food price transmission and economic development in this paper we challenge the conventional wisdom that the world s poorest countries are also the most vulnerable to spikes in international food prices we derive an inverted u shaped relationshi

keep on fighting the dynamics of head starts in all pay auctions abstract we investigate a model of a series of contests in which a contestant s past and present success gives a head start over a rival in the future how this advantage from winning affects contestants efforts whether the laggard gives up or keeps on fighting and how the head start develops over time are key issues we find that the expected effort of the laggard will always be higher than the rival at some stage in the series of contests and this is most likely to happen when at a large disadvantage or at a late stage in the series

impact of food inflation on poverty in the philippines abstract we simulate the impact of food inflation between june 2006 and june 2008 on poverty across different areas and between agricultural and non agricultural households we explicitly treat the spatial heterogeneity in food inflation and the differences in consumption and production patterns across households by merging household expenditure survey and price datasets at the provincial level or lower although some of the poor agricultural households may have escaped poverty the poorest of the poor whether they are in an agricultural household or not are severely and adversely affected by the food inflation

favoritism in asymmetric contests head starts and handicaps abstract i examine a contest with identity dependent rules in which contestants are privately informed and ex ante heterogeneous a contestant may suffer from a handicap or benefit from a head start the former reduces the contestant s score by a fixed percentage the latter is an additive bonus although total effort increases if the weak contestant is favored with a head start the optimal use of handicaps is not as clear cut depending on the nature of the asymmetry it may or may not be optimal to handicap the strong contestant moreover it is generally optimal to combine the two instruments for instance when contestants are sufficiently heterogeneous the weak contestant should be given both a head start and a handicap it may also be possible to induce higher effort and at the same time make both contestants better off ex ante

the dynamic relationship between agricultural sustainability and food energy water poverty in a panel of selected sub saharan african countries abstract the relationship between food energy water resources and agricultural sustainability has got a significant policy attraction that generally in favor of livelihood of the poor which is largely affected by climate change food security challenges poor access of water resources and less access of electricity these challenges generally faced by less developing countries while sub saharan african ssa countries has no exemption to escape out from this food water energy poverty nexus due to inadequate socio economic and environmental action programs of sustainable development this study examined the dynamic nexus between agricultural sustainability and food energy water poverty in a panel of selected ssa countries over the period of 1980 2013 the study used pooled least squares regression pooled fixed effects and pooled random effects regression techniques to absorb country specific time variant shocks the hausman 1978 test results reveal that country specific shocks influence the food energy water poverty model therefore the fixed effects regression results are consider a better fit model than that of the pooled random effect model the overall results conclude that agricultural value added cereal yields and forest area significantly decreases food energy water poverty nexus leading to higher economic growth and price levels at the cost of environmental degradation in general agricultural sustainability is the prerequisite for reducing food energy water poverty

a note on competitive bribery games abstract within a competitive bribery game in which each player has incomplete information we show that there exists a unique nash equilibrium which is symmetric similar results hold for another bribery game form that prevails in the literature implications for corrupt practices in relation to economic development are also discussed

information alliances in contests with budget limits we study the role of information exchange that may occur in alliances in a contest without noise contestants learn their own limits of what they can spend in a contest they may also form alliances and learn the limits of all players who are within the same alliance then they decide independently about their own contest efforts alliance formation for the purpose of information exchange is beneficial for members of the same alliance and neutral for all other players also a merger between alliances is beneficial for their members further we identify and discuss the set of stable alliance combinations

the optimal allocation of prizes in contests we study a contest with multiple not necessarily equal prizes contestants have private information about an ability parameter that affects their costs of bidding the contestant with the highest bid wins the first prize the contestant with the second highest bid wins the second prize and so on until all the prizes are allocated all contestants incur their respective costs of bidding the contest s designer maximizes the expected sum of bids our main results are 1 we display bidding equlibria for any number of contestants having linear convex or concave cost functions and for any distribution of abilities 2 if the cost functions are linear or concave then no matter what the distribution of abilities is it is optimal for the designer to allocate the entire prize sum to a single first prize 3 we give a necessary and sufficient conditions ensuring that several prizes are optimal if contestants have a convex cost function

multi battle contests abstract we study equilibrium in a multistage race in which players compete in a sequence of simultaneous move component contests players may win a prize for winning each component contest as well as a prize for winning the overall race each component contest is an all pay auction with complete information we characterize the unique subgame perfect equilibrium analytically and demonstrate that it exhibits endogenous uncertainty even a large lead by one player does not fully discourage the other player and each feasible state is reached with positive probability in equilibrium pervasiveness expected effort in the component contests may be non monotonic in the closeness of the race and realized individual effort may exceed the value of the prize by a factor that is proportional to the maximum number of stage victories required

extent and possible causes of intrayear agricultural commodity price volatility wheat corn rice soybeans and cotton experienced higher volatility in the second half of the 2000s for the sample at hand the unit root tests only validate a new period of high volatility for wheat and cotton if in the next couple of years however corn rice and soybeans maintain their higher volatility a new period of high volatility may also be validated statistically regarding the factors driving the intrayear volatility gmm estimates show that commodity market fundamentals i e the stock to use ratio and to a lesser extent the degree of internationalization are the most systematically statistically significant coefficients among commodities over time consecutive low stock to use ratios and a thin international market provoke typically high volatility speculative activity and liquidity in the agricultural derivative market have a stabilizing effect on the spot price if any finally common macro factors significantly impact volatility especially the volatility of petrol and of exchange rates their dispersion importance over the sample is quite sizeable however it is difficult to establish a link between on the one hand loose monetary policy business cycle and inflation and on the other hand commodity price volatility as the sign of the estimated coefficient changes depending on the commodity and the estimated elasticities are quite low

orchestrating rent seeking contests contests have different sometimes quite complex organisational structures in particular while most of the existing literature focusses on simultaneous contests multistage contests are also quite frequently encountered this paper seeks to provide a rationale for the latter by endogenising the choice of a contest structure which is made by an organiser of a contest interested in maximising the efforts expended by the contenders

forecasting food inflation in developing countries with inflation targeting regimes developing countries that employ inflation targeting monetary policy regimes require accurate short run food inflation forecasts we develop a systematic approach to improve food inflation forecasts apply it to colombian monthly data from december 1989 to april 2006 and show its relevance for inflation targeting regimes forecast accuracy can be improved by disaggregating food products into away from home processed and fresh foods employing econometric methods to combine forecasts from individual models and using flexible least squares methods in the presence of structural changes we also show the importance of accurate food inflation forecasts in models simulating monetary policy transmission ams subject classification copyright 2012 oxford university press

