analyzing nutritional impacts of policies an empirical study for malawi summary widespread malnutrition in developing countries calls for appropriate strategies presupposing good knowledge about nutritional impacts of policies little previous work has been carried out in this direction especially with respect to micronutrients we use representative household data from malawi and develop a demand systems approach to estimate income and price elasticities of food demand and nutrient consumption these estimates are applied for policy simulations given multiple nutritional deficiencies income related policies are better suited than price policies to improve nutrition while consumer price subsidies for maize improve calorie and mineral consumption they can worsen vitamin consumption in urban areas

how traders influence their neighbours modelling social evolutionary processes and peer effects in agricultural trade networks abstract marketing channel choices in agricultural trade networks affect the networks overall performance and influence rural livelihoods this study identifies key determinants of these choices among natural rubber traders in indonesia to evaluate four policy scenarios and their potential effects on rural incomes since traders marketing decisions are based on past interactions resulting trade networks are formed in recursive processes and can be understood as complex adaptive systems due to inherent endogeneity in these systems process based approaches such as agent based modelling abm can be effective in understanding them using a self gathered primary dataset from jambi province indonesia we implement and parameterise an abm to simulate the formation of the rubber trading network and analyse the effects on rural livelihoods of four hypothetical policy scenarios improved micro credit availability increased access to education better infrastructure and transportation capacity and market information availability the model is calibrated through a genetic algorithm which maximises the similarity between the simulated network and the actual network observed in the data results indicate that sellers decisions on a buyer are primarily determined by debt obligations and past peer interactions the most influential sellers have a similar level of formal education as their peers and live in close physical proximity results of the policy scenario analysis suggests that policies aimed at reducing sellers dependence on credit from buyers and increasing education are the most effective policies for improving value chains and reducing poverty in the region under consideration

linear quadratic approximation external habit and targeting rules abstract we examine the linear quadratic approximation of nonlinear dynamic stochastic optimization problems a discrete time version of magill 1977a a local analysis of n sector capital accumulation under uncertainty journal of economic theory 15 2 211 219 is generalized to models with forward looking variables paying special attention to second order conditions this is the large distortions case in the literature we apply the approach to monetary policy in a dsge model with external habit in consumption we then develop a condition for target implementability a concept related to targeting rules finally we extend the approach to a comparison between cooperative and non cooperative equilibria in a two country model and show that the small distortions approximation is inappropriate for this exercise

land degradation drought and food security in a less favoured area in the ethiopian highlands a bio economic model with market imperfections abstract this paper presents a bio economic model of andit tid a severely degraded crop livestock farming system with high population density and good market access in the highlands of ethiopia land degradation population growth stagnant technology and drought threaten food security in the area drought or weather risk appears to have increased in recent years the bio economic model is used to analyse the combined effects of land degradation population growth market imperfections and increased risk of drought on household production welfare and food security we find that the indirect effects of drought on household welfare through the impact on crop and livestock prices are larger than the direct production effects of drought provision and adoption of credit for fertiliser although risky in itself may lead to increased grain production and improved household welfare and food security provision of credit may have a negative effect on conservation incentives but this effect may be mitigated by linking a conservation requirement to the provision of credit for fertiliser

socialism and the revenue maximizing leviathan the driving force in the government s progress from a capitalistic system to one with government ownership of capital and relative wage allocated labor socialism to a system involving inframarginal taxation of labor and government ownership of capital communism is the government s desire to increase current revenues 1 each step along the way sacrifices more private resource allocation and replaces it with direct governmental control the government might well realize that it lacks the knowledge to replicate these lost private functions accurately with the passage of time and the appearance of potentially useful technological innovations any losses resulting from this lack of knowledge increase these losses are an anticipated drain on future income a decision maker with a long time horizon and a secure position a low discount rate would find these prospective losses weighing heavily in his calculations and might never take the first step beyond capitalism a less fortunately placed decision maker facing domestic and foreign threats may find that current revenue requirements for internal and external defense and for payments made to supporters force him to mortgage the future for increased current revenue this decision maker may be tempted by socialism not for any ethical or political reasons but merely for the quick revenue returns it offers

the future of food demand understanding differences in global economic models understanding the capacity of agricultural systems to feed the world population under climate change requires projecting future food demand this article reviews demand modeling approaches from 10 global economic models participating in the agricultural model intercomparison and improvement project agmip we compare food demand projections in 2050 for various regions and agricultural products under harmonized scenarios of socioeconomic development climate change and bioenergy expansion in the reference scenario ssp2 food demand increases by 59 98 between 2005 and 2050 slightly higher than the most recent fao projection of 54 from 2005 2007 the range of results is large in particular for animal calories between 61 and 144 caused by differences in demand systems specifications and in income and price elasticities the results are more sensitive to socioeconomic assumptions than to climate change or bioenergy scenarios when considering a world with higher population and lower economic growth ssp3 consumption per capita drops on average by 9 for crops and 18 for livestock the maximum effect of climate change on calorie availability is 6 at the global level and the effect of biofuel production on calorie availability is even smaller

