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

can financial intermediation induce endogenous fluctuations abstract this paper studies the possibility of endogenous fluctuations caused by activities of financial intermediaries risk averse agents borrow from banks and invest in a risky two state capital technology the probability of success with the technology is assumed to be decreasing in the amount of capital invested in a complete information setting with intermediation the efficient loan contract achieves complete risk sharing but the amount invested in the risky project is smaller than the loan size this income effect is responsible for the endogenous generation of complex dynamics in the absence of intermediation the economy studied cannot exhibit any cyclical fluctuations

prices institutions and determinants of supply in the malian cotton sector cotton both a source of livelihood for millions of poor rural households and a major source of export revenues is a vital commodity for the economic and social development of mali inefficiencies in the malian cotton system at the ginnery and producers cooperative levels e g late payment to farmers and poorly functioning credit schemes have recently led to an important decline in supply threatening the sustainability of the sector using regional data from 1998 1999 to 2008 2009 this study aims to quantitatively assess the contribution of key determinants such as cotton prices and timely payment toward the downward trend in cotton area a dynamic supply model based on adaptive expectations and partial adjustment is employed to estimate the effects of prices and institutional factors such as credit recovery rates and date of payment to farmers on the malian cotton supply results show that supply responds significantly to cotton prices relative to cereal and fertilizer prices date of payment varies across agricultural cycles and late payment negatively influences land devoted to cotton low credit repayment rates create disincentives to grow cotton therefore the revitalization of the malian cotton sector depends upon getting both prices and institutions right

nash implementation a complete characterization the authors extend e maskin s results on nash implementation first they establish a condition that is both necessary and sufficient for nash implementability if there are three or more agents the case covered by maskin s sufficiency result second and more important they examine the two agent case for which there existed no general sufficiency results the two agent model is the leading case for applications to contracting and bargaining for this case too they establish a condition that is both necessary and sufficient the authors use their theorems to derive simpler sufficiency conditions that are applicable in a wide variety of economic environments copyright 1990 by the econometric society

monetary policy and stock market dynamics across monetary regimes abstract this paper examines the dynamic linkages between monetary policy and the stock market during the three distinct monetary regimes of burns volcker and greenspan since the 1970s some major findings are the following first in the 1990s it appears that there was a disconnection between federal reserve actions via the federal funds rate and responses by the stock market second the impact of inflation on the stock market did not surface as significant in the later parts of 1980s and the 1990s and third significant asymmetric effects of monetary policy on the stock markets were observed throughout each monetary regime but these were more pronounced during bear markets than bull markets these results suggest that there was no consistent dynamic relationship between monetary policy and the stock market and that the nature of such dynamics was different in each of the three monetary regimes

partial vertical integration risk shifting and product rejection in the high value export supply chain the ghana pineapple sector summary high value export supply chains hold potential to improve smallholders welfare but their relative production inefficiency and moral hazard problems can cause exporters to prefer vertically integrated plantation production however pineapple exporters in ghana produce both for their own account and purchase from smallholders we hypothesize that vertical integration is only partial because exporters face large market risks that smallholders surprisingly are better able to absorb we show empirically that exporters average rejection rate of export quality fruit is high and varies in response to unanticipated fluctuations in european demand these results support the hypothesis and are consistent with theories of partial vertical integration but not the standard principal agent paradigm

the economics of smallholder organic contract farming in tropical africa summary the paper examines the revenue effects of certified organic contract farming for smallholders and of adoption of organic agricultural farming methods in a tropical african context the comparison in both cases is with farming systems that are organic by default survey data from a large organic coffee contract farming scheme in uganda are reported and analyzed using a standard ols regression and a full information maximum likelihood fiml estimate of the heckman selection model the analysis finds that controlling for a range of factors there are positive revenue effects both from participation in the scheme and more modestly from applying organic farming techniques

simple mechanisms and preferences for honesty we consider full implementation in complete information environments when agents have an arbitrarily small preference for honesty we offer a condition called separable punishment and show that when it holds and there are at least two agents any social choice function can be implemented by a simple mechanism in two rounds of iterated deletion of strictly dominated strategies

financial collapse a lesson from the great depression abstract we analyze financial collapses such as the one that occurred during the u s great depression from the perspective of a monetary model with multiple equilibria the multiplicity arises from the presence of a strategic complementarity due to increasing returns to scale in the intermediation process intermediaries provide the link between savers and firms who require working capital for production fluctuations in the intermediation process are driven by variations in the confidence agents place in the financial system from a positive perspective our model matches quite closely the qualitative changes in important financial and real variables the currency deposit ratio ex post real interest rates deflation and production over the great depression period an experience often attributed to financial collapse further we assess whether the policy prescription advocated by friedman and schwartz adding liquidity to the banking system through increases in the money supply would have overcome strategic uncertainty and thus avoided a financial collapse

steepness and deepness in the australian macroeconomy this study uses nonparametric tests the triples test and the bds test to examine whether key australian macroeconomic aggregates exhibit nonlinearities and important steepness and deepness asymmetries at the business cycle frequency evidence is found of nonlinearities but there is little evidence of deepness in the australian macroeconomy however there is evidence of steepness especially concerning labour market variables as well as both the cpi and m3 the evidence suggests that unemployment employment rises falls rapidly in recessions and only recovers slowly over time also positive asymmetries in m3 are reflected in similar asymmetries in the cpi but not in output consumption or investment