urban agriculture poverty and food security empirical evidence from a sample of developing countries urban agriculture may have a role to play in addressing urban food insecurity problems which are bound to become increasingly important with the secular trend towards the urbanization of poverty and of pop ulation in developing regions our understanding of the importance nature and food security implica tions of urban agriculture is however plagued by a lack of good quality reliable data while studies based on survey data do exist for several major cities much of the evidence is still qualitative if not anec dotal using a recently created dataset bringing together comparable nationally representative house hold survey data for 15 developing or transition countries this paper analyzes in a comparative international perspective the importance of urban agriculture for the urban poor and food insecure some clear hints do come from our analysis on the one hand the potential for urban agriculture to play a sub stantial role in urban poverty and food insecurity reduction should not be overemphasised as its share in income and overall agricultural production is often quite limited on the other hand though its role should also not be too easily dismissed particularly in much of africa and in all those countries in which agriculture provides a substantial share of income for the urban poor and for those groups of households to which it constitutes an important source of livelihoods we also find fairly consistent evidence of a positive statistical association between engagement in urban agriculture and dietary adequacy indicators

the global food crisis disaster opportunity or non event household level evidence from cote d ivoire summary using 2008 lsms data for cote d ivoire we study the welfare implications of the price increase of key imported staple food rice and consider the consumption smoothing effect of locally produced food and cash crop varieties while middle income urban households are adversely affected by rising rice prices relatively poor rural households benefit availability of local staple alternatives leads to further income redistribution from net consumers toward net producers of staples by contrast the ability to generate income from tropical cash crops not only improves the welfare of rural households but helps smooth the consumption of urban households

on the measurement of poverty official statistics in the united states and the united kingdom show a rise in poverty between the 1970 s and the 1980 s but scepticism has been expressed with regard to these findings in particular the methods employed in the measurement of poverty have been the subject of criticism this paper re examines three basic issues in measuring poverty the choice of the poverty line the index of poverty and the relation between poverty and inequality one general theme running through the paper is that there is a diversity of judgments which enter the measurement of poverty and that it is necessary to recognize these explicitly in the procedures adopted there is likely to be disagreement about the choice of poverty line affecting both its level and its structure in this situation we may only be able to make comparisons and not to measure differences and the comparisons may lead only to a partial rather than a complete ordering the first section of the paper discusses the stochastic dominance conditions which allow such comparisons illustrating their application by reference to data for the united states the choice of poverty measure has been the subject of an extensive literature and a variety of measures have been proposed in the second section of the paper a different approach is suggested considering a class of measures satisfying certain general properties and seeking conditions under which all members of the class which includes many of those proposed give the same ranking those sceptical about measures of poverty often assert that poverty and inequality are being confounded the third section of the paper distinguishes four different viewpoints and relates them to theories of justice and views of social welfare

inefficient redistribution and inefficient redistributive politics this paper examines the effect of inefficient redistribution in myerson s american political science review 87 856 869 1993 model of redistributive politics regardless of the absolute levels of the efficiency of political parties transfers to different voter segments parties have incentive to stochastically shift resources away from voter segments with large relative efficiency gaps between the two parties transfers towards voter segments with smaller relative efficiency gaps because of this dependence on relative and not absolute levels of efficiency the parties optimal strategies may lead to large discrepancies between the sum of the budgetary transfers and the sum of the effective transfers

comparative statics of contests and rent seeking games this paper develops the comparative statics properties of a contest encountered in patent races and rent seeking games the author shows that symmetric equilibrium expenditure and profit per player decrease with the number of competitors and the discount rate but increase with the value of the prize a fundamental lemma established in the paper shows that a stability condition usually imposed on the model is automatically satisfied the author identifies a class of likelihood or hazard rate functions for which aggregate expenditure increases with the number of competitors and total profits converge to zero copyright 1997 by economics department of the university of pennsylvania and the osaka university institute of social and economic research association

strategic groups and rent dissipation we consider a rent seeking contest in which players can form strategic groups before expending their outlays we examine the profitability of endogenous group formation and the effect of such group formation on rent dissipation we show the following when just one strategic group is formed in equilibrium group formation is beneficial both to the group members and to the nonmembers and rent dissipation is smaller than with usual individual rent seeking however when more than two strategic groups are formed in equilibrium group formation is never profitable to any players and rent dissipation is greater than with individual rent seeking jel

commodity prices trade and poverty in uruguay abstract the 2006 2008 food price spike raised concerns about the impact of high commodity prices on poverty in developing countries this paper addresses these concerns in relation to uruguay a small country that exports agricultural commodities and imports fuels applying a general equilibrium model we find that as a whole an increase in commodity prices has a positive effect on the economy of uruguay benefits obtained through a growth in export activities are partially outweighed by an increase in crude oil prices in this context extreme poverty increases as in other countries the increase in food prices affects the already poor population who become even poorer this fact highlights the need for policies that mitigate the negative effects of price shocks

electricity derivatives pricing with forward looking information in order to increase overall transparency on key operational information power transmission system operators publish an increasing amount of fundamental data including forecasts of electricity demand and available capacity we employ a fundamental model for electricity prices which lends itself well to integrating such forecasts while retaining ease of implementation and tractability to allow for analytic derivatives pricing formulae in an extensive futures pricing study the pricing performance of our model is shown to further improve based on the inclusion of electricity demand and capacity forecasts thus confirming the general importance of forward looking information for electricity derivatives pricing however we also find that the usefulness of integrating forecast data into the pricing approach is primarily limited to those periods during which electricity prices are highly sensitive to demand or available capacity whereas the impact is less visible when fuel prices are the primary underlying driver to prices instead

gendered impacts of the 2007 2008 food price crisis evidence using panel data from rural ethiopia abstract this paper provides empirical evidence on the gendered impact of the 2007 2008 food price crisis using panel data on 1400 households from rural ethiopia that were initially surveyed before the onset of the crisis in 1994 1995 1997 and 2004 and after food prices spiked in 2009 it investigates whether female headed households are more likely to report experiencing a food price shock and whether female headed households experiencing a shock are more or less likely to adopt certain coping strategies controlling for individual household and community characteristics our findings suggest that female headed households are more vulnerable to food price changes and are more likely to have experienced a food price shock in 2007 2008 because female headed households are also resource poor and have a larger food gap compared with male headed households they cope by cutting back on the number of meals they provide their households during good months and eating less preferred foods in general a combination of short term measures to protect diet diversity and micronutrient consumption of vulnerable groups and longer term measures to promote investment in sustainable agriculture such as strengthening women s property rights may increase the ability of poor and vulnerable households to cope better with food price increases