what are the farm level impacts of malawi s farm input subsidy program a critical review this article provides a critical analysis of the current frontier of research evaluating malawi s farm input subsidy program fisp whose main objectives are increasing maize production promoting household food security and enhancing rural incomes we focus on farm level studies in malawi identifying consistent and contrasting research results in order to draw important policy lessons and provide suggested avenues for future research while national production estimates suggested dramatic increases in maize production and productivity during the years of the fisp the farm level studies found relatively modest increases in maize production and yields over the same period consistent with the farm level results of modest maize production increases there has been a relative increase in real maize prices and the country continued to import maize during most of the subsidy program years furthermore there is evidence that better off households gained substantially more than poorer households when they participated in the program together these findings cast some doubt on the fisp s ability to reduce food insecurity and poverty we propose a number of policy lessons and suggestions for rigorous investigation including research that directly measures the causal impacts of the fisp program on poverty in malawi

input subsidy programs in sub saharan africa a synthesis of recent evidence input subsidy programs have once again become a major plank of agricultural development strategies in africa ten african governments spend roughly us 1 billion annually on input subsidy programs isps amounting to 28 6 of their public expenditures on agriculture this article reviews the microlevel evidence on isps undertaken since the mid 2000s we examine the characteristics of subsidy beneficiaries crop response rates to fertilizer application and their influence on the performance of subsidy programs the impacts of subsidy programs on national fertilizer use and the development of commercial input distribution systems and finally the impact of isps on food price levels and poverty rates the weight of the evidence indicates that the costs of the programs generally outweigh their benefits findings from other developing areas with a higher proportion of crop area under irrigation and with lower fertilizer prices factors that should provide higher returns to fertilizer subsidies than in africa indicate that at least a partial reallocation of expenditures from fertilizer subsidies to r d and infrastructure would provide higher returns to agricultural growth and poverty reduction however because isps enable governments to demonstrate tangible support to constituents they are likely to remain on the african landscape for the foreseeable future hence the study identifies ways in which benefits can be enhanced through changes in implementation modalities and complementary investments within a holistic agricultural intensification strategy among the most important of these are efforts to reduce the crowding out of commercial fertilizer distribution systems and programs to improve soil fertility to enable farmers to use fertilizer more efficiently the challenges associated with achieving these gains are likely to be formidable

probability models and robust policy rules abstract we consider sims s 2008 argument that robust policy making requires that policy models be treated as probability models in a welfare based setting we estimate by bayesian methods a number of variants of a new keynesian macroeconomic model and use both the model odds and posterior densities to design robust interest rate rules consisting of an inflation forecast based rule and a wage targeting one each are shown to have distinct robustness qualities and distinct implications for the probability models approach to ensure feasible policy we further impose that rules are stable determinate and lower bound compatible our results have important implications for the design evaluation and analysis of the probability models approach to robust monetary policy making

spurious welfare reversals in international business cycle models several papers have documented spurious welfare reversals incompletemarkets economy produces a higher level of welfare than the completemarkets economy this paper first demonstrates how conventional linearization can generate approximation errors that can result in welfare reversals using a two country production economy we argue that spurious welfare reversals are not only possible but also plausible under reasonable values for model parameters this paper then proposes an approximation method that modifies the conventional linearization by a bias correction this method can be easily implemented and approximates welfare as accurately as a second order perturbation method

dealing with uncertainty in agent based simulation farm level modeling of adaptation to climate change in southwest germany climate change will most likely confront agricultural producers with natural economic and political conditions that have not previously been observed and are largely uncertain as a consequence extrapolation from past data reaches its limits and a process based analysis of farmer adaptation is required simulation of changes in crop yields using crop growth models is a first step in that direction however changes in crop yields are only one pathway through which climate change affects agricultural production a meaningful process based analysis of farmer adaptation requires a whole farm analysis at the farm level we use a highly disaggregated mathematical programming model to analyze farm level climate change adaptation for a mountainous area in southwest germany regional level results are obtained by simulating each full time farm holding in the study area we address parameter uncertainty and model underdetermination using a cautious calibration approach and a comprehensive uncertainty analysis we deal with the resulting computational burden using efficient experimental designs and high performance computing we show that in our study area shifted crop management time slots can have potentially significant effects on agricultural supply incomes and various policy objectives promoted under german and european environmental policy schemes the simulated effects are robust against model uncertainty and underline the importance of a comprehensive assessment of climate change impacts beyond merely looking at crop yield changes our simulations demonstrate how farm level models can contribute to a process based analysis of climate change adaptation if they are embedded into a systematic framework for treating inherent model uncertainty

