil price shocks and the us real effective exchange rate over the post bretton woods period the results suggest that oil prices may have been the dominant source of persistent real exchange rate shocks and that energy prices may have important implications for future work on exchange rate behavior

human capital adjustments in subjective probabilities and the demand for pest controls in addition to risk aversion farmer behavior in an uncertain environment is governed by subjective probability estimates of random events the estimates given here lend support to the idea that human capital development can improve farmers ability to estimate pest damage probabilities more accurate assessment of subjective probabilities leads to lower pesticide use and increases the use of labor intensive pest controls the human capital variables with the largest effects are formal schooling and farmer experience with smaller impacts from field scouting and extension schools

cointegration and threshold adjustment this article proposes an extension to the engle granger testing strategy by permitting asymmetry in the adjustment toward equilibrium in two different ways we demonstrate that our test has good power and size properties over the engle granger test when there are asymmetric departures from equilibrium we consider an application namely whether there exists cointegration among interest rates for instruments with different maturities this issue has been widely tested with mixed results we argue that either cautious policy or possibly opportunistic behavior on the part of the federal reserve implies that an equilibrium relationship between short and long term interest rates exists but that adjustments from disequilibrium are asymmetric in nature empirical tests using u s yields confirm the asymmetric nature of error correction among interest rates of different maturities

a policy agenda for pro poor agricultural growth abstract sub saharan africa and parts of south asia are likely to hold large numbers of very poor rural people into the foreseeable future although both history and theory suggest a pre eminent role for agricultural growth in poverty reduction in poor agrarian economies such growth today faces new difficulties many of these difficulties are endogenous to today s poor rural areas others result from broader processes of global change but some are due to changes in the dominant policy environment emphasizing liberalization and state withdrawal examination of 20th century green revolutions suggests that active state interventions were important in supporting critical stages of agricultural market development unfortunately such interventions benefits in institutional development are easily overlooked whereas their high costs are much more visible policy implications are discussed

precautionary saving motives an assessment from uk time series of cross sections this paper gauges the strength of precautionary saving motives by estimating the coefficient of prudence from the u k family expenditure survey data set a time series of cross sections the instrumental variables estimates reveal that greater uncertainty systematically leads to larger current savings most of these impacts are large enough to be statistically consistent with widely accepted beliefs about attitudes towards risk so that precautionary saving behavior cannot be refuted moreover the households which are less likely to face liquidity constraints or to share risks are more sensitive to uncertainty finally the households for which the head works in the manufacturing industry are more inclined to self insure against uncertainty copyright 1996 by royal economic society

exchange rates of oil exporting countries and global oil price shocks a nonlinear smooth transition approach this paper models logistic and exponential smooth transition adjustments of real exchange rates for six major oil exporting countries in response to different shocks affecting oil prices the logis

global economic activity and crude oil prices a cointegration analysis abstract this paper empirically investigates the cointegrating relationship between crude oil prices and global economic activity the kilian economic index is used as an indicator of global economic activity based on a supply demand framework and the cointegration theory we find that real futures prices of crude oil are cointegrated with the kilian economic index and a trade weighted us dollar index and crude oil prices are influenced significantly by fluctuations in the kilian economic index through both long run equilibrium conditions and short run impacts we also develop an empirically stable data coherent and single equation error correction model ecm which has sensible economic properties empirical results based on the ecm show that the adjustment implied by a permanent change in the kilian economic index is a relatively drawn out process

endowments technology and factor markets a natural experiment of induced institutional innovation from china s rural reform the induced institutional innovation hypothesis postulates that new institutions are innovated to exploit profitable opportunities arising from institutional disequilibrium the removal of legal restrictions on factor market exchanges after recent reforms in china resulted in institutional disequilibrium this paper utilizes data from a household survey in china to explore i the relationship between the emergence of land labor and rental markets in a region and the distribution of factor endowments across rural households in that region and ii the impact of hybrid rice on the emergence of factor markets in that region the results are consistent with the induced institutional innovation hypothesis

world steel production a new monthly indicator of global real economic activity this paper proposes world steel production as an indicator of global real economic activity world steel production data is published with only a one month delay thereby providing timely information for world real gdp forecasters we find that world steel production and lutz kilian s 2009 index of global real economic activity generate large gains in forecasting world real gdp relative to an autoregressive benchmark a forecast combination of world steel production kilian s 2009 index of global real economic activity and an index of the industrial production of oecd countries plus six non oecd emerging economies produces significant gains in forecasting world real gdp relative to an autoregressive benchmark