the global food crisis and guatemala what crisis and for whom summary international food prices rose sharply during 2006 08 precipitating the global food crisis we analyze the welfare effects of changes in prices over categories of households in guatemala and find three surprising results the first is that the transmission of international into domestic prices was quite modest the second is that most farm households are net buyers of food implying that they lost from rising prices the third is that farm households represent two thirds of all poor households losing from rising food prices stressing the importance of production for home consumption in sheltering the poor from the crisis

economic contests comparative reward schemes contests are situations in which an individual s reward depends on his performance relative to others students are graded on a curve the candidate with the most votes gets the political office the underling who performs best is promoted to the executive position contests are useful in dealing with indivisible rewards reducing monitoring costs and minimizing risks from common uncertainties they are employed to sort potential participants and once they have entered to induce appropriate effort from them with monitoring precision and prize spreads as potential choice variables optimal contest structures are derived for fair and unfair contests among equal and unequal participants the converse problems of climbing low ability individuals enter the contest designed for high ability candidates and slumming are shown to be manageable

discrimination in a model of contests with incomplete information about ability we study contests with private information and identical contestants where contestants efforts and innate abilities generate output of varying qualities the designer s revenue depends on the quality of the output and she offers a reward to the contestant achieving the highest quality we characterize the equilibrium behavior outcomes and payoffs for both nondiscriminatory and discriminatory where the reward is contestant dependent contests we derive conditions under which the designer obtains a larger payoff when using a discriminatory contest and describe settings where these conditions are satisfied

monte carlo valuation of american options through computation of the optimal exercise frontier this paper introduces a monte carlo simulation method for pricing multidimensional american options based on the computation of the optimal exercise frontier we consider bermudan options that can be exercised at a finite number of times and compute the optimal exercise frontier recursively we show that for every date of possible exercise any single point of the optimal exercise frontier is a fixed point of a simple algorithm once the frontier is computed we use plain vanilla monte carlo simulation to price the option and obtain a low biased estimator we illustrate the method with applications to several types of options

the price impact of extreme weather in developing countries we examine the impact of extreme weather on consumer prices in developing countries by constructing a monthly data set of potential hurricane and flood destruction indices and linking these with consumer price data for 15 caribbean islands our econometric model shows that the price impact of extreme weather events can be large to illustrate potential welfare losses due to these price effects we combine our estimates with price elasticities obtained from a demand system and with event probabilities for jamaica our results show that while expected monthly losses are small rare events can cause large falls in monthly welfare due to price increases

the developing world is poorer than we thought but no less successful in the fight against poverty a new data set on national poverty lines is combined with new price data and almost 700 household surveys to estimate absolute poverty measures for the developing world we find that 25 of the population lived in poverty in 2005 as judged by what poverty typically means in the world s poorest countries this is higher than past estimates substantial overall progress is still indicated the corresponding poverty rate was 52 in 1981 but progress was very uneven across regions the trends over time and regional profile are robust to various changes in methodology though precise counts are more sensitive

the distributional impacts of indonesia s financial crisis on household welfare a rapid response methodology analyzing the distributional impacts of economic crises is an ever more pressing need if policymakers are to intervene to help those most adversely affected they need to identify those who have been hurt most and estimate the magnitude of the harm they have suffered they must also respond in a timely manner this article develops a simple methodology for measuring these effects and applies it to analyze the impact of the indonesian economic crisis on household welfare using only pre crisis household information it estimates the compensating variation for indonesian households following the 1997 asian currency crisis and then explores the results with flexible nonparametric methods it finds that virtually every household was severely affected although the urban poor fared the worst the ability of poor rural households to produce food mitigated the worst consequences of the high inflation the distributional consequences are the same whether or not households are permitted to substitute toward relatively cheaper goods households with young children may have suffered disproportionately large adverse effects

biased contests for symmetric players in a biased contest one of the players has an advantage in the winner determination process we characterize a novel class of biased contest success functions pertaining to such contests and provide necessary and sufficient conditions for zero bias to be a critical point of arbitrary objectives satisfying certain symmetry restrictions we however challenge the common wisdom that unbiased contests are always optimal when contestants are symmetric ex ante or even ex post we show that contests with arbitrary favorites i e biased contests of symmetric players can be optimal in terms of various objectives such as expected aggregate effort the probability to reveal the stronger player as the winner or expected effort of the winner

adoption of improved wheat varieties and impacts on household food security in ethiopia this article evaluates the impact of the adoption of improved wheat varieties on food security using a recent nationally representative dataset of over 2000 farm households in ethiopia we adopted endogenous switching regression treatment effects complemented with a binary propensity score matching methodology to test robustness and reduced selection bias stemming from both observed and unobserved characteristics we expand this further with the generalized propensity score gps approach to evaluate the effects of continuous treatment on the response of the outcome variables we find a consistent result across models indicating that adoption increases food security and farm households that did adopt would also have benefited significantly had they adopted new varieties this study supports the need for vital investments in agricultural research for major food staples widely consumed by the poor and efforts to improve access to modern varieties and services policies that enhance diffusion and adoption of modern wheat varieties should be central to food security strategies in ethiopia

allocation efficiency in a competitive bribery game abstract we consider the selection properties of a competitive bribery model in the presence of two types of asymmetry unevenness between the competitors and unfairness in the contest rules only under very special conditions does the benchmark model yield allocation efficiency in other cases the effect on allocation efficiency of making the contest more unfair is ambiguous and parameter specific we present conditions under which each result obtains our results indicate that it is socially optimal to run an unfair contest in order to redress the allocation inefficiency introduced when contestants are asymmetric we show however that a selfish income maximizing bribee will discriminate in the opposite direction to that which society would prefer

a tug of war team contest this paper analyzes a tug of war contest between two teams in each round of the tug of war a pair of agents from the opposing teams competes in a private value all pay auction with asymmetric value distributions and effort effectiveness whichever team arrives first at a given lead in terms of battle victories over the opponent wins the tug of war there exists a unique markov perfect equilibrium in bidding strategies which depend on the respective player s valuation and the current state of the tug of war we derive rich comparative statics for this equilibrium by using the fact that the state of the tug of war evolves according to a time homogeneous absorbing markov chain