effect of changes in population density and crop productivity on farm households in malawi this study examines the ex ante farm household effects of changes in family size yield potential and yield gaps using a farm household simulation model that reflects the economic and biophysical conditions of central malawi disparities between growth in human population and crop yields present challenges for farm household crop production and income in sub saharan africa we focus on the effect of growth in yield potential and a more efficient use of livestock manure as approaches to improving crop production and incomes in the face of looming population pressures our results suggest that even without considering climate change expected changes in population density and crop prices in 2050 mean that per person crop production and income may fall by 21 compared to 2013 values if yield potential and yield gaps remain constant however per person crop production and income could increase in 2050 by 8 compared to 2013 values if 1 growth rates of yield potential rise for maize by 1 13 each year and for legumes rise by at least 0 4 each year and 2 farmers use livestock manure more efficiently our foresight approach to considering crop production at the farm household scale supplements macro scale analyses of the production dimension of food security

rural nonfarm employment in developing countries in an era of globalization rural nonfarm employment rnfe has become a topic of major importance in rural development as by the mid 2000s rnfe constituted 35 of rural incomes in africa and 50 in both asia and latin america the traditional view of rnfe was a sleepy hinterland activity cut off from changes in the national let alone the global economy that view was assailed by sweeping changes in rural areas starting with the green revolution then rur urbanization and lately by globalization intervening via both trade and modernization of the national economy including the rise of modern retail and processing in this article we hypothesize and offer emerging evidence that the strongest and most positive effects on rnfe of globalization come in the zones that are rur urbanized with a tradeables growth motor induced rnfe sector with clusters of small medium enterprises for manufactures and a preponderance of services surprisingly the trade effects are least and the domestic market transformation effects are the strongest the most challenges are posed for zones that are rur urbanized and dense zone rnfe with low moderate local growth motors the least effects are on hinterland zones the policy implications are to promote tradeables growth motors key to creating rnfe in services the major component of rnfe and to incorporate competitiveness in a changing urban and global economy into rnfe promotion

does population pressure induce farm intensification empirical evidence from tigrai region ethiopia the scarcity of land for crop and livestock production is critical in countries with growing populations the idea that increasing population density leads to natural resource depletion and economic failure as predicted by malthus or rather to farm intensification as hypothesized by boserup motivates this research this article examines how high population pressure in northern ethiopia influences smallholders farm intensification by applying recursive estimation with a control function approach using data from 518 randomly selected farmers although our empirical results are more in favor of the boserupian hypothesis the findings also reveal that both malthusian and boserupian forces coexist consistent with malthus theory high population pressure is found to be associated with small farm size and herd size population pressure affected both technology use breed cow stall feeding and modern cattle feed and output supply milk yield milk income and straw output as predicted by boserup s theory the use of modern input and output supply initially increases with increasing population pressure but declines again when population densities pass a critical threshold 800 persons km2 supporting malthus hypothesis the estimation results also revealed that both milk and straw supply responded positively to prices free grazing and stall feeding are found to be complementary activities likewise crop farm income and off farm job have a nonlinear relation with population pressure implying that both initially increase and then decrease with rising population pressure

do the ecb and the fed really need to cooperate optimal monetary policy in a two country world abstract a two country model with monopolistic competition and price stickiness is employed to investigate the implications for macroeconomic stability and the welfare properties of three international policy arrangements a cooperative b non cooperative and c monetary union i characterize the conditions under which there is scope for policy cooperation and quantify the costs of non cooperation and monetary union the non cooperative equilibrium may be suboptimal because of terms of trade spillover effects while monetary union may be suboptimal because of the sluggishness of relative prices both the costs of policy competition and of a monetary union are sensitive to the values assumed for the intertemporal and international demand elasticity and the degree of openness of the economy independently of the calibration scenario adopted the ecb has little to gain by coordinating with the fed

fertilizer market development a comparative analysis of ethiopia kenya and zambia abstract this article synthesizes case studies from kenya zambia and ethiopia to assess how differences in the implementation of fertilizer marketing policies have affected the costs and risks borne by marketing actors the investment response by private traders and fertilizer consumption financial cost accounting techniques indicate that domestic marketing costs account for 50 or more of farm gate prices the sum of importer wholesaler and retailer profit margins generally account for less than 10 there are opportunities to reduce domestic marketing costs through the following reducing port fees coordinating the timing of fertilizer clearance from the port with up country transport reducing transport costs through port rail and road improvements reducing high fuel taxes and reducing the uncertainty associated with government input distribution programs that impose additional marketing costs on traders estimated reductions in the farm gate price of fertilizer from implementing the full range of options identified in each country range from 11 to 18 price reductions of this magnitude if passed along to farmers would increase farmers effective demand for fertilizer investments in selected publically provided goods often considered outside the scope of fertilizer marketing policy per se strongly affect the costs of fertilizer farmers willingness to pay for it and hence the performance of markets