oil prices and real exchange rates in this paper we investigate the long run relationship between real oil prices and real exchange rates by using a monthly panel of g7 countries from 1972 1 to 2005 10 we first test whether exchange rates are cointegrated with real oil prices it is shown that real oil prices may have been the dominant source of real exchange rate movements and that there is a link between real oil prices and real exchange rates we then examine the ability of real oil prices to forecast future real exchange returns panel predictive regression estimates suggest that real oil prices have significant forecasting power the out of sample prediction performances demonstrate greater predictability over longer horizons

the diversity of land markets and regulations in europe and some of its causes abstractthe creation of optimal land institutions attracted renewed attention in the 1990s because of its central role in the transition process in former communist countries in the former soviet union and eastern europe and more recently because of large scale land investments in developing countries this article documents the existence of large variations in land institutions markets and regulation using current and historical data from western and eastern europe it then offers explanations for these differences and draws implications for the role and optimality of land institutions in development with special reference to the current debate on large scale land acquisitions

resolving the exposure puzzle the many facets of exchange rate exposure theory predicts sizeable exchange rate fx exposure for many firms however empirical research has not documented such exposures to examine this discrepancy we extend prior theoretical results to model a global firm s fx exposure and show empirically that firms pass through part of currency changes to customers and utilize both operational and financial hedges for a typical sample firm pass through and operational hedging each reduce exposure by 10 15 financial hedging with foreign debt and to a lesser extent fx derivatives decreases exposure by about 40 the combination of these factors reduces fx exposures to observed levels

the reaction of household consumption to predictable changes in social security taxes the key implication of rational expectations and the basic life cycle permanent income hypothesis that predictable changes in income have no effect on the growth rate of consumption expenditures is examined this implication is important for understanding the effectiveness and optimal timing of fiscal policy the causes and propagation of business cycles and the effects of income fluctuations on the growth rate of the economy using household level consumption data from the consumer expenditure survey whether expenditures on nondurable goods increase contemporaneously with predictable changes in social security tax withholding is tested it is found that households do change their consumption expenditures in response to the predictable fluctuations in income induced by the social security tax system

land tenure choice in chinese villages the rational versus the political model the rational and political decision models are developed and tested for the land tenure choice in rural china a novelty of the test is to link the collective decision with general relative factor scarcities competing hypotheses are developed for the two models and tested with panel data collected on 83 chinese villages the results show that neither model is strongly rejected although the political model fares slightly better in more sophisticated econometric testing this suggests that popular political participation is emerging in chinese villages implications of this finding to chinese land policy are discussed

precautionary saving and subjective earnings variance abstract in this paper i examine a model of precautionary saving and i show that the fact that people may insure against income risk makes it difficult to evaluate the extent of precautionary accumulation by simply looking at the relationship between wealth and earnings variance i also argue that occupations may represent a bad proxy for income risk

land allocation in hyv adoption models an investigation of alternative explanations microeconomic theory provides four competing explanations for partial land allocation to new and traditional seed varieties in hyv adoption decisions input fixity portfolio selection safety first behavior and learning testing a general model that contains each as a special case suggests that they are jointly most likely to explain land allocation in the hyv adoption decisions of malawian smallholders yet when each explanation is tested to the exclusion of the others as is usually the case in the literature competing hypotheses are individually significant results suggest that employing approaches based on single explanations may lead to inappropriately narrow conclusions