upgrading primary production a global commodity chain approach abstract global commodity chain gcc analysis has been concerned mainly with examining power relations in global manufacturing industries although it has been preoccupied increasingly by the question of how developing country dc producers can upgrade this paper extends gcc analysis to traditional primary commodities where international traders exercise the driving role and suggests a new agenda for their upgrading in dcs based upon public action

ready for capital account convertibility abstract this paper investigates whether the impact of capital account convertibility on the long term volatility of economic growth depends on financial development it estimates a system of three simultaneous equations mean growth volatility of growth and financial development this allows for the study of both the impact of capital account liberalization on volatility as well as its direct impact on financial development results indicate that economies with low financial development fall prey to excess volatility arising from capital account openness while capital account openness itself has a significant positive impact on financial development the results are robust to alternative measures of financial development and volatility and to the removal of outliers

revisiting the model of credit cycles with good and bad projects abstract we revisit the model of endogenous credit cycles by matsuyama 2013 sections 2 4 first we show that the same dynamical system that generates the equilibrium trajectory is obtained under a much simpler setting such a streamlined presentation should help to highlight the mechanism through which financial frictions cause instability and recurrent fluctuations then we discuss the nature of fluctuations in greater detail when the final goods production function is cobb douglas for example the unique steady state possesses corridor stability locally stable but globally unstable for empirically relevant parameter values this also means that when a parameter change causes the steady state to lose its local stability its effects are catastrophic and irreversible so that even a small temporary change in the financial friction could have large permanent effects on volatility other features of the dynamics include an immediate transition from the stable steady state to a stable asymmetric cycle of period n 3 along which n 1 2 consecutive periods of gradual expansion are followed by one period of sharp downturn as well as to a robust chaotic attractor these results demonstrate the power of the skew tent map as a tool for analyzing a regime switching dynamic economic model

coordination risk and cost impacts on economic development in poor rural areas this paper addresses issues relevant to a critical problem in economic development how to get rapid pro poor economic growth in poor rural areas in africa and south asia where most of the world s dollar a day poor live it examines constraints to the development of coordinated exchange systems in poor rural areas focusing on the core problem of thin markets and low density of economic activity in these areas transaction cost and risk analysis is integrated into a conventional neoclassical production economics framework to describe the existence of low level equilibrium traps in transactions and supply chains and to generate important insights for development policy

trade and industrial policy on an uneven playing field the case of the deciduous fruit canning industry in south africa the deciduous fruit canning industry dfci is a resource and labor intensive industry with a high trade ratio it offers the prospect of being a significant source of employment and export earnings for a number of southern hemisphere countries which enjoy a considerable comparative advantage market distortions severely constrain this outcome however most importantly a combination of protection and subsidies in the industrially advanced countries in addition as in other sectors globalization is increasingly associated with processes in which value added activities are located in the major markets of the industrialized countries this paper examines the dfci in south africa and explores the consequences of market distortions and the shifting location of profitable activities for both industrial and trade policy in that country

north south lending and endogenous domestic capital market inefficiencies abstract we develop an open economy model of intertemporal trade under asymmetric information capital market imperfections are endogenous and depend on a country s stage of economic development relative to the perfect information benchmark north south capital flows are dampened and possibly reversed and world interest rates are lower whereas riskless rates are equalized across borders the domestic loan rate is higher in poorer countries the model can be applied to a number of policy issues including the debt overhang problem the indexation of foreign public debts and the effect of income distribution on growth

lending terms and aggregate productivity abstract several empirical studies suggest that lending terms are eased in expansions and tightened in recessions thereby influencing the mix of financed entrepreneurs we study a model of adverse selection in competitive financial markets and show that lending terms deteriorate with the aggregate state under two general conditions if exogenous increments to entrepreneurs productivity raise returns to investment and or tighten the credit line needed to screen out a given entrepreneur type competition results in contracts with less screening two endogenous effects on productivity emerge production scales grow closer to optimal but lower productivity entrepreneurs enter the mix of producers the positive negative effect dominates at low high aggregate states

measuring business cycles a modern perspective in the first half of this century special attention was given to two features of the business cycle 1 the comovement of many individual economic series and 2 the different behavior of the economy during expansions and contractions both of these attributes were ignored in many subsequent business cycle models which were often linear representations of a single macroeconomic aggregate however recent theoretical and empirical research has revived interest in each attribute separately notably dynamic factor models have been used to obtain a single common factor from a set of macroeconomic variables and nonlinear models have been used to describe the regime switching nature of aggregate output we survey these two strands of research and then provide some suggestive empirical analysis in an effort to unite the two literatures and to assess their usefulness in a statistical characterization of business cycle dynamics