on nationalizing private property and the present value of dictators reply john lott and david reiffen 1986 argue that our explanation of socialism is both inconsistent with rational behavior on the part of government leaders and empirically unsupported they also assert that our revenuemaximizing inframarginal taxes are incorrectly specified we feel that their comments are a result of a misreading of our paper 1984 our primary concern was with the capture of the inframarginal rents of labor suppliers rather than the return on capital labor returns in a capitalistic society typically comprise 70 to 80 percent of income and are therefore a potentially large source of governmental wealth although in framing our argument in a way consistent with brennan and buchanan s 1980 framework we choose to evaluate alternative tax regimes such taxes actually take the form of a governmental labor monopsony all firms are nationalized and workers become government employees by choosing wages which just cover substance governmental profits are increased by what would be workers rent in a capitalistic economy although substance may vary from worker to worker the government would not know this variation and wages would realistically be set at a level sufficient to draw most of the population into the work force any variation in wages seen would reflect not differences in productivity in the usual sense but rather differing political pay offs according to the worker s service towards maintaining the political regime or conversely his potential to disrupt it the resulting wage structure would be independent of economic productivity and the government would have to rely on some form of directed labor allocation the resulting economy would correspond to the soviet model of communism with a total elimination of non governmental employment opportunities in western european countries socialism does not appear to be motivated by the desire to maximize governmental revenue but rather as part of an attempt to achieve employment or other political goals the existence of a private sector economy of a significant size precludes the exercise of monopsony power in the labor market it is interesting to note that these western socialized economies do not prohibit out migration coun

on nationalizing private property and the present value of dictators the empirical and theoretical results in this paper cast doubt upon the explanation of socialism advanced by gifford and kenney the empirical finding that socialism is inversely related to the degree of political instability is directly contrary to the prediction of their model

how much of the labor in african agriculture is provided by women the contribution of women to labor in african agriculture is regularly quoted in the range of 60 to 80 percent using individual disaggregated plot level labor input data from nationally representative household surveys across six sub saharan african countries this study estimates the average female labor share in crop production at 40 percent it is slightly above 50 percent in malawi tanzania and uganda and substantially lower in nigeria 37 percent ethiopia 29 percent and niger 24 percent there are no systematic differences across crops and activities but female labor shares tend to be higher in households where women own a larger share of the land and when they are more educated controlling for the gender and knowledge profile of the respondents does not meaningfully change the predicted female labor shares the findings question prevailing assertions regarding substantial gains in aggregate crop output as a result of increasing female agricultural productivity

productivity growth and the effects of r d in african agriculture this article measures and compares total factor productivity growth in african agriculture under contemporaneous and sequential technology frontiers over the period 1970 2004 the sources of productivity growth are examined using a fixed effects regression model and a polynomial distributed lag structure for agricultural r d expenditures while conventional estimates show an average productivity growth rate of only 0 3 per year the improved measures under sequential technology show that african agricultural productivity grew at a higher rate of 1 8 per year technical progress rather than efficiency change was the principal source of productivity growth agricultural r d weather and trade reforms turned out to have significant effects on productivity in african agriculture with a rate of return of 33 per year r d is shown to be a socially profitable investment in african agriculture while a strong r d expenditure growth of about 2 per year in the 1970s led to strong productivity growth after the mid 1980s stagnation of r d expenditure in the 1980s and early 1990s led to slower productivity growth in the 2000s consistent with recent economic recovery in africa evidenced by stronger agricultural gdp growth rates results showed that policy reforms as well as improved weather contributed to the recovery of agricultural productivity after the mid 1980s

smart policies to reduce pesticide use and avoid income trade offs an agent based model applied to thai agriculture abstract policy makers in developing countries need better evidence of how changes in pesticide regulation would affect pesticide reduction and farm incomes but there are very few modeling tools that can provide such information the present study develops a new model based on mathematical programming based multi agent system mpmas a simulation software that allows assessing ex ante the impact of alternative pesticide use reduction strategies including combinations of pesticide taxes the introduction of integrated pest management a price premium for safe agricultural produce and subsidies for biopesticides the model is parameterized with farm and plot level data from northern of thailand where the adoption of high value cash crops has been accompanied by a rapid increase in synthetic pesticide use simulation results suggest that a pesticide tax alone has little effect on synthetic pesticide use a smart policy package combining integrated pest management a progressive pesticide tax based on toxicity and subsidies lowering the price of biopesticides can reduce average use of hazardous pesticides by 34 over current levels without adverse effects on the average farm income

inflation stabilization and welfare the case of a distorted steady state this paper considers the appropriate stabilization objectives for monetary policy in a microfounded model with staggered price setting rotemberg and woodford 1997 and woodford 2002 have shown that under certain conditions a local approximation to the expected utility of the representative household in a model of this kind is related inversely to the expected discounted value of a conventional quadratic loss function in which each period s loss is a weighted average of squared deviations of inflation and an output gap measure from their optimal values zero however those derivations rely on an assumption of the existence of an output or employment subsidy that offsets the distortion due to the market power of monopolistically competitive price setters so that the steady state under a zero inflation policy involves an efficient level of output here we show how to dispense with this unappealing assumption so that a valid linear quadratic approximation to the optimal policy problem is possible even when the steady state is distorted to an arbitrary extent allowing for tax distortions as well as market power and when as a consequence it is necessary to take account of the effects of stabilization policy on the average level of output we again obtain a welfare theoretic loss function that involves both inflation and an appropriately defined output gap though the degree of distortion of the steady state affects both the weights on the two stabilization objectives and the definition of the welfare relevant output gap in the light of these results we reconsider the conditions under which complete price stability is optimal and find that they are more restrictive in the case of a distorted steady state we also consider the conditions under which pure randomization of monetary policy can be welfare improving and find that this is possible in the case of a sufficiently distorted steady state though the parameter values required are probably not empirically realistic