uk gas markets the market price of risk and applications to multiple interruptible supply contracts we employ the schwartz and smith schwartz e and j smith 2000 short term variations and long term dynamics in commodity prices management science 46 893 911 model to explore the dynamics of the uk gas markets we discuss in detail the short term and long term market prices of risk borne by the market players and how deviations from expected cyclical storage affect the short term market price of risk finally we illustrate an application of the model by pricing interruptible supply contracts that are currently traded in the uk

investment in the absence of property rights the role of incumbency advantages in many situations the individuals who can generate some output must enter a contest for appropriating this output this paper analyses the investment incentives of such agents and the role of incumbency advantages in the contest depending on the advantages an increase in the productivity of the investment can decrease or increase the amount of investment the results are applied to autocrats investment behavior and job specific investment in organizations

optimal hedging under biased energy futures markets abstract optimal futures hedging positions for those agents trying to maximize their expected utility will depend on their view about the evolution of the market and on how risk adverse they are the most risk adverse agents will probably decide to full cover their positions but when a futures bias exists hedgers with moderate or low degree of risk aversion can alter their strategy depending on the expected gains in futures markets in our application to the uk natural gas market we find a statistically significant time varying negative futures bias that can be forecasted with confidence as a result of this bias most effective and best performing hedging strategies for moderate risk averse agents are those involving short long hedging in winter summer with a hedging ratio above below the minimum variance hedge ratio these findings are of great interest to practitioners in the uk natural gas markets and the methodology can be extrapolated to other energy markets

contests with endogenous discrimination abstract this paper builds a complete information contest model with endogenous discrimination we show that a revenue maximizing contest designer will optimally set a bias towards a weaker contestant against a stronger contestant and completely eliminate the asymmetry between the two moreover in contrast to fair contest models where the revenue maximizing contest designer is better off if the weaker contestant becomes stronger or the stronger contestant becomes weaker our model shows that the opposite result may arise

evaluating the risk premium in the u s a natural gas market evidence from low price regime abstractin recent years the u s a natural gas market has seen enormous changes the expectations of abundant supply of shale gas and the slow u s a economic recovery have pushed gas prices below us 4 mmbtu although shale gas is a new promising source of unconventional energy investors face uncertain investment plans in this study we investigate the risk premium by comparing behaviour before and after the change point in agents risk perception unlike traditional empirical research on risk premium we use the parametric two factor model of schwartz and smith 2000 to evaluate the implied risk premium term structure from futures prices traded on the new york mercantile exchange nymex we compare our findings with other empirical results and find that the change point lies at the beginning of the low price regime when we compare periods before and after the change point we observe that the risk premium changed not only in sign but also in magnitude

hedging size risk theory and application to the us gas market abstract many corporate commitments exhibit a combined financial exposure to both market prices and idiosyncratic size components e g volume load or business turnover we design a customized contract to optimally mitigate the risk of joint fluctuations in price and size terms the hedge is sought out among contingent claims written on price and any quoted index that is statistically dependent on commitment size closed form solutions are derived for the optimal custom hedge pay off and for the asset holdings of two market strategies one based on price linked forwards the other based on price linked and index linked forwards analytical hedges are obtained using a stylized lognormal market model detailed comparative statics provide a thorough analysis of optimal hedging pay off functions performance assessment is conducted in the context of the us gas market and a prototypical urban region results suggest that hedging through suitable custom claims written on price and an additional index significantly outperforms standard price based as well as mixed price index forward hedging alternatives our optimal custom hedge could be adopted as a benchmark for the relative assessment of any risk management solution

analytical pricing of discretely monitored asian style options theory and application to commodity markets we compute an analytical expression for the moment generating function of the joint random vector consisting of a spot price and its discretely monitored average for a large class of square root price dynamics this result combined with the fourier transform pricing method proposed by carr and madan carr p madan d 1999 option valuation using the fast fourier transform journal of computational finance 2 4 summer 61 73 allows us to derive a closed form formula for the fair value of discretely monitored asian style options our analysis encompasses the case of commodity price dynamics displaying mean reversion and jointly fitting a quoted futures curve and the seasonal structure of spot price volatility four tests are conducted to assess the relative performance of the pricing procedure stemming from our formulae empirical results based on natural gas data from nymex and corn data from cbot show a remarkable improvement over the main alternative techniques developed for pricing asian style options within the market standard framework of geometric brownian motion

market fundamentals competition and natural gas prices after the liberalisation of the gas industry trading hubs have emerged in europe although these hubs appear to be liquid market places fostering gas to gas competition the efficiency of the gas market remains a topic of interest as a fair share of gas is still traded through long term contracts with prices linked to the oil price while the number of gas suppliers to the european market is limited in order to assess the efficiency of the gas market we analyse the day ahead spot price at the dutch gas hub over the period 2011 2014 we find that the oil price had a small positive impact on the gas price changes in the concentration on the supply side did not affect the movement in gas prices the availability of gas in storages and the outside temperature negatively influenced the gas price we also find that the gas price was related to the production of wind electricity overall we conclude that the day ahead gas prices are predominantly determined by gas market fundamentals policies to further integrate gas markets within europe may extend this gas to gas competition to a larger region

stochastic convenience yield and the pricing of oil contingent claims this paper develops and empirically tests a two factor model for pricing financial and real assets contingent on the price of oil the factors are the spot price of oil and the instantaneous convenience yield the parameters of the model are estimated using weekly oil futures contract prices from january 1984 to november 1988 and the model s performance is assessed out of sample by valuing futures contracts over the period november 1988 to may 1989 finally the model is applied to determine the present values of one barrel of oil deliverable in one to ten years time

valuation of commodity based swing options in the energy markets in particular the electricity and natural gas markets many contracts incorporate flexibility of delivery options known as swing or take or pay options subject to daily as well as periodic constraints these contracts permit the option holder to repeatedly exercise the right to receive greater or smaller amounts of energy we extract market information from forward prices and volatilities and build a pricing framework for swing options based on a one factor mean reverting stochastic process for energy prices that explicitly incorporates seasonal effects we present a numerical scheme for the valuation of swing options calibrated for the case of natural gas

measuring the impacts of production risk on technical efficiency a state contingent conditional order m approach this article studies the influence of risk on farms technical efficiency levels the analysis extends the order m efficiency scores approach proposed by daraio and simar 2005 to the state contingent framework the empirical application focuses on cross section data of catalan specialized crop farms from the year 2011 results suggest that accounting for production risks increases the technical performance a 10 increase in output risk will result in a 2 5 increase in average firm technical performance 2014 elsevier b v all rights reserved