developing agricultural markets in sub saharan africa organic cocoa in rural uganda abstract this article investigates the process of development in a traditional african export market focusing on a contract farming scheme for organic cocoa in rural uganda based on a repeated household survey we measure the impact of the scheme on the income of participants and the economic mechanisms behind these effects we find substantial benefits from the scheme driven primarily by the establishment of credible incentives for farmers to adopt technologies which improve cocoa quality there is also evidence of broader trends of market deepening and increased productivity probably due to positive spillovers

institutional adjustment and transaction costs product and inputs markets in the tanzanian coffee system abstract commodity market liberalization can improve incentives for production of export crops by reducing the total costs of transforming products through space form and time or by reducing the costs of arranging and completing transactions while liberalization often leads to reduced costs in output exchange it can remove opportunities for linked input output transactions that sometimes lowered the costs of providing finance in state controlled markets assessments of liberalization that focus on output exchange alone obscure the impact of rising transaction costs in finance this study of liberalization in the tanzanian coffee market documents declining costs in output marketing rising transaction costs for financing farm activities and differential but generally positive net impacts on growers

trend reverting fluctuations in the life cycle model abstract aggregate time series provide evidence of short term dynamic adjustment that appears to be governed by complex or negative real eigenvalues this finding is at odds with the predictions of reasonably parameterized convex one sector growth models with complete markets we study life cycle economies in which aggregate saving depends non trivially on the distribution of wealth among cohorts if consumption goods are weak gross substitutes near the steady state price vector we prove that the unique equilibrium of a life cycle exchange economy converges to the unique non monetary steady state via damped oscillations we also discuss examples and extensions

trade policy reform and the competitive response in kwazulu natal province south africa like many other formerly protected economies the liberalization of the external trade regime has placed new competitive pressures on south african enterprises detailed research in over 130 enterprises in the kwazulu natal kzn province of south africa shows the extent to which firms have been able to respond to these new competitive pressures and particularly on their ability to hear and to meet more demanding customers requirements inevitably the response has been varied but there are reasons to be concerned that the pace of adjustment has been suboptimal this reflects imperfections in information markets the challenges poses by the need for new social relations in production and the limited implementation of new supply sided policies designed to compensate firms for the reduction in protective barriers

competition and coordination in liberalized african cotton market systems abstract private operators now dominate input supply crop buying and ginning activities in many african cotton sectors varying levels of competition are observed but greater levels of competition are not necessarily associated with better system performance this paper explores this phenomenon drawing on the liberalization experience of ghana mozambique tanzania uganda zambia and zimbabwe while the capacity of the state to support markets remains weak there may be tradeoffs between the level of competition and the degree of coordination achieved between players within a sector different sectoral structures are observed with a different role for the state appropriate for each

financial intermediation and regime switching in business cycles the authors study a one sector growth model where capital investment is credit financed and there is an adverse selection problem in credit markets the presence of adverse selection creates an indeterminacy of equilibrium many equilibria display permanent fluctuations characterized by transitions between walrasian regimes and regimes of credit rationing cyclical contractions involve declines in real interest rates increases in credit rationing and withdrawals of savings from banks for some configurations of parameters all equilibria display cyclical fluctuations the authors provide sufficient conditions for deterministic cycles consisting of m periods of expansion followed by n periods of contraction to exist copyright 1998 by american economic association

reaching consensus through approval bargaining in the approval bargaining game two players bargain over a finite set of alternatives to this end each one simultaneously submits a utility function u jointly with a real number by doing so she approves the lotteries whose expected utility according to u is at least the lottery to be implemented is randomly selected among the most approved ones we first prove that there is an equilibrium where players truthfully reveal their utility function we also show that in any equilibrium the equilibrium outcome is approved by both players finally every equilibrium is sincere and pareto efficient as long as both players are partially honest

the latte revolution regulation markets and consumption in the global coffee chain abstract coffee is a truly global commodity and a major foreign exchange earner in many developing countries the global coffee chain has changed dramatically as a result of deregulation new consumption patterns and evolving corporate strategies from a balanced contest between producing and consuming countries within the politics of international coffee agreements power relations shifted to the advantage of transnational corporations a relatively stable institutional environment where proportions of generated income were fairly distributed between producing and consuming countries turned into one that is more informal unstable and unequal through the lenses of global commodity chain analysis this paper examines how these transformations affect developing countries and what policy instruments are available to address the emerging imbalances

single name credit risk portfolio risk and credit rationing this paper introduces non diversifiable risk in the stiglitz weiss adverse selection model so that an increase in the average riskiness of the borrower pool causes higher portfolio risk this opens up the possibility of equilibrium credit rationing comparative statics analysis shows that an increase in risk aversion turns a two price equilibrium into a rationing equilibrium a two price equilibrium is more inefficient than a rationing equilibrium and a usury law that rules out the higher of the two interest rates can be welfare improving contrary to the common result the equilibrium may be characterized by over investment

revisiting the cotton problem a comparative analysis of cotton reforms in sub saharan africa summary the cotton sector has been among the most regulated in sub saharan africa ssa and still largely is in west and central africa wca despite repeated reform recommendations by international donors on the other hand orthodox reforms in east and southern africa esa have not always yielded the expected results this paper uses a stylized contracting model to investigate the link between market structure and equity and efficiency in ssa cotton sectors explain the outcomes of reforms in esa and analyze the potential consequences of reforms in wca we illustrate our arguments with empirical observations on cotton sector performance