designing targeting rules for international monetary policy cooperation this study analyzes a two country dynamic general equilibrium model with nominal rigidities monopolistic competition and producer currency pricing a quadratic approximation to the utility of the consumers is derived and assumed as the policy objective function of the policymakers it is shown that only under special conditions there are no gains from cooperation and moreover that the paths of the exchange rate and prices in the constrained efficient solution depend on the kind of disturbance that affects the economy it might be the case either for fixed or floating exchange rates despite this result simple targeting rules that involve only targets for the growth of output and for both domestic gdp and cpi inflation rates can replicate the cooperative allocation

the term structure of interest rates in a dsge model with recursive preferences abstract a dynamic stochastic general equilibrium dsge model in which households have epstein and zin recursive preferences is solved with perturbation the parameters governing preferences and technology are estimated by maximum likelihood using macroeconomic data and the term structure of interest rates the estimates imply a large risk aversion an elasticity of intertemporal substitution higher than one and substantial adjustment costs furthermore the paper identifies the tensions within the model by estimating it on subsets of these data the analysis concludes by pointing out potential extensions that may improve the model s fit

a fiscal stimulus with deep habits and optimal monetary policy abstract a new keynesian model with deep habits and optimal monetary policy delivers a larger than 1 fiscal multiplier and consumption crowding in optimized taylor type rules dominate a conventional taylor rule consumption is crowded out if the taylor rule is suboptimal or if commitment is absent

trend inflation and firms price setting rotemberg versus calvo we compare the calvo and rotemberg price setting mechanisms in a new keynesian model with trend inflation we show that the long run relationship between inflation and output is positive in rotemberg and negative in calvo the dynamics of the two models differ even to a first order approximation positive trend inflation enlarges the determinacy region in the rotemberg model whereas it shrinks it in the calvo model the responses of output and inflation to technology shocks are amplified by trend inflation in calvo whereas they are dampened in rotemberg the two models imply differing non linear adjustments after a disinflation

sustainable international monetary policy cooperation abstract we provide new insight on international monetary policy cooperation in a familiar two country setting a country facing a relatively more volatile markup shock has an incentive to deviate from an assumed cooperation regime to a non cooperation regime a similar result obtains if countries differ in size have non unitary elasticity of substitution between domestic and foreign goods and have different degrees of trade openness home bias in consumption this motivates our study of an endogenous history dependent sustainable cooperation regime its history contingent welfare redistributions are supported by incentive compatible variations in resource transfers through the terms of trade or net exports such an endogenous cooperative solution may also provide a theoretical rationale for perceived occasional cooperation between national central banks in reality

cyclical risk aversion precautionary saving and monetary policy this paper analyzes the conduct of monetary policy in an environment in which cyclical swings in risk appetite aect households propensity to save it uses a new keynesian model featuring external habit formation to show that taking note of precautionary saving motives justi es an accommodative policy bias in the face of persistent adverse disturbances equally policy should be more restrictive that is lean against the wind following positive shocks under su ciently persistent habits it is in fact optimal to increase interest rates following a rise

the power to tax analytical foundations of a fiscal constitution preface 1 taxation in constitutional perspective 2 natural government a model of leviathan 3 constraints on base and rate structure 4 the taxation of commodities 5 taxation through time income taxes capital taxes and public debt 6 money creation and taxation 7 the disposition of public revenues 8 the domain of politics 9 open economy federalism and taxing authority 10 toward authentic tax reform prospects and prescriptions epilogue notes selected bibliography index

soil erosion and smallholders conservation decisions in the highlands of ethiopia abstract soil erosion is one of the most serious environmental problems in ethiopia coupled with growing populations falling per capita food production and worsening poverty loss of productive land due to land degradation undermines rural livelihoods and national food security despite their awareness of the erosion problem peasants investments in land have been limited we use an applied nonseparable model to simulate conservation decisions pervasive market imperfections poverty and high rates of time preference seem to undermine erosion control investments lack of technologies which provide quick returns to subsistence constrained peasants also seem to deter such investments lower private incentives to internalize the intertemporal land degradation externality may require public intervention