a comparison of bribery and bidding in thin markets abstract this paper compares bribery to competitive bidding in a government purchasing context while competitive bidding is one method of procurement bribery is a common alternative in many third world countries although bribery is often considered to be the ethical antithesis of competitive bidding the analysis shows there is a fundamental isomorphism between bribery and competitive bidding on the supply side of the transaction

the impact of managerial change on performance the role of team heterogeneity when a key responsibility of a manager is to allocate more or less attractive tasks to subordinates these subordinates have an incentive to work hard and demonstrate their talents as a new manager is less well acquainted with these talents this incentive mechanism is reinvigorated after a management change but only when the team is suciently homogenous otherwise a new manager quickly makes similar choices as the old one did we investigate this hypothesis using a large data set on coach dismissals in the german football league where the selection of players is indeed a key task of the coach indeed we nd substantial evidence that coach replacements enhance team performance only in homogenous teams moreover from a methodological point of view we argue that there is typically a negative selection bias when evaluating succession eects which might reconcile previous ndings of no or even negative eects with the vast number of dismissals

contests with multi tasking the standard contest model in which participants compete in a single dimension is well understood and documented multi dimension extensions are possible but are liable to increase the complexity of the contest structure mitigating one of its main advantages simplicity in this paper we propose an extension in which competition ensues in several dimensions and a competitor that wins a certain number of these is awarded a prize the amount of information needed to run the contest is hence limited to the number of dimensions won by each player we look at the design of this contest from the point of view of maximising effort in the contest per dimension and totally and show that there will be a tendency to run small contests with few dimensions the standard tullock model and its results are encompassed by our framework

optimal favoritism in all pay auctions and lottery contests abstract we analyze the revenue enhancing potential of favoring specific contestants in complete information all pay auctions and lottery contests with several heterogeneous contestants two instruments of favoritism are considered head starts that are added to the bids of specific contestants and multiplicative biases that give idiosyncratic weights to the bids in the all pay auction head starts are more effective than biases while optimally combining both instruments even yields first best revenue in the lottery contest head starts are less effective than biases and combining both instruments cannot further increase revenue as all pay auctions revenue dominate lottery contests under optimal biases we thus obtain an unambiguous revenue ranking of all six combinations of contest formats and instruments

short term variations and long term dynamics in commodity prices in this article we develop a two factor model of commodity prices that allows meanreversion in short term prices and uncertainty in the equilibrium level to which prices revert although these two factors are not directly observable they may be estimated from spot and futures prices intuitively movements in prices for long maturity futures contracts provide information about the equilibrium price level and differences between the prices for the short and long term contracts provide information about short term variations in prices we show that although this model does not explicitly consider changes in convenience yields over time this short term long term model is equivalent to the stochastic convenience yield model developed in gibson and schwartz 1990 we estimate the parameters of the model using prices for oil futures contracts and apply the model to some hypothetical oil linked assets to demonstrate its use and some of its advantages over the gibson schwartz model

estimating the short run poverty impacts of the 2010 11 surge in food prices global food prices have increased substantially since mid 2010 as have prices in many developing countries in this study we assess the poverty impact of the price changes between june and december 2010 in twenty eight low and middle income countries this is done by gathering detailed information on individual households food production and consumption levels for thirty eight agricultural and food commodities to assess the impacts on household welfare this study estimates that this sudden food price surge increased the number of poor people globally but with considerably different impacts in different countries the heterogeneity of these impacts is partly related to the wide variation in the transmission of global prices to local prices and partly to differences in households patterns of production and consumption on balance the adverse welfare impact on net buyers outweighs the benefits to net sellers resulting in an increase in the number of poor and in the depth of poverty we estimate that the average poverty change was 1 1 percentage points in low income countries and 0 7 percentage points in middle income countries with a net increase of 44 million people falling below the 1 25 per day extreme poverty line

corruption and allocation efficiency abstract in this paper we investigate the possibility of allocation inefficiencies associated with corrupt practices specifically we consider the case in which two firms compete via bribery of a corrupt government official for a to be awarded project the economy may suffer allocation inefficiencies whenever there is some degree of discrimination given additional assumptions it is shown that the possibility of inefficient allocations increases as the degree of discrimination increases although empirical verification of discrimination is difficult due to the observational equivalence of an alternative imperfect knowledge model two possible explanations for the determination of discrimination coefficients indicate that it is a general phenomenon in competitive bribery games

rigging the lobbying process an application of the all pay auction textabstractin a world where a politician can explicitly auction off a prize to the high bidder the standard auction literature can be used to analyse political behavior the justice system however precludes politicians from explicitly selling the prize to the highest bidder thus politicians cannot let it become public knowledge that they are in the business of selling political favors an institution has emerged in political markets to overcome this constraint which are termed as lobbying lobbyists make implicit payments to the politician through campaign contributions if these up front payments were rebated to those failing to receive the prize it would be clear that the politician was selling favors this article has examined an interesting principle arising in all pay auctions this principle states that a politician wishing to maximize political rents may find it in his best interest to exclude certain lobbyists from participating in the lobbying process particularly lobbyists valuing most the political prize

a multi factor model with time varying and seasonal risk premiums for the natural gas market abstract in this paper we develop a quantitative model of the us natural gas market that explores its multi factor structure and its time varying and seasonal risk premiums with weekly spot and futures prices we show that three factors are preferred to describe the futures term structure and the time varying risk premiums are also significant moreover we found that the market implies a seasonal risk premium with two peaks and troughs in one year which is important to correctly price the futures by maturity month finally we link this seasonal risk premium to the uncertainty of the us natural gas demand and find a positive relationship between them these results reveal the complex aspect of the market and may have useful applications for other commodity sectors

self reported food insecurity in africa during the food price crisis this article analyzes data on self reported food insecurity of more than 50 000 individuals in 18 sub saharan african countries over the period 2005 2008 when global food prices increased dramatically the average level of self reported food insecurity was high but remarkably stable over time at about 54 however this average hides large heterogeneity both within countries and across countries in eight of the sample countries self reported food security improved while it worsened in the ten other countries our results suggest that heterogeneous effects in self reported food security are consistent with economic predictions as they are correlated with economic growth and net food consumption both at the household and country level specifically in the face of rising food prices self reported food security improved on average in rural households while it worsened in urban households a finding that holds when using global prices or domestic food prices improvements in food security over time were also positively correlated with net food exports and gdp per capita growth while the self reported indicator used in this paper requires further study and one should carefully interpret the results our findings suggest the need for a critical evaluation of the currently used data and numbers in the public debate on food prices and food insecurity