unconventional adjustment strategies for rural households in the less developed areas in greece abstract international competition in agricultural production is intensifying following the implementation of the 1993 accord of the general agreement on tariffs and trade the production of conventional farm products in surplus is being discouraged by means of indirect economic disincentives the common agricultural policy has already adjusted to unprotected national markets within the european union and greater market orientation is being achieved mainly through price reductions farmers in the less developed areas in greece where agricultural activity is still the main source of income and employment have been responding to policy reforms by seeking part time employment and income in non farm enterprises the adoption of alternative unconventional farm enterprises that use farm resources in an innovative and quantitatively different way does have the potential for bringing in a new source of income to farm business for the purpose of this research three adjustment strategies were recognised the conventional no change pathway is based on traditional region specific products production methods and services the adoption of the new crop pathway refers to the redeployment of resources into new agricultural products whereas farms on the market integration pathway redeploy resources into new marketing services and agricultural product processing on the farm the new crop and the market integration pathways are identified as unconventional adjustment strategies results derived from multinomial logit analysis highlight the major constraints and opportunities associated with the adoption of new crops and market integration practices farmers who have adopted unconventional practices are influenced by factors external to the farm such as contacts with institutions and have a high probability of having higher debts these farmers are likely to depend heavily on seasonal labour and rented land the fact that market integration activities are associated with smaller farms in conjunction with off farm work signifies the importance of establishing an integrated rural development policy approach public policy involvement in enhancing dissemination of information concerning unconventional enterprises is emphasised

household resources transaction costs and adjustment through land tenancy this paper examines the role of household endowments of imperfectly tradeable factors of production e g male female child labor and draft animals on land leasing an explicit attempt is made to account and test for the role of transaction costs on the incidence and extent of adjustment taking place through the land lease market the econometric model is implemented using pooled data from six villages in the semiarid region of india the results confirm the significant role of nontradeable family endowments and indicate the presence of frictions in the land tenancy market

the household responsibility system reform and the adoption of hybrid rice in china abstract this paper studies the diffusion of hybrid rice before and after the recent institutional change from the collective team system to the household based farming system in rural china a simple model which treats the adoption of hybrid rice as a portfolio selection problem is presented the model is tested against time series cross county data collected from hunan province in south china the empirical evidence suggests that 1 adoption behavior in the collective system was not consistent with the predictions of the theoretical model this evidence indicates the existence of administrative intervention in influencing production decisions in the collective system 2 there was a significant change in the structure of the adoption function following the transition from the collective system to the household based system and 3 adoption behavior in the household system is consistent with the predictions of the theoretical model

oil price fluctuations and u s dollar exchange rates adding oil prices to the monetary model of exchange rates we find that oil prices significantly explain movements in the value of the u s dollar usd against major currencies from the 1970s to 2008 our long run and forecasting results are remarkably consistent with an oil exchange rate relationship increases in real oil prices lead to a significant depreciation of the usd against net oil exporter currencies such as canada mexico and russia on the other hand the currencies of oil importers such as japan depreciate relative to the usd when the real oil price goes up

a rational economic model of paygo tax rates abstract we argue that paygo rates are determined by a representative agent and a benevolent government jointly maximizing the expected life time utility of the agent the distributions of labor and capital income are calculated from national data on real gdp real wages and the real return to capital since 1950 with uniform risk aversion predicted rates explain 83 of the variance of observed rates the globalization of capital markets would lead to convergence of paygo rates our results are immune to crises like 2008

tenancy and family resources a model and some empirical analysis abstract in this paper we discuss with the help of a simple model the role of family resource endowments in determining the extent of land leased in or leased out by a household this becomes important when the market for some of these resources is either not functioning at all or is functioning imperfectly we focus on three such resources which have some relevance in indian agriculture these are 1 the family s managerial skill 2 its endowment of human labour and 3 its endowment of draft animal labour household level data from six villages of maharashtra and andhra pradesh are also utilized to test some of the hypotheses

land inheritance and market transactions in uganda studies on the role of nonmarket land transactions remain limited this paper addresses two questions is land inheritance driven by underdeveloped land markets how does land inheritance influence land disposal and acquisition we use a switching regression model on household data from rural uganda we find that the initially landless or near landless households due to little or no land inheritance obtain land through land markets while those that are land rich dispose of land through land sales and bequests the results suggest that a process of land equalization is unfolding within the sample

institutional reforms and dynamics of agricultural growth in china abstract the collective farming system the state monopolized procurement and marketing system and the grain self sufficient policy formed in the early 1950s made the rapid development of heavy industries possible in china however they were detrimental to farmers incentives and resulted in a serious misallocation of resources consequently despite sharp improvements in technology and increases in the use of modern inputs grain production in china barely kept up with population growth before the 1979 reform the shift from the collective farming system to the household based farming system in 1979 greatly improved farmers incentive and resulted in a sharp increase of grain output in the early 1980s in the late 1980s grain production stagnated again because the incompleteness of procurement system reform made the production of grain unprofitable for producing enough grain to feed china s ever increasing popualation it is imperative for the chinese government to liberalize the grain procurement and marketing system and to invest in yield improvement research it is also desirable for china to adjust her trade policy and to import more grain for meeting domestic grain demands