banking crises and nonlinear linkages between credit and output in this article we analyse the asymmetric causality linkages between credit growth and output growth during banking crises we employ a recently developed procedure based on a bivariate markov switching model to test the hypotheses of independence causality and asymmetric causality between credit and output using a sample of 103 banking crises around the world we find that neither credit nor output takes precedence as a variable in calm and crisis periods although there is evidence of instantaneous interdependence between the banking and real sector during crises the results suggest that shocks propagate mostly within a year between the banking sector and the real economy the linear link between credit growth and output growth is also regime dependent

how institutions mediate the impact of cash cropping on food crop intensification an application to cotton in sub saharan africa summary it is widely agreed that smallholder led agricultural growth would contribute most to improved food security and reduced poverty yet how to achieve broader and more sustainable access by smallholder farmers to productivity enhancing inputs for food crop production remains a largely unsolved riddle in light of the great institutional diversity across cotton sectors in sub saharan africa this study investigates whether cotton can be used to spur the intensification of smallholder food production first a conceptual framework linking cotton institutional structures to food crop intensification is developed then predictions from the conceptual framework are compared with empirical evidence from different countries

credit and economic activity credit regimes and nonlinear propagation of shocks in this paper we examine empirically whether credit plays a role as a nonlinear propagator of shocks this propagation takes the form of a threshold vector autoregression in which a regime change occurs if credit conditions cross a critical threshold using nonlinear impulseresponse functions we evaluate the dynamics implied by the threshold model these suggest that shocks have a larger effect on output in the tight credit regime than is normally the case and that contractionary monetary shocks typically have a larger effect than expansionary shocks finally using a nonlinear version of historical decompositions we attempt to determine the relative contribution to output growth of shocks and the nonlinear structure

indeterminacy and increasing returns abstract we investigate properties of the one sector growth model with increasing returns under two organizational structures capable of reconciling the existence of aggregate increasing returns with competitive behavior by firms the first involves input externalities the second involves monopolistic competition we show for parameters in close accord with recent literature on real business cycles that the model displays an indeterminate steady state that can be exploited to generate a model of business fluctuations driven by self fulfilling beliefs in our first class of models growth is generated by exogenous increases in factor productivity in the second class the marginal product of capital is large enough for endogenous growth journal of economic literature classification numbers e00 e3 o40

the effects of inflation on economic growth lessons from latin america this paper investigates the relationship between inflation and long run growth it presents an endogenous growth model that illustrates the channels through which inflation affects growth the model highlights the effects of inflation on the productivity of capital and the rate of capital accumulation the reduction in growth is caused by a diversion of resources away from activities that lead to faster rates of growth toward activities associated with reducing the costs of inflation the negative association between inflation and growth is assessed empirically for a sample group of latin american countries this abstract was borrowed from another version of this item

credit growth monetary policy and economic activity in a three regime tvar model we employ a threshold vector autoregression tvar methodology in order to examine the nonlinear nature of the interactions among credit market conditions monetary policy and economic activity we depart from the existing literature on the subject along two dimensions first we focus on a model in which the relevant threshold variable describes the state of economic activity rather than credit market conditions second in contrast to the existing tvar literature which concentrates exclusively on single threshold models we allow for the presence of a second threshold which is overwhelmingly supported by all relevant statistical tests our results indicate that the dynamics of the interactions among credit market conditions monetary policy and economic activity change considerably as the economy moves from one phase of the business cycle to another and that single threshold tvar models are too restrictive to fully capture the nonlinear nature of those interactions the impact of most shocks tends to be largest during periods of sub par economic growth and smallest during times of moderate economic activity by contrast credit risk shocks have the largest impact when output growth is considerably above it long term trend

comparative statics and perfect foresight in infinite horizon economies does a pure exchange economy with an infinite time horizon have determinate perfect foresight equilibria when there is a finite number of infinitely lived agents equilibria are generically determinate this is not true with overlapping generations of finitely lived agents we ask whether the initial conditions together with the requirement of convergence to a steady state locally determine an equilibrium price path in this framework there are many economies with isolated equilibria many with continua of equilibria and many with no equilibria at all with two or more goods in every period not only can the price level be indeterminate but relative prices as well furthermore such indeterminacy can occur whether or not there is fiat money and whether or not the equilibria are pareto efficient this paper considers whether infinite horizon economies have determinate perfect foresight equilibria this question is of crucial importance if instead equilibria are locally indeterminate not only are we unable to make comparative static predictions but the agents in the model are unable to determine the consequences of unanticipated shocks the idea underlying perfect foresight is that agents expectations should be the actual future sequence predicted by the model if the model does not make determinate predictions the concept of perfect foresight is meaningless we consider two extreme cases the first with a finite number of infinitely lived consumers and the second with an infinite number of finitely lived consumers an overlapping generations model both are models of stationary pure exchange economies no production including the storage of goods between periods can occur these models are unrealistic but are the easiest to study extensions of the results of this paper to models with production infinitely lived assets and mixtures of the two types of consumers are presented by muller and woodford 29 when there is a finite number of infinitely lived consumers we argue that equilibria are generically determinate this is because the effective number of equations determining equilibria is not infinite but equal to the number of agents minus one and must determine the marginal utility of income for all but one agent generically near an equilibrium these equations are independent and exactly determine the unknowns when there are infinitely many overlapping generations this reasoning breaks down an infinite number of equations is not necessarily sufficient to determine

