agricultural price instability a survey of competing explanations and remedies there are two explanations for agricultural price dynamics one follows cobweb logic and models fluctuations driven by expectation errors but emphasises that these expectations create complex dynamics and possibly chaos the other stems from the rational expectations tradition of dynamics driven by real shocks the empirical evidence tends to support the latter but is not conclusive the rational expectations model generates an optimal dynamic path from which no improvement can be expected from public intervention however if we take account of all the potential market failures in agricultural markets and especially in developing countries this conclusion might require some qualifications although an appropriate policy design for stability has still to be achieved this paper surveys the positive and normative literature on agricultural prices highlighting empirical evidence and identifying remaining unresolved issues

executive compensation strategic competition and relative performance evaluation theory and evidence we examine compensation contracts for managers in imperfectly competitive product markets we show that strategic interactions among firms can explain the lack of relative performance based incentives in which compensation decreases with rival firm performance the need to soften product market competition generates an optimal compensation contract that places a positive weight on both own and rival performance firms in more competitive industries place greater weight on rival firm performance relative to own firm performance we find empirical evidence of a positive sensitivity of compensation to rival firm performance that is increasing in the degree of competition in the industry

portfolio diversification futures markets and uncertain consumption prices this paper examines the robustness of the keynes hicks backwardation hypothesis for futures markets in a model that admits diversification and inflation protection as speculative motives it presents a criterion in terms of the correlation of futures price with anticipated consumption net of other asset holdings for the keynes hicks proposition to be true the paper finds the effect of changes in net wealth and commodity demand on the risk premium spread open interest and storage

persistence of interindustry wage differentials a reexamination using matched worker firm panel data we estimate interindustry wage differentials using new french longitudinal data that allow a tracking of workers and their firms over time we find that when measured on a cross sectional basis they primarily reflect the interindustry variations in unmeasured labor quality however interindustry wage differentials are only a minor component of interfirm wage differentials the average differential in wages paid to the same workers by different firms is about 20 30 in a given industry wage policies are more favorable to workers in large capital intensive firms

the economics of development a survey i the subject our definition of the subject will be the use of economic analysis to understand the economies of poor or developing countries this includes in particular how standards of living in the population are determined and how they change over time and further how policy can or should be used in the influence of these processes the definition contains in principle much or most of analytical methods in economics insofar as they can be put to use in the examination of the issues of interest this is as it should be but it poses a problem for a survey in a journal a comprehensive treatment is infeasible so we shall follow a different route the survey will focus on what i take to be the major themes and approaches which characterise the productive aspects of the subject there is therefore no pretence at being exhaustive the purpose is rather to highlight some of the advances many of these have been of real substance there are a number of possible purposes for a survey and it is important to be clear at the outset for whom it is intended what it is and what it is not this survey is addressed to economists and students of economics who know the tools of their trade but not necessarily how they have been applied to and fashioned for the analysis of the economics of developing countries it is a description of the ways in which problems can be productively formulated and approached in terms of examples chosen for their intrinsic importance and interest the vastness of the subject means that we have to be highly selective it does not seek to provide a summary evaluation of the current view of the appropriate response to immediate policy questions it is not a history of thought nor a research manifesto nor an attempt to adjudicate or settle the major debates where they arise naturally from the major purpose some judgements on these subjects will be offered but they do not themselves constitute the primary intent of this survey there are three lines of enquiry or sets of questions which have i suggest been distinctive of the most fruitful work in development economics they will

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

the price effects of cash versus in kind transfers this article examines the effect of cash versus in kind transfers on local prices both types of transfers increase the demand for normal goods in kind transfers also increase supply in recipient communities which could lead to lower prices than under cash transfers we test and confirm this prediction using a programme in mexico that randomly assigned villages to receive boxes of food trucked into the village equivalently valued cash transfers or no transfers we find that prices are significantly lower under in kind transfers compared to cash transfers relative to the control group in kind transfers cause a 4 fall in prices while cash transfers cause a positive but negligible increase in prices in the more economically developed villages in the sample households purchasing power is only modestly affected by these price effects in the less developed villages the price effects are much larger in magnitude which we show is due to these villages being less tied to the outside economy and having less competition among local suppliers

ceo pay and appointments a market based explanation for recent trends ceos increased from an average of 700 000 in 1970 in 2002 constant dollars to over 2 2 million in 2000 1 during the same period the ratio of ceo cash compensation to average pay for production workers increased from about 25 in 1970 to nearly 90 in 2000 2 the most prevalent explanation in the popular press for this trend is the fat cat theory a variant of which has been espoused among academics by lucian bebchuk et al 2002 3 accord