education and innovation adoption in agriculture evidence from hybrid rice in china this paper uses the diffusion of f1 hybrid rice as a case for examining the effects of education on the adoption of new technology in china a simple behavioral model that treats the adoption of hybrid rice as a portfolio selection problem is presented the implications of the model are tested with farm level data collected from a sample of 500 households in hunan province the results from a dichotomous probit model and a two limit tobit model are consistent with the hypothesis that education has a positive impact on the adoption of new technology

rural reforms and agricultural growth in china this paper employs province level panel data to assess the contributions of decollectivization price adjustments and other reforms to china s agricultural growth in the reform period decollectivization is found to improve total factor productivity and to account for about half of the output growth during 1978 84 the adjustment in state procurement prices also contributed positively to output growth its impact came mainly from the responses in input use the effect of other market related reforms on productivity and output growth was very small reasons for slowdown in agricultural growth after 1984 are also analyzed copyright 1992 by american economic association

what fisher knew about his relation we sometimes forget abstract expected consumption growth increases the real interest rate as one tries to smooth consumption over time we demonstrate that placing it in the fisher relation 1 is consistent with the euler equation governing the purchase of nominal bonds 2 explains observed procyclicality of the real interest rate 3 is supported empirically and 4 provides an alternative method for estimating the consumer s degree of relative risk aversion

optimal dynamic tax evasion abstract we study optimal dynamic tax evasion in the framework proposed by lin and yang 2001 and dzhumashev and gahramanov 2011 with some modifications a more flexible utility function a more realistic audit process and a penalty function which can be defined both on evaded income and evaded taxes in the former case the elasticity between tax rate and tax evasion is positive unless the subsistence consumption level is higher than a given threshold in the latter case the relationship is usually negative but the value of elasticity depends on the form of absolute risk aversion in particular we show that for increasing relative risk aversion for a tax rate higher than 50 the elasticity may even become positive us data are consistent with irra preferences

collectivization and china s agricultural crisis in 1959 1961 the agricultural crisis in china in 1959 61 after the initial success of the collectivization movement resulted in 30 million extra deaths in this paper a game theory hypothesis proposes the main cause of this catastrophe i argue that because of the difficulty in supervising agricultural work the success of an agricultural collective depends on a self enforcing contract in which each one promises to discipline oneself a self enforcing contract however can be sustained only in a repeated game in the fall of 1958 the right to withdraw from a collective was deprived the nature of the collectivization was thus changed from a repeated game to a one time game as a result the self enforcing contract could not be sustained and agricultural productivity collapsed the empirical evidence is consistent with this hypothesis

the development of the land lease market in rural china this paper examines the development of the land lease market in rural china special attention is paid to productive heterogeneity among farmers and the openness of the labor market in activating the land lease market a theoretical model is employed to explore the underlying connections an econometric model is implemented using a two period panel data set gathered in three counties of china s zhejiang province the results show that productive heterogeneity and a freer labor market do promote more land leases the implications for the institutional change literature are discussed

risk aversion wealth and background risk we use household survey data to construct a direct measure of absolute risk aversion based on the maximum price a consumer is willing to pay for a risky security we relate this measure to consumer s endowments and attributes and to measures of background risk and liquidity constraints we find that risk aversion is a decreasing function of the endowment thus rejecting cara preferences we estimate the elasticity of risk aversion to consumption at about 0 7 below the unitary value predicted by crra utility we also find that households attributes are of little help in predicting their degree of risk aversion which is characterized by massive unexplained heterogeneity we show that the consumer s environment affects risk aversion individuals who are more likely to face income uncertainty or to become liquidity constrained exhibit a higher degree of absolute risk aversion consistent with recent theories of attitudes toward risk in the presence of uninsurable risks jel d1 d8

what makes a currency procyclical an empirical investigation this paper looks at the correlation between the cyclical components of gross domestic product and the exchange rate and classifies countries currencies as procyclical if they appreciate in good times countercyclical if they appreciate in bad times and acyclical otherwise with this classification the paper shows that i the countries that are commodity exporters and experience procyclical capital flows tend to have procyclical currencies ii countries with procyclical currencies tend to restrict their capital accounts perhaps as an attempt to reduce the degree of procyclicality iii countries with procyclical currencies pursue procyclical monetary policy iv however in the last decade there is a disconnect between the cyclicality of currency and monetary policy and v the disconnect may reflect a decline in the fear of floating which can be partially attributed to an improvement in countries net foreign asset positions