the impact of the international coffee agreement on producing countries the main objective of this article is to analyze the impact of the international coffee agreement s export system on the world coffee market focusing on increases in real export revenues transfer benefits and reductions in income variability risk benefits in each exporting country over the recent period of operation of the international coffee agreement s export quota system the authors find that the quota system had a stabilizing effect on world coffee prices the quotas reduced real export revenues for most small exporting countries but large producers gained most small countries gained however in terms of risk reduction if a brief suspension of the quota occurs from time to time caused for example by adverse weather which results in a shortfall in world supply the quota system works like a buffer stock scheme on average producing countries as a whole lose transfer benefits but gain risk benefits

money banking and capital formation we consider a monetary growth model in which banks arise to provide liquidity in addition there is a government that issues not only money but interest bearing bonds these bonds compete with capital in private portfolios when the government fixes a constant growth rate for the money stock we show that there can exist multiple nontrivial monetary steady states one of these steady states is a saddle while the other can be a sink moreover paths approaching a steady state can display damped endogenous fluctuations and development trap phenomena are common across different steady states low capital stocks are associated with high nominal interest rates the latter signal the comparative inefficiency of the financial system also increases in the steady state inflation rate can easily reduce the steady state capital stock journal of economic literatureclassification numbers e13 e44 e50 g20 o16

governance and trade in fresh vegetables the impact of uk supermarkets on the african horticulture industry production of fresh vegetables for export has grown rapidly in a number of countries in sub saharan africa over the last decade this trade brings producers and exporters based in africa together with importers and retailers in europe large retailers in europe play a decisive role in structuring the production and processing of fresh vegetables exported from africa the requirements they specify for cost quality delivery product variety innovation food safety and quality systems help top determine what types of producers and processors are able to gain access to the fresh vegetables chain and the activities they must carry out the control over the fresh vegetables trade exercised by uk supermarkets has clear consequences for inclusion and exclusion of producers and exporters of differing types and for the long term prospects for the fresh vegetables industry in the two major exporting countries studied kenya and zimbabwe

are economic time series asymmetric over the business cycle it has long been argued that major cyclical variables such as the unemployment rate display an asymmetric behavior over various phases of the business cycle the paper provides a statistical test for this hypothesis using the framework of finite state markov processes i implement a test to see if the behavior of the unemployment rate is characterized by sudden jumps and slower drops it is argued that the framework provided in the paper can also be used to test other sample path properties of economic time series

effects of the us monetary policy shocks during financial crises a threshold vector autoregression approach abstractthis article analyzes the impact of monetary policy during periods of low and high financial stress in the us economy using a threshold vector autoregression model there is evidence that expansionary monetary policy is effective during periods of high financial stress with larger responses having a higher proportionate effect on output the existence of a cost channel effect during periods of high financial stress implies the existence of a short run output inflation trade off during financial crises large expansionary monetary shocks also increase the likelihood of moving the economy out of a high financial stress regime

volatile capital flows and financial integration the role of moral hazard abstract we study a model in which income and capital flows between countries are jointly determined in a world economy with integrated financial markets in a setting that combines risky entrepreneurial activity with moral hazard we find that a shift from autarky to financial integration leads to boom bust cycles in capital flows output and consumption moral hazard causes cycles because financial intermediaries incentivize effort by insisting entrepreneurs take an equity share in their own projects the size of this stake rises with wealth discouraging entrepreneurship and inhibiting capital formation the reverse is true when wealth falls generating cycles

a model of moral hazard credit cycles this paper considers a simple model of credit cycles driven by moral hazard in financial intermediation financial agents or bankers must earn moral hazard rents but the cost of these rents can be efficiently spread over an agent s entire career by promising large late career rewards if the agent has a consistently successful record dynamic interactions among different generations of financial agents can create credit cycles with repeated booms and recessions in recessions a scarcity of trusted financial intermediaries limits investment and reduces employment under such conditions taxing workers to subsidize bankers may increase employment enough to make the workers better off

do recessions permanently change output abstract this paper examines whether negative innovations to gnp are more or less persistent than positive innovations we find that once we allow for the impulse response of gnp to be asymmetric negative innovations to gnp are observed to be much less persistent than positive ones in particular the effect of a recession on the forecast of output is found to be negligible after only eight to twelve quarters while the effect of a positive shock is estimated to be persistent and amplified over time our results may therefore help reconcile two antagonistic views about the nature of business cycle fluctuations

how do changes in monetary policy affect bank lending an analysis of austrian bank data using a panel of austrian bank data we show that the lending decisions of the smallest banks are more sensitive to interest rate changes and that for all banks sensitivity changes over time we propose to estimate the groups of banks that display similar lending reactions by means of a group indicator which after estimation indicates each bank s classification additionally we estimate a state indicator that indicates the periods during which the lending reaction differs from what we normally observe bayesian methods are used for estimation a sensitivity analysis and a forecast evaluation confirm our model choice copyright 2006 john wiley sons ltd