generalised taylor and generalised calvo price and wage setting micro evidence with macro implications the generalised calvo and the generalised taylor models of price and wage setting are unlike the standard calvo and taylor counterparts exactly consistent with the distribution of durations observed in the data using price and wage micro data from a major euro area economy france we develop calibrated versions of these models we assess the consequences for monetary policy transmission by embedding these calibrated models in a standard dynamic stochastic general equilibrium model the generalised taylor model is found to help rationalise the hump shaped and persistent response of inflation without resorting to the counterfactual assumption of systematic wage and price indexation

collective contests for commons and club goods abstract this paper focuses on collective contests for commons and club goods our main objective is to examine in this context the effect of group size on its performance the main results specify conditions for the existence non existence of the group size paradox namely the situation where a larger group is less more effective in pursuing its interest because of despite the combined effect of the incentives that result in the free riding problem and the tragedy of the commons the paper also explains under what circumstances there exists a bias towards excessive or inadequate winning group size finally it examines the effect of restricted excludability of the commons good within the winning group on the relationship between group size and its winning probability

on the comparison of schwartz and smith s two and three factor models on commodity prices since schwartz and smith 2000 published their study on two factor model on commodity prices many studies have used this model and others have extended it the authors also proposed the three factor model due to the poor fitting of the two factor one on long term futures prices at that time the authors had only long term prices from a private source to calibrate test and compare these models no public data on long term future contracts were available on the other hand during the last decade the commodity prices soared as did the liquidity of long term contracts this means that the interest of the agents in the management of their risk on long term positions increased the same way and this is the motivation for this study in this article we revisit the comparison between two and three factor models using public data for short and long term contracts we use up to the 67 month ahead contract we also provide a detailed derivation of the three factor model differently from that of the original a

food price surges and poverty in urban colombia new evidence from household survey data abstract the present study simulates the impacts of price surges in 2006 2008 on poverty in the main colombian cities drawing upon household survey data it is found that the price surges increased both extreme and moderate poverty in urban areas but the magnitude of poverty rise was not homogeneous across geographical locations or in terms of household characteristics such as education or gender of the household head as a policy option we suggest geographical targeting or demographic targeting that will select and support poor households by locations or socio demographic characteristics guided by the degree of household vulnerability to food price shocks

how much should we pay for interconnecting electricity markets a real options approach abstract an interconnector is an asset that gives the owner the option to transmit electricity between two locations in financial terms the value of an interconnector is the same as a strip of real options written on the spread between power prices in two markets we model the spread based on a seasonal trend mean reverting gaussian process and mean reverting jump process and express the value of these real options in closed form the valuation tool is applied to five pairs of european neighboring markets to value a hypothetical one year lease of the interconnector using different assumptions about the seasonal component of the spread and different liquidity caps which proxy for the depth of the interconnected power markets we derive no arbitrage lower bounds for the value of the interconnector in terms of electricity futures contract and find that depending on the depth of the market the jumps in the spread can account for between 1 and 40 of the total value of the interconnector the two markets where an interconnector would be most resp least valuable are germany and the netherlands resp france and germany finally we provide rules of thumb to interpret the different interconnector values

digging for golden carrots an analysis of research tournaments contracting for research is often infeasible because research inputs are unobservable and research outcomes cannot be verified by a court sponsoring a research tournament can resolve these problems a model is presented in which contestants compete to find the innovation of highest value to the tournament sponsor the winner receives a prespecified prize the tournament game has a unique subgame perfect equilibrium free entry is not optimal because equilibrium effort by each researcher decreases in the number of contestants an optimally designed research tournament balances the probability of overshooting the first best quality level against the probability of falling short copyright 1995 by american economic association

a generalized schwartz model for energy spot prices estimation using a particle mcmc method we propose an energy spot price model featuring a two factor price process and a two component stochastic volatility process the first factor in the price process captures the normal variations the second accounts for spikes the two component volatility allows for a flexible autocorrelation structure instead of using various filtering techniques for splitting the two factors as often found in the literature we estimate the model in one step using an adaptive mcmc method with a rao blackwellized particle filter we fit the model to uk natural gas spot prices and investigate the importance of spikes and stochastic volatility we find that the inclusion of stochastic volatility is crucial and that it strongly impacts the jump intensity in the spike process furthermore our estimation method enables us to consider both continuous and purely jump driven volatility processes and thereby assess if the volatility specification also influences the spike process and the overall model fit

semi targeted all pay auctions a partial exclusion principle abstract this paper studies the effects of a specific affirmative action policy in complete information all pay auctions when players differ in ability the contest organizer splits the overall prize of the competition into a targeted and an untargeted prize the targeted prize is exclusively for disadvantaged low ability agents and excludes advantaged agents partially from the overall prize we consider a setting with one high ability and two low ability contestants and fully characterize equilibrium assuming that the contest organizer aims to maximize expected total effort we show that i almost any targeted prize is preferable to a standard all pay auction without targeted prize ii the exclusion principle baye et al 1993 can be implemented by a wide range of sufficiently large targeted prizes and iii partial exclusion by means of an appropriately chosen targeted prize benefits the organizer more than complete exclusion we also discuss the robustness of our results in settings with more than three agents

stochastic modeling of financial electricity contracts abstract we discuss the modeling of electricity contracts traded in many deregulated power markets these forward futures type contracts deliver either physically or financially electricity over a specified time period and is frequently referred to as swaps since they in effect represent an exchange of fixed for floating electricity price we propose to use the heath jarrow morton approach to model swap prices since the notion of a spot price is not easily defined in these markets for general stochastic dynamical models we connect the spot price the instantaneous delivery forward price and the swap price and analyze two different ways to apply the heath jarrow morton approach to swap pricing either one specifies a dynamics for the non existing instantaneous delivery forwards and derives the implied swap dynamics or one models directly on the swaps the former is shown to lead to quite complicated stochastic models for the swap price even when the forward dynamics is simple the latter has some theoretical problems due to a no arbitrage condition that has to be satisfied for swaps with overlapping delivery periods to overcome this problem a practical modeling approach is analyzed the market is supposed only to consist of non overlapping swaps and these are modelled directly a thorough empirical study is performed using data collected from nord pool our investigations demonstrate that it is possible to state reasonable models for the swap price dynamics which is analytically tractable for risk management and option pricing purposes however this is an area of further research