are risk averse agents more optimistic a bayesian estimation approach our aim is to analyze the link between optimism and risk aversion in a subjective expected utility setting and to estimate the average level of optimism when weighted by risk tolerance this quantity is of particular importance since it characterizes the consensus belief in risk taking situations with heterogeneous beliefs its estimation leads to a nontrivial statistical problem we start from a large lottery survey 1 536 individuals we assume that individuals have true unobservable characteristics and that their answers in the survey are noisy realizations of these characteristics we adopt a bayesian approach for the statistical analysis of this problem and use an hybrid mcmc approximation method to numerically estimate the distributions of the unobservable characteristics we obtain that individuals are on average pessimistic and that pessimism and risk tolerance are positively correlated as a consequence we conclude that the consensus belief is biased towards pessimism

a note on weak exogeneity in var cointegrated models abstract in this note an extension of the traditional definition of weak exogeneity when the variables are i 1 and cointegrated is presented in particular the concept of long run weak exogeneity is introduced when the parameters of interest are the elements of the cointegrating vectors this definition extends some previously available definitions in this framework

impacts of capital and land constraints on the economics of new livestock technology in western kenya abstract the introduction of new forages and milk marketing improvements was projected to permit even the smallest modeled farms in a western kenya region to adopt dual purpose goats and thereby improve family income and nutrition expanded credit permitted modeled medium and large farms especially to vigorously exploit these innovations credit also expanded income more than did goat management improvements because credit extension assistance marketing improvements and new forages will leave projected incomes of small farmers below those of medium and large farmers in the study region development of off farm jobs may still be necessary to supplement the incomes of this fast growing group the marginal value of capital for medium and large farmers with new livestock technology was high this suggests that government subsidized credit might be unnecessary with proper infrastructural and legal support private capital markets might develop as new livestock technology and marketing improvements expand the demand for borrowing

global economic activity crude oil price and production stock market behaviour and the nigeria us exchange rate abstract this paper investigates the dynamic relationship among oil price nigeria us exchange rate stock market activity kilian s global economic activity index and global oil production we develop a robust stable single equation error correction model where the exchange rate solely bears the burden of short run adjustments with causal influences from the rest of the variables included in the model we find a role for asymmetry in the long run confirming the presence of equilibrium path adjustment asymmetry and suggesting that the positive and negative variations must be accounted for in designing the policymaking process to enforce stable exchange rate movement by comparing the linear and nonlinear models we find that the two models are complementary and that each is horizon bound in its forecasting ability

farmer to farmer transfer of new crop varieties an empirical analysis on small farms in uganda farmer to farmer transfer or dissemination of technologies is a neglected area of research even though successful diffusion of many researcher and farmer developed technologies is highly dependent upon farmers private initiatives this is particularly true in many developing countries where formal market mechanisms used in dissemination are often ineffective successful dissemination of new technologies to marginal farmers require greater knowledge and use of indigenous dissemination methods the determinants of farmer to farmer transfer of new bean varieties experimented with by small scale farmers in uganda are investigated farmers were experimenting with new varieties received through earlier on farm trials and were transferring small quantities of grain to other farmers for experimental purposes on farm trials may thus be an effective but limited method for diffusing new varieties factors directly associated with the transfer decision were farm size and variables identifying a willingness to experiment with new varieties the production risk reducing strategies of intercropping and sowing of a larger number of non climbing bean varieties were negatively associated with the probability to transfer grain the quantity of grain available to transfer was not associated with the transfer decision farmers were not transferring grain of the five varieties at different rates even though significant differences in yield were found

subsistence first farm allocation decisions in senegal abstract this paper examines a problem suggested by the senegalese experience but common to many countries of joint production of a subsistence crop millet which is subject to stringent marketing constraints and a cash crop groundnuts sold through established channels empirical implications for the intertemporal pattern of land allocation are drawn and evidence is provided to support the proposed approach