the u s health care expenditure evidence from 2001 to 2009 abstractthis study utilizes state level data from 2001 to 2009 to estimate the impact of the 2007 financial crisis upon health care expenditures higher death rates are consistently found to have a positive and statistically significant impact on health expenditures while mental health and copd are not generally found to impact expenditures increases in the percentage of the population diagnosed with cholesterol and obesity tend to increase health expenditures increases in health expenditures slowed considerably after the financial crisis even though recessions high unemployment rates are generally found to have a positive impact on health expenditures the post financial crisis time period is estimated to have much lower health expenditures than in other time periods our results can be used to give insight into the conditions under which the slower rate of increase in health expenditures can be expected to increase more research will be needed to be able to more completely explore not only the re

uncertainty risk and incentives theory and evidence uncertainty has qualitatively different implications than risk in studying executive incentives we study the interplay between profitability uncertainty and moral hazard where profitability is multiplicative with managerial effort investors who face greater uncertainty desire faster learning and consequently offer higher managerial incentives to induce higher effort from the manager in contrast to the standard negative risk incentive trade off this learning by doing effect generates a positive relation between profitability uncertainty and incentives we document empirical support for this prediction this paper was accepted by wei jiang finance

price stabilization using buffer stocks abstract the price stabilization problem is stated and solved for a nonlinear cobweb model with government stocks it is shown that if the storage capacity for the commodity is sufficiently large then there exists a simple stabilization policy called the keep supply at equilibrium kse policy such that the equilibrium price is a global attractor for the corresponding closed loop system in addition it is shown that if the government approximates the equilibrium supply with the average supply stabilization is guaranteed we refer to this policy as keep supply at average ksa

price dynamics in the bangladesh rice market implications for public intervention in this paper the price dynamics of a rice market are examined using dynamic programming techniques the model is parameterised to the case of bangladesh and thus represents the situation of a very poor country which has characteristically high price elasticity due to income effects and high storage and interest costs the incentives for private sector storage and its impact on price stability are examined various options for public intervention in the storage sector are also explored including price ceiling schemes and subsidisation of storage costs results show that interventions that remove private disincentives such as storage subsidies are much cheaper than direct intervention by government but the impact on the probability distribution of prices is quite different the effect of trade on the probability distribution of prices is also examined

endogenous matching and the empirical determinants of contract form empirical work on contracts typically regresses contract choice on observed principal and agent characteristics if i some of these characteristics are unobserved or partially observed and ii there are incentives whereby particular types of agents end up contracting with particular types of principals estimated coefficients on the observed characteristics may be misleading we address this endogenous matching problem using a data set on agricultural contracts between landlords and tenants in early renaissance tuscany controlling for endogenous matching has an impact on parameters of interest and tenants risk aversion appears to have influenced contract choice

measuring firm size in empirical corporate finance abstract in empirical corporate finance firm size is commonly used as an important fundamental firm characteristic however no research comprehensively assesses the sensitivity of empirical results in corporate finance to different measures of firm size this paper fills this hole by providing empirical evidence for a measurement effect in the size effect in particular we examine the influences of employing different proxies total assets total sales and market capitalization of firm size in 20 prominent areas in empirical corporate finance research we highlight several empirical implications first in most areas of corporate finance the coefficients of firm size measures are robust in sign and statistical significance second the coefficients on regressors other than firm size often change sign and significance when different size measures are used unfortunately this suggests that some previous studies are not robust to different firm size proxies third the goodness of fit measured by r squared also varies with different size measures suggesting that some measures are more relevant than others in different situations fourth different proxies capture different aspects of firm size and thus have different implications therefore the choice of size measures needs both theoretical and empirical justification finally our empirical assessment provides guidance to empirical corporate finance researchers who must use firm size measures in their work

a cost effective approach to attracting low income countries to international emissions trading theory and experiments the cost effectiveness of the kyotoprotocol and any similar non global treatywould be enhanced by attracting additionalcountries to international emissions tradingand achieving this as soon as possible incontrast to what is heard in most of thedebate such an enlargement is here taken to beattained with the new participants atleast to begin with being fullycompensated this paper focuses on twoforms of compensation that can be used toattract poor countries to participate inemissions trading the theoretical aswell as experimental evidence suggests that ifpoor countries are more risk averse than richcountries partial compensation in terms offinancial transfers is more cost effective thanrelying solely on compensation in kind emission quotas as has been the case so far using money for partial compensation would alsoreduce the risk for hot air allocations andthe ensuing political obstacles tocost effectiveness that such allocations tendto create