contractual arrangements between farmer cooperatives and buyers in china the agrofood market in china is dominated by spot market exchanges of small farmers and various small traders with only minor penetration of the modern supply chain at the farmgate the emerging farmer professional cooperatives fpcs are expected to facilitate vertical coordination the overall goal of this study is to investigate the contractual arrangements between the fpcs and the buyers based on a national representative survey of 157 fpcs in china this study shows that 32 of fpcs introduced written contracts in the primary marketing channel contracts are more likely to be adopted in the livestock sector and are positively related to the scale of production while branding promotes contracts between fpcs and buyers public certification of quality and food safety often substitutes for contracts furthermore the membership heterogeneity of fpcs affects an fpc s decision to use contractual arrangements with the buyer

chaotic dynamics in credit constrained emerging economies abstract this paper analyzes the role of financial development as a source of endogenous instability in small open economies by assuming that firms face credit constraints our model displays a complex dynamic behavior with high period cycles or even chaotic dynamic patterns for intermediate values of the parameter representing the level of financial development of the economy we derive sufficient conditions for global stability and we prove that chaos appears via a border collision bifurcation the basic implication of our model is that economies experiencing a process of financial development are more unstable than both very underdeveloped and very developed economies

cash flows and credit cycles aggregate productivity falls in recessions and rises in expansions several empirical studies suggest that the systematic behavior of lending standards with laxer tighter standards applied during expansions recessions is responsible for reverting trends in aggregate productivity we build a dynamic model that rationalizes these findings adverse selection in credit markets emerges as a potential source of macroeconomic instability the key idea modeled is that in order to effectively signal their type to financiers productive entrepreneurs must suffer a cost the effective cost of signaling rises with higher cash flow brought about by stronger economic fundamentals because higher cash flow makes it easier for the unproductive type to mimic the productive type competition among the financiers then results in suboptimally lax lending standards low productivity entrepreneurs obtain financing the producer composition effect inducing a recession this in turn creates conditions weak economic fundamentals and low cash flow conducive to the emergence of tighter lending terms the strong composition effect leading to an economic recovery

international commodity agreements an obituary notice abstract it is widely believed that international commodity agreements have lapsed because they have failed the reality is more complex the tin agreement did collapse but for sugar and cocoa adverse market conditions and lack of general support made stabilization impractical control of the coffee market ceased largely because of disagreements both between and within the producing countries on the division of the benefits resulting from higher prices overall commodity control fits uneasily in an increasingly globalized and competitive world and this perception has resulted in a diminished willingness to resolve the practical difficulties of price stabilization

behavioral aspects of implementation theory abstract we incorporate behavioral economics into implementation theory where each agent dislikes telling a white lie by using a single detail free mechanism any alternative can be uniquely implemented as long as the agents regard this alternative as being socially desirable

imperfectly competitive cycles with keynesian and walrasian features abstract we consider a multi sector overlapping generations model with oligopolistic firms in the output markets and wage setting trade unions in the labour markets a coordination problem between firms creates multiple temporary equilibria which are either walrasian or of the keynesian unemployment type there exist many deterministic and stochastic equilibrium cycles fluctuating between keynesian recession and walrasian boom periods with arbitrarily long phases in each regime the cycles are in accordance with certain empirical regularities money is neutral and superneutral but appropriate countercyclical fiscal policies stabilize the cycles in a textbook keynesian way

market power and rents in global supply chains market power and competition policy in food supply chains has emerged as an important economic issue in economics and a highly sensitive item on the policy agenda consolidation is taking place in the food industry both in high income countries and in emerging economies but the impact of concentration in global food chains on efficiency and rent distribution is more nuanced and complex than often claimed we review the literature and extend it by developing a model which explicitly takes into account market imperfections and contract enforcement problems in supply chains increased competition benefits farms by improving contract conditions but contract enforcement becomes more complicated

why do small scale producers choose to produce under contract lessons from nontraditional vegetable exports from zimbabwe summary this article explores the motivations behind the decision of small scale producers to grow nontraditional vegetables under contract for export based on a survey of small scale producers in zimbabwe four factors are identified as motivating contracting namely market uncertainty indirect benefits e g knowledge acquisition income benefits and intangible benefits respondents are clustered according to the relative importance of these factors in their contracting decision four clusters are identified and related to the characteristics of these farmers including size of the farm amount of land devoted to export crops access to alternative markets and the proportion of family income derived from export crops the results suggest that there are systematic differences between farmers in their decisions to contract which needs to be recognized in contract design and management 2005 elsevier ltd all rights reserved

financial development and the instability of open economies this paper introduces a framework for analyzing the role of financial factors as a source of instability in small open economies our basic model is a dynamic open economy model with a tradeable good produced with capital and a country specific factor we also assume that firms face credit constraints with the constraint being tighter at a lower level of financial development a basic implication of this model is that economies at an intermediate level of financial development are more unstable than either very developed or very underdeveloped economies this is true both in the sense that temporary shocks have large and persistent effects and also in the sense that these economies can exhibit cycles thus countries that are going through a phase of financial development may become more unstable in the short run similarly full capital account liberalization may destabilize the economy in economies at an intermediate level of financial development phases of growth with capital inflows are followed by collapse with capital outflows on the other hand foreign direct investment does not destabilize