quality quantity and nutritional impacts of rice price changes in vietnam summary asian governments intervene in the world rice market to protect domestic consumers whether consumers are nutritionally vulnerable depends on the elasticity of calories with respect to rice prices common demand models applied to household survey and market price data ignore quality substitution and force all adjustment onto the quantity calorie margin this paper uses data from vietnam on market prices food quantity and quality a 10 increase in the relative price of rice reduces household calorie consumption by less than 2 but this elasticity would be wrongly estimated to be more than twice as large if quality substitution is ignored

the impact of the global food crisis on self assessed food security the paper provides the first large scale survey based evidence on the impact of the global food crisis of 2007 08 using an indicator of self assessed food security from the gallup world poll for the sampled countries as a whole this subjective indicator of food security remained the same or even improved seemingly owing to a combination of strong economic growth and limited food inflation in some of the most populous countries particularly india however these favorable global trends mask divergent trends at the national and regional levels with a number of countries reporting substantial deterioration in food security the impacts of the global crisis therefore appear to be highly context specific

caps on political lobbying the cost of political campaigns in the u s has risen substantially in recent years for example real spending on congressional election campaigns doubled between 1976 and 1992 steven d levitt 1995 there are many reasons why increased campaign spending might be socially harmful first increased spending means increased fund raising which may keep politicians from their legislative duties 1 second a lobbyist who makes a large campaign contribution may have undue influence on electoral outcomes on the shaping of legislation or on the outcome of regulatory proceedings 2 that is the socially preferred candidate or legislation may not prevail likewise a lobbyist involved in a regulatory matter or a competition for a government contract may benefit unduly from a legislator s intervention 3 third a perception that campaign contributions purchase influence may lead to increased tolerance of corruption in the private sector a desire to control campaign spending has spawned many initiatives to limit both campaign contributions and spending beginning with the passage of the federal election campaign act feca political action committees pacs can contribute at most 5 000 per election to a candidate while individuals can contribute at most 1 000 restrictions have also been put on in kind contributions making it more difficult to circumvent these limits 4 while direct restrictions on campaign spending have proven difficult to implement recent initiatives aim to impose voluntary spending limits and stricter limits on contributions 5 despite the existing legislation and the proposals to limit contributions little is known about the impact of contribution limits on aggregate expenditures while it is intuitively appealing that aggregate expenditures would drop we challenge that intuition here we study a lobbying game and show that a cap on individual lobbyists expenditures may have the perverse effect of increasing aggregate expenditures and loweri this abstract was borrowed from another version of this item

risk premium in the uk natural gas forward market this report investigates the uk natural gas market and tests whether it is a fair game efficient forward market using forward contracts ranging from one to five months time to delivery the forward and spot price series are separately non stationary but cointegrated furthermore the forward prices are biased predictors of both the future spot and the 1 month ahead forward price the risk premium on the forward prices is positive as opposed to the us gas market where the risk premium was found to be negative in similar work moreover the analysis reveals that the storage model is an incomplete model for the relationship between the spot and forward prices however storage has a clear effect on this relationship an effect that appears to be non linear

creating balance in dynamic competitions abstract we consider incentives for organizing competitions in multiple rounds focusing on situations where there is heterogeneity among the contestants ex ante which discourages effort in a single contest heterogeneity evolves across rounds depending upon the outcomes of previous rounds we present conditions under which balance in such a competition can be created by determining the number of rounds and dividing the prize fund carefully across them so that full rent dissipation entails in the model each round is an all pay auction where contestants differ in their abilities to gain a momentum from winning we also discuss the case when negative prizes are feasible demonstrating that this strengthens the full dissipation result and we consider a case where the size of the winner s momentum is related to the size of the prize attained showing that the stronger this linkage the less of the prize is awarded early on

some results on rent seeking contests with shortlisting we show that rent seeking contests with shortlistinghave comparative static properties which depend on thestage of the contest by generalising the argument inamegashie 1997 we show that well known comparativestatic results in single stage rent seeking contestsdo not necessarily carry over to contests withshortlisting the analysis suggeststhat policy prescriptions for reducing rent seekingexpenditures in contests with shortlisting cannot begiven without taking into account the stage of thecontest we also extend the model in amegashie 1997 to the case of unequal class sizes finally theshortlisting method in amegashie 1997 is comparedwith that in clark and riis 1996

long term swings and seasonality in energy markets abstract this paper introduces a two factor continuous time model for commodity pricing under the assumption that prices revert to a stochastic mean level which shows smooth periodic fluctuations over long periods of time we represent the mean reversion price by a fourier series with a stochastic component we also consider a seasonal component in the price level an essential characteristic of many commodity prices which we represent again by a fourier series we obtain analytical pricing expressions for futures contracts using futures price data on natural gas we provide evidence on the presence of long term fluctuations and show how to estimate the long term component simultaneously with a seasonal component using the kalman filter we analyse the in sample and out of sample empirical performance of our pricing model with and without a seasonal component and compare it with schwartz and smith 2000 model our findings show the in sample and out of sample superiority of our model with seasonal fluctuations thereby providing a simple and powerful tool for portfolio management risk management and derivative pricing

seasonal stochastic volatility implications for the pricing of commodity options many commodity markets contain a strong seasonal component not only at the price level but also in volatility in this paper the importance of seasonal behavior in the volatility for the pricing of commodity options is analyzed we propose a seasonally varying long run mean variance process that is capable of capturing empirically observed patterns semi closed form option valuation formulas are derived we then empirically study the impact of the proposed seasonal stochastic volatility model on the pricing accuracy of natural gas futures options traded at the new york mercantile exchange nymex and corn futures options traded at the chicago board of trade cbot our results demonstrate that allowing stochastic volatility to fluctuate seasonally significantly reduces pricing errors for these contracts

monetary policy shocks and the dynamics of agricultural commodity prices evidence from structural and factor augmented var analyses fluctuation in commodity prices is a significant and timely issue to be studied this study is to examine the impact of monetary policy and other macroeconomic shocks on the dynamics of agricultural commodity prices the major contributions of this study are twofold first unlike other studies that use indexes this study analyzes the commodities individually affording the inclusion of commodity specific fundamentals such as the level of inventory an important determinant of commodity price in a structural var framework second it exploits a rich data set of agricultural commodity prices which includes commodities that are usually overlooked in the literature and extracts a common factor using the dynamic factor model to understand the extent of comovement of the prices and to gauge the extent to which macroeconomic shocks drive the comovement in a factor augmented var favar framework the findings show that monetary policy global economic conditions and the u s dollar exchange rates play an important role in the dynamics of agricultural commodity prices