the potential of land rental markets in the process of economic development evidence from china abstract we develop a model of land leasing with agents characterized by unobserved heterogeneity in ability and presence of an off farm labor market in this case decentralized land rental may contribute to equity and efficiency goals and may have several advantages over administrative reallocation the extent to which this is true empirically is explored using data from three of china s poorest provinces land rental markets and administrative reallocation reallocate land to those with lower endowments but the former are more effective in doing so and have a bigger productivity enhancing effect information on hypothetical market participation suggests that reducing transaction costs in land rental markets could help to realize significant additional productivity gains

rural industry and labor market integration in eastern china abstract this paper tests the competitiveness of the labor market in a semi industrialized county located in eastern china labor market segmentation is linked to the degree of government interventions and the management structures of the local enterprises and two forms of rationing labeled entrance and time rationing are identified a test based on income maximizing behavior is developed to find the form of rationing that is consistent with the data the results show that the labor market is not competitive and time rationing prevails in the county in addition industrial wages are not responsive to experience and education but strongly biased against women and varying to government interventions

oil prices and exchange rates the quotations show a sharply divergent pattern in the response of the foreign exchange market to announcements of oil price increases during the first oil shock news about oil price rises led to a strengthening of the dollar whereas during the i979 surge of oil prices the reverse was generally true when the news was not so bad as feared the dollar fell back in i974 but rose in i979 in 1980 the pattern shifted once again back to dollar appreciation is there a rational fundamental explanation for the behaviour of the foreign exchange market or is it a matter of traders responding to what other traders arbitrarily think it is difficult to resolve this question but some insight can be provided through an analytical examination of the relationship between oil price increases and exchange rates the paper begins with a theoretical framework for analysing the relation between oil prices and exchange rates and then uses the theory to explain the behaviour of the foreign exchange market

how prudent are consumers using data from the consumer expenditure survey this paper presents a simple test that provides an explicit estimate of the parameter in the utility function that reflects the strength of the precautionary saving motive the coefficient of relative prudence the test yields a fairly precise estimate of a small precautionary motive in fact the estimate is too small to be consistent with widely accepted beliefs about risk aversion the presence of liquidity constrained households does not appear to explain this finding and there is some evidence that self selection of households into risky environments also cannot explain the results

higher order risk attitudes demographics and financial decisions we conduct an experiment to study the prevalence of the higher order risk attitudes of prudence and temperance in a large demographically representative sample as well as in a sample of undergraduate students participants make pairwise choices between lotteries of the form proposed by eeckhoudt and schlesinger 2006 the choices in these lotteries isolate prudent from imprudent and temperate from intemperate behavior we relate individuals risk aversion prudence and temperance levels to demographics and financial decisions we observe that the majority of individuals decisions are consistent with risk aversion prudence and temperance in both the student and the demographically representative sample an individual s level of prudence is predictive of his wealth saving and borrowing behavior outside of the experiment while temperance predicts the riskiness of portfolio choices our findings suggest that the coefficient of relative prudence for a representative individual is approximately equal to two

labor migration and returns to rural education in china this paper provides an answer to the following question why do empirical studies find low returns to schooling in rural china and yet the schooling rates are high i find that schooling played a significant role in raising the accessibility of urban formal employment to rural people in the late 1970s and early 1980s in the face of the government s restrictive policy on labor migration from rural to urban areas the large urban rural income difference provided a strong incentive for senior high school education the theory also explains the drop in the senior high school attendance in the mid 1980s

food insecurity income inequality and the changing comparative advantage in world agriculture i would like to argue in this article that in the process of economic development in land poor countries in asia agriculture faces three distinctly different problems food insecurity sectoral income inequality and the declining food self sufficiency associated with the declining comparative advantage in agriculture at the high income stage massive imports of food grains to asia if they occur will aggravate the world food shortage which will have significant implications for the poverty incidence in the world i argue that in order to avoid such a tragedy asia should expand farm size to reduce labor cost by adopting large scale mechanization sub saharan africa should realize a green revolution in grain production and latin america should further expand its grain production capacity

efficiency risk aversion and portfolio insurance an analysis of financial asset portfolios held by investors in the united kingdom using data for the united kingdom the author shows that investors in six different wealth ranges hold mean variance efficient portfolios of financial assets this result permits him to estimate coefficients of relative risk aversion for investors in each wealth range the author finds that these coefficients are much higher than most previous studies have found this implies that investors 1 are unwilling to hold risky assets unless they are compensated with a sufficiently high risk premium and 2 are willing to pay for portfolio insurance the general nonavailability of portfolio insurance in the united kingdom appears to indicate a supply side rather than a demand side failure copyright 1996 by royal economic society