technical coefficients for bio economic farm household models a meta modelling approach with applications for southern mali abstract in recent years different types of bio economic models have been developed to support the analysis of the potential impact of agrarian policies on changes in land use sustainable resource management and farmers welfare most bio economic models rely on series of discrete input output coefficients for current and improved cropping and livestock activities whereas mathematical programming procedures are usually applied to analyse optimum allocative choice adequate procedures for the smooth integration of biophysical information into economic decision models are however not readily available this article provides a new and comprehensive framework for the incorporation of technical input output coefficients derived from agroecological simulation approaches into bio economic farm household models therefore continuous production functions are estimated for the production side of the farm household model making use of meta modelling principles it is shown that meta modelling offers considerable scope for improving the specification and behaviour of bio economic farm household models this procedure is applied in a farm household model developed for the analysis of farmers response to agrarian policies in southern mali results are presented for the behaviour of a typical household focusing attention on the trade offs between farm income and soil nutrient balances under free market conditions and with constraints on labour capital and animal traction markets the stability and robustness of the model is analysed through a simulation of the impact of higher input costs for land use and fertiliser applications

two pitfalls of linearization methods this paper illustrates two types of pitfalls when linearization methods are improperly applied first if we linearize the constraints before deriving the optimality conditions the derived conditions are not correct up to first order second even when we obtain the behavior of the economy that is correct to the first order applying this behavior to welfare implications may lead to incorrect results we also review different ways to avoid those pitfalls

monetary and fiscal policy under deep habits allowing habits to be formed at the level of individual goods deep habits can radically alter the fiscal policy transmission mechanism as the counter cyclicality of mark ups this implies can result in government spending crowding in rather than crowding out private consumption in the short run we explore the robustness of this mechanism to the existence of price discrimination in the supply of goods to the public and private sectors we then describe optimal monetary and fiscal policy in our new keynesian economy subject to the additional externality of deep habits and explore the ability of simple policy rules to mimic fully optimal policy we find that the presence of deep habits at empirically estimated levels can imply large externalities that significantly affect the conduct of monetary and tax policy however despite the rise in government spending multipliers implied by deep habits government spending is barely used as a stabilisation tool under the optimal policy

simulating the diffusion of organic farming practices in two new eu member states abstract agriculture continues to be a major contributor to water pollution climate change and loss of biodiversity although policies to encourage farmers to work to higher sustainability standards in food and energy crop production have increased throughout the european union in new member states accession to the european union mostly brought a substantially increased public support to foster the diffusion of certified organic farming however the take up of organic farming is varied for reasons that are not yet well understood in this paper we analyse the diffusion of organic farming through farm populations this involves an understanding of farmer behaviour and how it can change over time we present a generic agent based model that builds on the theory of planned behaviour as framework for understanding and modelling farmers decision making processes the model is applied to high diffusion regions in two new eu member states latvia and estonia the values for the model s parameters are informed by survey data the model reproduces the interdependence of social influence and economic factors social influence alone is shown to make little difference to the model dynamics organic farmers remain organic and conventional farmers remain conventional introducing a change to the environment e g a subsidy results in an increase in the proportion of adopters thus economic factors appear to be more influential than social factors however only when allowing for both the subsidy and social influence do we reveal the whole picture and the combined adoption rate is higher than the sum of the proportion of adopters resulting from just social influence without a subsidy and from just a subsidy without social influence we also compare the effect of the subsidy with the effect of influence from organic farm advisors to develop policy recommendations

quantifying and sustaining welfare gains from monetary commitment abstract our objectives are to quantify the stabilization welfare gains from commitment to examine how commitment to an optimal rule can be sustained as an equilibrium to find a simple interest rate rule that approximates the optimal commitment one we utilize an empirical micro founded euro area dsge model a quadratic approximation of household utility as the welfare criterion employing a nominal interest rate lower bound in contrast to previous studies we find significant commitment stabilization gains of around a 0 4 0 5 equivalent permanent consumption increase and with higher price stickiness gains over 2 we find that a simple optimized commitment rule responding to inflation and the real wage mimics the optimal one

input use and market development in sub saharan africa an overview abstract this paper sets forth the background and objectives of this special issue trends in input use since 1980 are reviewed and a conceptual framework is presented for analyzing problems of input use and formulating strategies for resolving them reasons for low levels of fertilizer use by smallholder farmers are summarized briefly the essential points of the papers in the special issue and their implications for further expansion of input use in sub saharan africa are then outlined

impacts of price and productivity changes on banana growing households in uganda this article compares the effects of changing market prices and farm productivity on the welfare of banana growing households in the ntungamo district of uganda a heterogeneous agent model is applied via a series of mathematical optimization problems to simulate production and consumption responses of 70 farm households surveyed in 2006 results show that a given increase in productivity has a greater impact on poverty alleviation than that same increase in market prices despite the effects of productivity gains being comparable across different types of household groups price improvements primarily benefit the incomes of households who are involved in rural producer organizations who are located closer to markets and who sell at the market

quantitative easing and the loan to collateral value ratio we study optimal monetary policy in a new keynesian model at the zero bound interest rate where households use cash alongside house equity borrowing to conduct transactions the amount of borrowing is limited by a collateral constraint when either the loan to value ratio declines or house prices fall we observe a decrease in the money multiplier we argue that the central bank should respond to the fall in the money multiplier and therefore to the reduction in house prices or the loan to collateral value ratio we also find that optimal monetary policy generates a large and persistent fall in the money multiplier in response to the drop in the loan to collateral value ratio