free competition without sustainable development tanzanian cotton sector liberalisation 1994 95 to 1997 98 this article summarises the results of fieldwork carried out in 1997 8 season on post liberalisation changes in the tanzanian cotton sector developments in primary marketing ginning and the export trade are reviewed on the basis of survey material market entry by private companies has been high leading to considerable competition and slight increases in producers share of the world price but real producer price and cultivation increases have not been sustained following changes in the input supply system insecticide use has fallen sharply along with the quality and underlying international price of the cotton crop tanzania s place in the world market has been re defined as a producer for a specific time based market window this places a question mark over the sustainability of the sector s future and by inference over policy reforms whose main emphasis is to increase competition

disentangling the effects of fair trade on the quality of malian cotton the increasing importance of premium segments and private labels raise skepticism about the ability of fair trade to help smallholders compete in high value added markets using panel data collected in mali this paper contributes to the debate by estimating the impact of fairtrade certification on the quality of malian cotton controlling for the nonrandom certification of producers results show a significant impact on the quality of cotton produced by both certified and geographically close noncertified growers via spillover effects the analysis suggests that contract farming enforced by third parties and demonstration effects foster the adoption of innovative agricultural practices

vertical integration in west africa s cotton industry are parastatals a second best solution this article provides a framework to compare market outcomes among vertically integrated monopsonies in the cotton sector of west africa and alternative more competitive market structures based on a principal agent framework in the presence of factor market constraints as well as capital market failure efficiently operated cotton parastatals increase sector welfare and efficiency by providing input credits in equilibrium outcomes with the principal agent model suggest growers receive the reservation income to participate in cotton production while the principal cotton company extracts the surplus above the reservation income competitive markets entail more equitable distribution of benefits than with parastatal vertical integration but credit and factor market constraints can still persist promotion of a competitive market system will not support cotton productivity growth unless stakeholders pursue complementary programs to develop credit markets and research and extension institutions in the presence of current market failures parastatals may be a second best solution

strongly sincere best responses under approval voting and arbitrary preferences abstract approval voting allows voters to support as many candidates as they wish one advantage is that voters have weak or no incentives to vote insincerely however the exact meaning of this statement depends on how the voters preferences over candidates are extended to sets we show that under a combination of standard well established assumptions on extended preferences voters always have a strongly sincere best response a best response ballot such that every approved candidate is strictly preferred to every disapproved one given other voters ballots an analogous result for sincere best responses obtains under weaker conditions the results hold for arbitrary preferences over candidates allowing for indifferences but covering the extreme cases of dichotomous or strict preferences as a corollary we show that the classical strategy proofness result for dichotomous preferences brams and fishburn 1978 holds for a larger class of preferences on sets than originally assumed

managing quantity quality and timing in indian cane sugar production ex post marketing permits or ex ante production contracts private sugar processors in andhra pradesh india use an unusual form of vertical coordination they issue permits to selected cane growers a few weeks before harvest these permits specify the amount of cane to be delivered during a narrow time period this article investigates why processors create uncertainty among farmers using ex post permits instead of ex ante production contracts the theoretical model predicts that ex post permits are more profitable than ex ante contracts or the spot market under existing government regulations in the sugar sector which include a binding price floor for cane and the designation of a reserve area for each processor wherein it has a legal monopsony for cane the use of ex post permits creates competition among farmers to increase cane quality which increases processor profits and farmer costs empirical analysis supports the hypothesis that farmers operating in private factory areas have higher unit production costs than do their counterparts who patronize cooperatives

implementation in undominated strategies a look at bounded mechanisms this paper examines the impact of placing natural restrictions on the mechanisms considered for implementation problems it is shown that if all mechanisms are considered and preferences satisfy a basic condition then any social choice correspondence can be implemented in undominated strategies an example points out that the strength of this result derives from the use of mechanisms with questionable features in part of the message space the agent who announces the highest integer is rewarded this sort of tail chasing construction common in the constructive proofs of the literature is used to assure that undesired strategy combinations do not form an equilibrium if such mechanisms are ruled out then the social choice correspondences which can be implemented in undominated strategies satisfy an incentive compatibility type condition called strategy resistence for social choice functions this is equivalent to strategy proofness this contrast suggests that this issue should be examined as it applies to other solution concepts used in implementation theory the last portion of the paper begins to explore the issue as it relates to nash implementation and undominated nash implementation

credit traps and credit cycles we develop a simple macroeconomic model of credit market imperfections with heterogeneous investment projects the projects differ in productivity the investment requirement and the severity of agency problems behind the borrowing constraints a movement in borrower net worth shifts the composition of the credit between projects with different productivity levels thereby causing endogenous investment specific technological change furthermore such endogenous technological change in turn affects borrower net worth these composition effects could give rise to credit traps credit collapse leapfrogging credit cycles and growth miracles in the dynamics of the aggregate investment and borrower net worth jel e22 e44 o33