bribery inefficiency and bureaucratic delay abstract we examine bribery in a dynamic setting with a partially honest bureaucracy the presence of honest officials lowers the bribe that a corrupt official can extract from efficient applicants consequently efficient applicants may face delays in receiving licenses or may never receive licenses as inefficient applicants are serviced ahead of them an increase in the proportion of honest officials while directly increasing the incidence of socially optimal decisions can also induce greater inefficiencies misallocation and delay from corrupt officials as a result social welfare may be non monotonic in the proportion of honest officials and small differences in monitoring costs may lead to very different levels of corruption competition between officials can hurt efficiency its desirability depends on the prevalence of applicants ability to pay bribes

political culture and discrimination in contests abstract many economic and political decisions are the outcome of strategic contests for a given prize the nature of such contests can be determined by a designer who is driven by political considerations with a specific political culture the main objective of this study is to analyze the effect of political culture and of valuation asymmetry on discrimination between the contestants the weights assigned to the public well being and the contestants efforts represent the political culture while discrimination is an endogenous variable that characterizes the mechanism allocating the prize we consider situations under which the optimal bias of the designer is in favor of the contestant with the larger or smaller prize valuation and examine the effect of changes in the political culture and in valuation asymmetry on the designer s preferred discrimination between the contestants focusing on the two most widely studied types of contest success functions deterministic all pay auctions and logit csfs we show that an all pay auction is always the preferred csf from the point of view of the contest designer this result provides a new political economic micro foundation to some of the most commonly used models in the contest literature

on equilibrium player ordering in dynamic team contests we study equilibrium player ordering in a dynamic all pay contest between two teams the contest lasts two periods and each team consists of two players who perform in different periods on behalf of their teams the team with the higher aggregate output wins the prize which is a public good to its players each team has one stronger player and one weaker player and the two teams can differ in their values of the prize the teams maximize their winning odds by strategically assigning their players to different periods we find that when the intrateam heterogeneity in player ability is not excessive the teams would allocate their stronger players to the late positions as the anchormen when both the intrateam ability gap and interteam heterogeneity in teams values become excessively large the team with high value always places its stronger player in the early position who will place a large bid to preempt late competition jel c7 d7 d8

rent dissipation when rent seekers are budget constrained in the original tullock 1975 1980 game an individual bidder s probability of winning with a bid b is proportional to br where the exponent reflects economies of scale in rent seeking different interpretations can be given to these probabilities first one may view r as a reflection of the political culture alternatively one may view r as a choice variable for a politician intuition suggests that a society with a high tolerance for the selling of political favors and politicians who are receptive to rent seeking would both induce greater rent seeking expenditures than other societies all else equal this paper shows that a lower value of r can actually lead to more rent dissipation than a higher value this paper also reinforces two points concerning rent seeking first the analysis confirms the robustness of under dissipation of rents even in the face of entry second it points out the importance of distinguishing between rent seeking expenditures and rent dissipation when bidders must borrow for example total expenditure may understate rent dissipation

local impacts of a global crisis food price transmission consumer welfare and poverty in ghana abstract this paper takes a local perspective on global food price shocks by analyzing food price transmission between regional markets in ghana it also assesses the impacts of food price increases on various household groups taking the 2007 2008 global food crisis as an example we show that prices for domestic grain products are highly correlated with world market prices this is true both for products for which ghana is highly import dependent e g rice and the products for which ghana is self sufficient e g maize the econometric results also show that price transmission is high between regional producer markets and markets located in the country s largest cities and the distance between producer and consumer markets and the size of consumer markets matter in explaining the price transmission the welfare analysis for households as consumers shows that the effect of world food prices appears relatively modest for the country as a whole due to relatively diverse consumption patterns within country however the national average hides important regional differences both between regions and within different income groups we find that the poorest of the poor particularly those living in the urban areas are hardest hit by high food prices the negative effect of the food crisis is particularly strong in northern ghana the main explanations for this regional variation in the price effect is the different consumption patterns and much lower per capita income levels in the north of ghana compared to other regions in the country

the impact of food inflation on urban poverty and its monetary cost some back of the envelope calculations this paper uses a sample of 73 developing countries to estimate the change in the cost of alleviating urban poverty brought about by the recent increase in food prices this cost is approximated by the change in the poverty deficit that is the variation in financial resources required to eliminate poverty under perfect targeting the results show that for most countries the cost represents less than 0 1 percent of gross domestic product however in the most severely affected it may exceed 3 percent in all countries the change in the poverty deficit is mostly due to the negative real income effect of those households that were poor before the price shock while the cost attributable to new households falling into poverty is negligible thus in countries where transfer mechanisms with effective targeting already exist the most cost effective strategy would be to scale up such programs rather than designing tools to identify the new poor

local food prices and international price transmission world food prices spiked in the periods 2007 8 and 2010 11 the impact of these spikes in world food prices on local food prices and thus on local consumers is determined by the food price pass through pass through is defined as the extent to which changes in world food prices lead to changes in local food prices we examine the determinants of variation in food price pass through from global to local consumer prices in a global sample of 147 countries using fao data on world food prices and ilo data on food prices for consumers while market integration matters our study finds that income per capita is the dominant factor explaining cross country variation in pass through of food prices we estimate an elasticity of about 0 3 of pass through with respect to income per capita this means far greater price transmission of food price shocks at the commodity level to final consumers in low income countries than in high income countries the implication is that future swings in world food prices will in particular jeopardize food security in poor countries trade policy measures of market integration also affect the pass through significantly whereas infrastructure and geography measures play no significant role

implications of higher global food prices for poverty in low income countries in many poor countries the recent increases in prices of staple foods raise the real incomes of those selling food many of whom are relatively poor while hurting net food consumers many of whom are also relatively poor the impacts on poverty will certainly be very diverse but the average impact on poverty depends upon the balance between these two effects and can only be determined by looking at real world data results using household data for ten observations on nine low income countries show that the short run impacts of higher staple food prices on poverty differ considerably by commodity and by country but that poverty increases are much more frequent and larger than poverty reductions the recent large increases in food prices appear likely to raise overall poverty in low income countries substantially