technological and policy options for sustainable agricultural intensification in eastern uganda this article presents a bio economic household model which has been developed to assess the potential impacts of agricultural intensification efforts on economic and ecological indicators in eastern uganda a study region in the lake victoria crescent was selected with comparative advantages for intensive agricultural production high agricultural potential high market access and high population density however current production is characterized by low input output systems revealing a discrepancy between development opportunities and actual development outcomes based on a farmer participatory research approach production methods were introduced in the study region aimed at fostering sustainable agricultural development data from two community surveys two comprehensive household and plot level surveys and farm trial data were used to develop and calibrate bio economic models for four representative household types model scenarios reveal that farm households in eastern uganda would not pursue sustainable intensification under current socio economic conditions the market environment has to be improved substantially i e transaction and transportation costs have to be reduced innovative credit schemes for smallholders have to be introduced and alternative forms of labor acquisition have to be promoted to provide sufficient economic incentives for the adoption of environmentally sound production methods in addition agricultural service provision needs to be reformed and more agricultural research is needed for new and better targeted technologies

optimal monetary policy optimal monetary policy maximizes the welfare of a representative agent given frictions in the economic environment constructing a model with two sets of frictions costly price adjustment by imperfectly competitive firms and costly exchange of wealth for goods we find optimal monetary policy is governed by two familiar principles first the average level of the nominal interest rate should be sufficiently low as suggested by milton friedman that there should be deflation on average yet the keynesian frictions imply that the optimal nominal interest rate is positive second as various shocks occur to the real and monetary sectors the price level should be largely stabilized as suggested by irving fisher albeit around a deflationary trend path since expected inflation is roughly constant through time the nominal interest rate must therefore vary with the fisherian determinants of the real interest rate although the monetary authority has substantial leverage over real activity in our model economy it chooses real allocations that closely resemble those which would occur if prices were flexible in our benchmark model there is some tendency for the monetary authority to smooth nominal and real interest rates

what is wrong with taylor rules using judgment in monetary policy through targeting rules it is argued that inflation targeting is best understood as a commitment to a targeting rule rather than an instrument rule e ither ageneral targeting rule explicit objectives for monetary policy or a specific targeting rule a criterion for the forecasts of the target variables to be fulfilled essentially the equality of the marginal rates of transformation and substitution between the target variables targeting rules allow the use of judgment and extramodel information are more robust and easier to verify than optimal instrument rules and they can nevertheless bring the economy close to the socially optimal equilibrium

agent based spatial models applied to agriculture a simulation tool for technology diffusion resource use changes and policy analysis abstract this paper presents a spatial multi agent programming model which has been developed for assessing policy options in the diffusion of innovations and resource use changes unlike conventional simulation tools used in agricultural economics the model class described here applies a multi agent cellular automata ca approach by using heterogeneous farm household models and capturing their social and spatial interactions explicitly the individual choice of the farm household among available production consumption investment and marketing alternatives is represented in recursive linear programming models adoption constraints are introduced in form of network threshold values that reflect the cumulative effects of experience and observation of peers experiences the model s economic and hydrologic components are tightly connected into a spatial framework the integration of economic and hydrologic processes facilitates the consideration of feedback effects in the use of water for irrigation the simulation runs of the model are carried out with an empirical data set which has been derived from various data sources on an agricultural region in chile simulation results show that agent based spatial modelling constitutes a powerful approach to better understanding processes of innovation and resource use change

land pressures the evolution of farming systems and development strategies in africa a synthesis abstract evidence assembled in this special issue of food policy shows that rising rural population densities in parts of africa are profoundly affecting farming systems and the region s economies in ways that are underappreciated in current discourse on african development issues this study synthesizes how people markets and governments are responding to rising land pressures in africa drawing on key findings from the various contributions in this special issue the papers herein revisit the issue of boserupian agricultural intensification as an important response to land constraints but they also go further than boserup and her followers to explore broader responses to land constraints including non farm diversification migration and reduced fertility rates agricultural and rural development strategies in the region will need to more fully anticipate the implications of africa s rapidly changing land and demographic situation and the immense challenges that mounting land pressures pose in the context of current evidence of unsustainable agricultural intensification a rapidly rising labor force associated with the region s current demographic conditions and limited nonfarm job creation these challenges are manageable but will require explicit policy actions to address the unique development challenges in densely populated rural areas