some consequences of credit rationing in an endogenous growth model an endogenous growth model is developed where all investment is financed via credit extension there is also an adverse selection problem in loan markets so that in equilibrium credit rationing arises endogenously the result is that equilibrium levels of credit rationing and real growth rates are jointly determined in this context several changes in the environment can have unusual consequences for instance improvements in the technology for producing capital can reduce growth because of their adverse impacts on credit rationing for similar reasons various government investment subsidies can be growth reducing this phenomenon is often observed empirically

agency costs in dynamic economic models we consider an overlapping generations economy where capital is produced from bank loans under stochastic constant returns to scale and subject to idiosyncratic shocks whose realisations are costly to verify our formulation differs from earlier work in permitting investment projects to be infinitely divisible and private agency costs to be convex if there are external economies to financial intermediation then deviations from steady state output are negatively correlated with the spread between loan and deposit rates moreover the capital stock correspondence is set valued a result consistent with poverty traps growth cycles and humpshaped impulse response functions this paper investigates how nonconvexities in financial intermediation particularly in the cost of collecting private information about borrowers enrich the operating characteristics of a simple and relatively tractable onesector growth model the enriched set of equilibria is consistent with a number of phenomena that are hard to reconcile with convex models of economic growth poverty traps rank reversals growth cycles and humpshaped impulse response functions are all possible outcomes of nonconvex information costs bankers and economists alike have long regarded the credit market as key to understanding economic development and to transmitting cyclical shocks through modern industrial economies the growth branch of this literature starts with gurley and shaw 1967 who note that economic growth is almost universally accompanied by financial deepening that is by more intensive use of external finance in investment and by a gradual lifting of distortions in the credit market the cyclical fluctuations branch of the literature focuses on the connection between credit market conditions and business cycles a key concern here is how the credit market propagates and amplifies external shocks through the entire economy the general idea dates back at least to keynes fisher and friedman and schwartz who argued that adverse conditions in financial markets may have exacerbated the effects of prewar recessions including the great depression greenwood and smith 1995 survey work on development among recent contributions we note bencivenga and smith 1991 who study the growth effects of financial intermediation in an overlapping generations model with uncertain liquidity needs intermediation enhances growth because banks are efficient providers of liquidity which frees individuals from the need to maintain low yielding liquid assets similar results are obtained in greenwood and jovanovic 1990 where intermediary institutions are shown to arise

partnerships for sustainable change in cotton an institutional analysis of african cases this article examines intersectoral partnerships formed to promote sustainable cotton production and the extent to which such partnerships are facilitated or constrained by their institutional environment based on an analysis of five partnerships in sub saharan africa this article shows that institutional factors create both opportunities and obstacles for partnership implementation which are inextricably linked to their adoption of particular farming strategies and sustainability standards in general these institutional factors tend to facilitate the implementation of partnerships using contract farming and mainstream sustainability standards and hinder those adopting cooperative farming methods and organic standards

the future of small farms new directions for services institutions and intermediation summary efficient pre and post harvest services are essential if small farms in high potential areas are to intensify production contribute to economic growth and reduce poverty they also matter if small farms in marginal areas are to manage their natural resource base in the face of growing population pressure and climate change difficulties that smallholders face in accessing services are reviewed showing how incentives for commercial delivery of services to smallholders differ between staple food traditional cash crop and high value product supply chains the major challenge in service delivery to smallholders in much of africa concerns coordination of service development and delivery different forms of intermediary institution for achieving such coordination are examined

globalization and upgrading what can and cannot be learnt from international trade statistics in the wood furniture sector the measurement of innovation is a complex and ambiguous challenge two broad families of measures have been used those focusing on inputs and those focusing on outputs each has its strengths and weaknesses but neither is able to capture the growing importance of product innovation adequately in this paper we attempt to throw more light on the measurement of product innovation through the complementary use of data on unit price and market share the analysis is distinctive through its exclusive use of trade data these measures are applied to the global furniture industry through an analysis of imports into the eu between 1989 and 2001

can africa industrialize by processing primary commodities the case of mozambican cashew nuts abstract industrialization strategies based on vertical diversification into processing of primary commodities have long been appealing to low income countries the performance of such strategies is mixed an aggregate level literature is divided on the advisability of low income countries processing commodities for export especially for countries relatively poor in human capital while this general literature usefully illuminates the policy debate over processing cashew nuts in mozambique commodity and country specific factors reveal the weaknesses of conducting debate at too aggregated a level it may be that the most significant constraints on processing industrialization are political rather than purely technical or economic

nash equilibrium and welfare optimality if is a set of social alternatives a social choice rule scr assigns a subset of a to each potential profile of individuals preferences over a where the subset is interpreted as the set of welfare optima a game form or mechanism implements the social choice rule if for any potential profile of preferences 1 any welfare optimum can arise as a nash equilibrium of the game form implying in particular that a nash equilibrium exists and 2 all nash equilibria are welfare optimal the main result of this paper establishes that any scr that satisfies two properties monotonicity and no veto power can be implemented by a game form if there are three or more individuals the proof is constructive