food scare crises and price volatility the case of the bse in spain abstract recent incidents of contaminated food products coupled with the widespread diffusion of news by mass media and the growing social concerns about food safety have resulted in significant food market crises one of the most highly publicized recent food scares involved bovine spongiform encephalopathy bse in our analysis we evaluate the impacts from a bse outbreak on the price volatility transmission along the spanish food marketing chain by using a smooth transition conditional correlation stcc garch model our work is the first to assess price volatility responses to food scares results suggest that two distinct regimes involving different price volatility behavior can be distinguished one characterized by turbulent markets and another where markets are calming down

hedging grain price risk in the sadc case studies of malawi and zambia abstract we use simulation methods to examine the results of hedging maize food security imports into malawi and zambia on the south african exchange safex results show that hedging using either futures or options can spread import costs over time thereby reducing variability and also possibly generating lower average costs these benefits are increased if hedging only takes place when local prices are at less than import parity and also if the hedge is levered however problems will remain so long as intra regional transport costs remain high

do common inherited beliefs and values influence ceo pay abstract we use the ethnicity of ceos across 31 countries as a proxy for their common inherited beliefs and values and find an ethnicity effect in ceo variable pay we find that the ethnicity effect in variable pay is not driven by the ethnicity effects in corporate policy decisions and that changes in ceo compensation are significantly larger when ceos are replaced with a person from a different ethnicity our estimated ethnicity effect captures the future time reference and religion of ceos ancestors finally we find an ethnicity effect in performance firing sensitivities i e the sensitivity to being fired due to poor performance

overconfidence compensation contracts and capital budgeting a risk averse manager s overconfidence makes him less conservative as a result it is cheaper for firms to motivate him to pursue valuable risky projects when compensation endogenously adjusts to reflect outside opportunities moderate levels of overconfidence lead firms to offer the manager flatter compensation contracts that make him better off overconfident managers are also more attractive to firms than their rational counterparts because overconfidence commits them to exert effort to learn about projects still too much overconfidence is detrimental to the manager since it leads him to accept highly convex compensation contracts that expose him to excessive risk

news and volatility of food prices financial markets exhibit an asymmetric news effect with unexpected low prices generating more price volatility than news of high prices the present study examines us food markets for such asymmetric news effects analysis of 25 years of monthly data for 45 retail food items shows that price news destabilizes about a third of the markets with unexpected price increases more destabilizing

the effect of competition on executive compensation and incentives evidence from a quasi natural experiment the research was partially funded by fundacao para a ciencia e a tecnologia through the applied microeconomics research unit nima award no pest oe ege ui3181 2014

executive compensation a modern primer this article studies traditional and modern theories of executive compensation bringing them together under a simple unifying framework accessible to the general interest reader we analyze assignment models of the level of pay and static and dynamic moral hazard models of incentives and compare their predictions to empirical findings we make two broad points first traditional theories find it difficult to explain the data suggesting that compensation results from rent extraction by ceos however more modern shareholder value theories that arguably better capture the ceo setting do deliver predictions consistent with observed practices suggesting that these practices need not be inefficient second seemingly innocuous features of the modeling setup often made for tractability or convenience can lead to significant differences in the model s implications and conclusions on the efficiency of observed practices we close by highlighting apparent inefficiencies in executive compensation and additional directions for future research

determinants of management compensation with risk averse agents and dispersed ownership of the firm abstract the salaries of top managers consist of two parts one part depending on profits the other being constant in a model of management compensation schemes with risk averse agents holmstrom and milgrom 1987 predict that an increasing variance in profits should reduce the profit relatedness of salaries using data from germany we show that indeed a larger variance of profits reduces the pay performance sensitivity moreover we analyze the relative influence of profits as compared to firm size on managerial compensation in general as well as the relationship between pay performance sensitivity and ownership structure

the real rate of protection the income and insurance effects of agricultural policy agricultural price policies in developed countries aim at protecting farmers against both low and volatile world market prices however traditional indicators of protection only refer to the income level effect of policy following other research it is argued that public policy can also yield an insurance stabilizing effect in this paper a way to measure these dual effects is proposed the method is illustrated with wheat market data for the usa and the european union strong evidence is found that the insurance effect is an important component of protection albeit a small one relative to the income effect policy support provided higher income and lower insurance effects in the eu than in the usa for both markets policy reforms in the 1990s led to significantly reduced income effects and smaller insurance effects without accounting for the influence of policy on income variability traditional measures of protection will understate the real rate of protection

rice prices and income distribution in thailand a non parametric analysis rice is a staple crop in thailand significantly entering both household production and consumption this paper examines the effect of rice prices on the distribution of real income across households taking into account household characteristics and geographical location the data set is a large scale survey of 11 893 households simple nonparametric techniques for regression and density estimation are used these methods depend on few assumptions and generate flexible graphical results that are directly informative about the problem at hand the main results are that higher rice prices should benefit all rural households but the largest benefits accrue to rural households in the middle of the income distribution copyright 1989 by royal economic society