do fertilizer subsidies crowd out organic manures the case of malawi we assess the impacts of the malawian farm input subsidy program on manure use at the farm plot level using more than 3 000 farm plot observations from six districts in central and southern malawi over three years 2006 2007 and 2009 the probabilities and intensities of manure use were investigated with the correlated random effects cre probit and tobit models the endogeneity of access to fertilizer subsidies and fertilizer use intensity was controlled for with a control function approach both the probability of manure use and intensity of manure use were positively correlated with the intensity of fertilizer use a 1 increase in fertilizer use intensity is associated with a 1 94 1 96 increase in the intensity of manure use outside the subsidy program and a 0 62 1 66 increase in manure use with the subsidy program a 1 increase in average fertilizer price was associated with a 0 43 0 76 increase in the probability of manure use and a 3 5 5 3 increase in the intensity of manure use

the complex dynamics of smallholder technology adoption the case of sri in madagascar this article explores the dynamics of smallholder technology adoption with particular reference to a high yielding low external input rice production method in madagascar we present a simple model of technology adoption by farm households in an environment of incomplete financial and land markets we then use a probit model and symmetrically censored least squares estimation of a dynamic tobit model to analyze the decisions to adopt expand and disadopt the method we find that seasonal liquidity constraints discourage adoption by poorer farmers learning effects both from extension agents and from other farmers exert significant influence over adoption decisions

reducing dependence on chemical fertilizers and its financial implications for farmers in india the fertilizer intensive technology so long promoted in agriculture produced a green revolution but has brought long term damages to soil quality the technology now appears unsustainable for future agricultural development in india both on account of its ecological implications and the burden on the budget there is now a need to revisit the traditional methods once used in agriculture and to look for a judicious blend of chemical fertilizer based technology with organic manure since manures are relatively less productive in the short run there is an alarm that a shift in technology away from the chemical fertilizer towards organic manure may mean a compromise in production or may hurt the incomes of farmers this paper emphasizes the environmental benefits of a possible shift in agricultural technology while keeping in view the importance of sustaining crop yield levels and protecting farmers incomes considering two major crops in india in specific states the paper finds that over time while fertilizer use intensified several times over the use of manure in agriculture either stagnated or declined the manure market remained localized limited and unorganized and its price was significantly higher than fertilizer in terms of nutrients in contrast to the organized and state supported fertilizer market the paper estimates quadratic yield functions based on cross section household level data and using the prices faced by farmers as reported by official survey finds that in majority of the cases there will not be any financial loss resulting from a small shift in technology towards organic manure such a shift can however be considered feasible if the losing households are compensated and if manure price is kept in control by promoting a more dynamic manure market d 2004 elsevier b v all rights reserved

simulating soil fertility and poverty dynamics in uganda a bio economic multi agent systems approach declining soil fertility and increasing rural poverty are major problems facing sub saharan agriculture bio economic modeling has been used to analyze the complex interaction between ecological sustainability and rural poverty as well as to explore policy options promoting sustainable development this paper shows that these models can be further advanced by adopting an agent based modeling approach this gives a more realistic representation of diversity in socioeconomic and biophysical terms allows local interaction between households and can yield an ex ante assessment of the distributional consequences of policy intervention this paper describes the modeling approach and illustrates it with an empirical application to two village communities in the lake victoria crescent of uganda it is shown how the model system can be calibrated with and validated against empirical data the model is used to analyze the potential effect of short term credit mineral fertilizer and improved maize seed on poverty and sustainability simulation results suggest substantial reductions in poverty although the incidence of poverty would remain high and these innovations alone would have little effect on the long term ecological sustainability of the system

agent based modeling for ex ante assessment of tree crop innovations litchis in northern thailand this study uses an agent based model for ex ante assessment of agricultural innovations the model builds on whole farm mathematical programming mp and extends the methodology with a spatial representation of the system the heterogeneity of farm households and landscapes and the interaction between farm households we apply the model in a northern thai watershed to study the potential of four innovations to increase the profitability of litchi orchards cost benefit analysis shows that each innovation would increase the profitability of litchi growing however the results of the agent based model show that at current price levels these innovations alone would not be enough to stem the decline in the area under litchis the model was validated and the sensitivity of the results tested for variations in the irrigated water supply and liquidity we report on how farmers responded to these results and discuss the implications for other areas in northern thailand

exploring the widening food gap an international perspective using data for a long panel of 90 developed and developing countries this article explores the effects of research and development r d and fixed capital stock on agricultural land productivity over the period 1961 2012 instruments are used for r d to deal with feedback effects and measurement errors the results show very high social returns to investment in r d and to fixed capital stock suggesting that increasing investment in these factors are promising ways of arresting the increasing food prices due to increasing demand for animal protein population growth desertification salinization soil erosion climate change and decreasing growth in land productivity

cropland allocation effects of agricultural input subsidies in malawi summary we measure the impacts of malawi s farm input subsidy program on the cropland allocation decisions of farmers in kasungu and machinga districts in central and southern malawi using a two step regression strategy to control for endogenous selection into the program we find positive correlations between participation in the program and the amount of land planted with maize and tobacco furthermore results suggest that participating households simplified crop production by allocating less land to other crops e g groundnuts soybeans and dry beans our findings have implications for policies aimed at promoting both food self sufficiency and crop diversification in low income settings 2011 elsevier ltd all rights reserved