will disruptions in opec oil supply have permanent impact on the global oil market abstract opec has long been a major stakeholder and strong player in the global energy market especially in the petroleum sub sector in recent time however there have been questions over the influence of opec in the sub sector due to changing petroleum production landscape specifically as a result of the discovery of unconventional energy resources in north america and emergence of non opec petroleum producing and exporting countries this development could have significant effect on the global energy market and the macro economy of opec member countries the stationarity or otherwise of opec oil production supply has important implications for determining whether fluctuations in opec market supply has temporary or permanent effect using the zivot andrews structural break stationarity test and production data of opec member countries from 1980 to 2011 this paper investigates whether fluctuations in opec market supply has temporary or permanent effect the empirical analysis shows that for only 5 opec members nigeria saudi arabia ecuador kuwait and uae is the hypothesis of unit root rejected this implies that for the five 5 opec members the effects of shocks to oil production are not permanent and future pattern of oil production can be predicted following past trend the practical implication of this finding is that opec production quota strategy may not have long term impact on the global oil market thus the cartel needs to improve oil production policy coordination among members and ensure strict adherence to production quota while also stressing the need for diversification in member countries

land rental markets in transition theory and evidence from hungary summary this paper analyzes the determinants of household farms participation in land rental markets in transition countries we derive several hypotheses on the impact of households human capital land endowment land quality and prices transaction costs rural credit and labor market constraints our empirical analysis uses data from a representative survey of more than 1 400 hungarian household farms and hungarian official statistics land rental markets reallocate land to households with better farm management capacities households combine buying and renting of land to extend their farms land ownership is fragmented and land consolidation occurs through renting the domination of corporate farms in some regions restricts households access to land

precautionary saving of chinese and u s households we employ a model of precautionary saving to study why household saving rates are high in china and low in the united states the use of recursive preferences gives a convenient decomposition of saving into precautionary and nonprecautionary components over 80 of china s saving rate and nearly all u s saving arises from the precautionary motive the difference between u s and chinese household income growth rates is vastly more important than income risk for explaining the saving rates the key mechanism is that precautionary savers have target wealth to income ratios and rapid income growth necessitates high saving rates to maintain the ratio

precautionary saving in the small and in the large the theory of precautionary saving is shown to be isomorphic to the arrow pratt theory of risk aversion making possible the application of a large body of knowledge about risk aversion to precautionary saving and more generally to the theory of optimal choice under risk in particular a measure of the strength of the precautionary saving motive analogous to the arrow pratt measure of risk aversion is used to establish a number of new propositions about precautionary saving and to give a new interpretation of the dreze modigliani substitution effect copyright 1990 by the econometric society

geometric representation of the mean variance skewness portfolio frontier based upon the shortage function the literature suggests that investors prefer portfolios based on mean variance and skewness rather than portfolios based on mean variance mv criteria solely furthermore a small variety of methods have been proposed to determine meanvariance skewness mvs optimal portfolios recently the shortage function has been introduced as a measure of e ciency allowing to characterize mvs optimal portfolios using non parametric mathematical programming tools while tracing the mv portfolio frontier has become trivial the geometric representation of the mvs frontier is an open challenge a hitherto unnoticed advantage of the shortage function is that it allows to geometrically represent the mvs portfolio frontier the purpose of this contribution is to systematically develop geometric representations of the mvs portfolio frontier using the shortage function and related approaches

performance of utility based hedges abstract hedgers as investors are concerned with both risk and return however when measuring hedging performance the role of returns and investor risk aversion has generally been neglected in the literature by its focus on minimum variance hedging in this paper we address this by using utility based performance metrics to evaluate the hedging effectiveness of utility based hedges for hedgers with both moderate and high risk aversion together with the more traditional minimum variance approach to examine this for an energy hedger we apply our approach to wti crude oil for three different hedging horizons daily weekly and monthly we find significant differences between the minimum variance and utility based hedging strategies in sample for all frequencies however performance differentials between the different strategies are small and not economically significant out of sample results support these findings across all frequencies