market forces and ceo pay shocks to ceo demand induced by ipo waves i develop a simple competitive equilibrium model and derive the prediction that ceo pay size elasticity increases when more firms compete for an inelastic supply of managers using industry level ipo waves as a proxy for increased competition for ceos i find that pay size elasticity increases by 6 with a one standard deviation increase in ipo activity this effect is stronger in specialized industries in addition increased ipo activity leads to a greater likelihood of executive transitions between firms these findings indicate that market forces play a key role in the determination of ceo pay received august 6 2015 editorial decision september 24 2016 by editor francesca cornelli

managers with and without style evidence using exogenous variation in a large panel of compustat firms we find that firm policy changes after exogenous ceo departures do not display abnormally high levels of variability casting doubt on the presence of idiosyncratic style effects in policy choices after endogenous ceo departures we do detect abnormally large policy changes these changes are larger when the firm is likely to draw from a deeper pool of replacement ceo candidates suggesting the presence of causal style effects that are anticipated by the board our evidence suggests that managerial styles are not transferred across employers and that standard f tests are inappropriate for identifying style effects the author 2013 published by oxford university press on behalf of the society for financial studies all rights reserved for permissions please e mail journals permissions oup com oxford university press

the theory of food price stabilisation a small and very volatile fraction of total domestic food production many countries aim at food self sufficiency with the consequence that the country may be an exporter in good years but an importer in bad years international and domestic transport and handling costs are a significant fraction of the average price of cereals so the domestic price fluctuations will tend to be an amplified version of international price fluctuations the difference between the domestic price in exporting and importing years will be twice the transport costs if the world price is unchanged it would require a strong negative correlation between domestic and world supply to offset this additional source of instability 1

managerial attributes and executive compensation we study the role of firm and manager specific heterogeneities in executive compensation we decompose the variation in executive compensation and find that time invariant firm and especially manager fixed effects explain a majority of the variation in executive pay we then show that in many settings it is important to include fixed effects to mitigate potential omitted variable bias furthermore we find that compensation fixed effects are significantly correlated with management styles i e manager fixed effects in corporate policies finally the method used in the article has a number of potential applications in financial economics the author 2011 published by oxford university press on behalf of the society for financial studies all rights reserved for permissions please e mail journals permissions oup com oxford university press

managerial overconfidence and accounting conservatism managerial overconfidence overconfident managers overestimate ixwxuhuhwxuqviurpwkhluilupv lqyhvwphqwv 7kxv zh predict that overconfident managers will tend to accelerate good news recognition delay loss recognition and generally use less conservative accounting furthermore we test whether external monitoring helps to mitigate this effect using measures of both conditional and unconditional conservatism we find robust evidence of a negative relation between ceo overconfidence and accounting conservatism we further find that external monitoring does not appear to mitigate this effect our findings add to the growing literature on overconfidence and complements findings in schrand and zechman 2011 that overconfidence affects financial reporting behavior

why are ceos rarely fired evidence from structural estimation i evaluate the forced ceo turnover rate and quantify effects on shareholder value by estimating a dynamic model the model features learning about ceo ability and costly turnover to fit the observed forced turnover rate the model needs the average board of directors to behave as if replacing the ceo costs shareholders at least 200 million this cost mainly reflects ceo entrenchment rather than a real cost to shareholders the model predicts that shareholder value would rise 3 if we eliminated this perceived turnover cost all else equal the model also helps explain the relation between ceo firings tenure and profitability

optimal food price stabilisation policy this paper proposes a framework for designing optimal food price stabilisation policies in a self sufficient developing country it uses a rational expectations storage model with risk averse consumers and incomplete markets government stabilises food prices by carrying public stock and by applying a state contingent subsidy tax to production the policy rules are designed to maximise intertemporal welfare the optimal policy under commitment crowds out all private stockholding activity by removing the profit opportunity from speculation the countercyclical subsidy tax to production helps price stabilisation by subsidising production in periods of scarcity and by taxing it in periods of glut it contributes little to welfare gains most of which come from stabilisation achieved through public storage

piecewise linear trends and cycles in primary commodity prices we extend the methodology put forward in yamada and yoon 2014 journal of international money and finance 42 c 193 207 to analyze the trend and cyclical behavior of relative primary commodity prices these authors propose the use of the so called l1 filter that renders piecewise linear trends of the underlying data our focus on the calibration of such filter and its implications for the empirical analysis of primary commodity prices especially the interpretation given to the resulting trend we also illustrate how suitably calibrated filters may be used to compute piecewise linear super cycles whose turning points are easy to identify