the economic characteristics of imf program countries abstract a logit analysis is utilized to identify the factors that characterized developing nations that entered imf stabilization programs in the early 1980s program countries recorded higher rates of domestic credit growth larger shares of government expenditure more severe current account deficits smaller reserve holdings and lower per capita incomes

uncertainty and incentives in crisis bargaining game free analysis of international conflict we study two different varieties of uncertainty that countries can face in international crises and establish general results about the relationship between these sources of uncertainty and the possibility of peaceful resolution of conflict among our results we show that under some weak conditions there is no equilibrium of any crisis bargaining game that has voluntary agreements and zero probability of costly war we also show that while uncertainty about the other side s cost of war may be relatively benign in peace negotiations uncertainty about the other side s strength in war makes it much more difficult to guarantee peaceful outcomes along the way we are able to assess the degree to which particular modeling assumptions found in the existing literature drive the well known relationship between uncertainty the incentive to misrepresent and costly war we find that while the theoretical connection between war and uncertainty is quite robust to relaxing many modeling assumptions whether uncertainty is about costs or the probability of victory remains important

political economic markets perts and pests in food and agriculture j i lyniversity of california berkeley jjept of agricultural and resource economic l working paper al cljdare i lorking paper 0 231 politic eco lic l rxets a d pests i j food l ti achiculture by per ts cordon c rausser ja nlnl tt junot tlon a riii ent st ticn giannini fou 1cl itiol1of ar ricultllrnj econo ll i cs july 11 w

distortionary taxes and the provision of public goods economists have long been concerned with finding an efficient level of public expenditure the classic statement of the problem was given by paul samuelson 1954 an optimal level of expenditure is where the sum of the marginal rates of substitution between the public good and a reference good equals the marginal rate of transformation between the public good and the reference good mrs mrt however samuelson s formula assumes that all of the revenue needed to finance public goods can be raised with lump sum taxes since this is not generally possible the formula must be modified to account for the distortionary effects of the tax system an appropriate modification is to multiply the cost side of the equation by a term that is commonly called the marginal cost of public funds mcf in the case of samuelson s formula where government is entirely financed with lump sum taxes the mcf would be exactly 1 0 in the traditional view of economists distortionary taxes cause the mcf to be greater than one thus raising the cost of providing public goods in this paper we discuss some cases where the mcf may be less than one we will illustrate this possibility using numerical examples for labor taxes

the decoupling of farm programs revisiting the wealth effect recent reforms of agricultural policies in developed countries have introduced direct payments as replacements for traditional production enhancing instruments whereas these new instruments can in principle influence production through several channels current empirical studies show no significant impact on production direct payments mainly increase land values in this article we revisit the evaluation of the coupling effects passing through the wealth of agricultural households the initial wealth of these agents while mainly being in the form of land asset holding is always assumed to be fixed to the contrary we show theoretically and through an empirical simulation exercise that once the impact of farm programs on initial wealth is properly accounted for the measure of the coupling effects is not as negligible as found in previous studies copyright 2010 oxford university press

borrowing from the imf the policy implications of recent empirical research abstract at a time when the future of the international monetary fund is being widely debated a number of relevant and important studies have been published which advance our knowledge of the factors which determine borrowing from the fund there has been little attempt however to put this recent empirical research into context or to extract from it appropriate policy conclusions while dissent remains over some issues there is an emerging consensus on others which provides a firm empirical foundation for policy formulation unfortunately the policy stance adopted by the g7 is in many ways at odds with much of the recent empirical research

co integration error correction and the fisher effect a clarification the presence of co integration between interest rates and inflation implies the existence of an error correction model and the possibility of two sources of causation causality testing which does not account for feedback through the error correction mechanism as well as through the error correction mechanism as well as through the lagged changes in the variables can produce misleading reuslts reinterpreting atkin error correction model and causality tests in this framework points to a feedback relationship between inflation and post tax nominal interest rates these findings are consistent with previously published results but are in contrast to atkinsapos conclusion of one way causality from inflation to interest rates

auctions development and privatization efficient auctions with liquidity constrained buyers abstract we exhibit an efficient auction an auction for which the winner is the buyer with the highest valuation subject to the constraint that buyers may be budget or liquidity constrained

political economy influences within the life cycle of imf programmes increasing attention is being paid to political economy dimensions of the imf s operations however up until now the literature has lacked a systematic overview of how politics and economics interact in this context this paper sets out to fill the gap its conceptual basis is that of the life cycle of an imf programme what determines the decision to turn to the fund for financial assistance what determines the outcome of negotiations what determines whether a country will come back to the fund answers to these questions cannot be satisfactorily given by examining economics alone the paper draws on existing evidence to provide an empirically based discussion of the issues involved it also points the direction in which future research needs to go some of the policy implications of the analysis are also examined

revisiting the effects of imf programs on poverty and inequality investigating how lending programs of the international monetary fund imf affect poverty and inequality we explicitly address model uncertainty we control for endogenous selection into imf programs using data on 86 low and middle income countries for the 1982 2009 period and analyze program effects on various poverty and inequality measures the results rely on averaging over 90 specifications of treatment effect models and indicate adverse short run effects of imf agreements on poverty and inequality for the whole sample while for a 2000 2009 subsample the results are reversed there is evidence that significant short run effects might disappear in the long run author s abstract

adoption of organic farming in germany and austria an integrative dynamic investment perspective farm level adaptation to changing economic environments is often slower than expected technological innovations for instance are frequently adopted at a later date than the net present value of investment suggests this can be explained by a model of investment under uncertainty which consistently accounts for uncertainty sunk costs and the flexibility of investment timing its essential conclusion is that due to temporal opportunity costs critical incremental cash flows that trigger investments might be higher than those needed for simple cost recovery this accounts for an ostensible reluctance to invest economic hysteresis in this article we demonstrate how slow conversion to organic farming in general and the different rates of conversion in germany and austria in particular can be explained by the new investment theory

some neglected social costs of government spending in farm programs economic welfare analyses of farm programs typically assume that the direct social opportunity cost of subsidy payments is one dollar per dollar of government spending recent literature suggests that the marginal opportunity cost of a dollar of u s federal government spending is more likely to be in the range of 1 20 to 1 50 this implies that the net social costs of farm programs that involve government spending are significantly greater than the typical estimates in addition the normative efficiency ranking of alternative policies is sensitive to the marginal opportunity cost of government spending

the fisher effect and the term structure of interest rates tests of cointegration the literature on the fisher effect has ignored the potential relationship between inflation and long term interest rates using an expectations model of the term structure of interest rates the authors establish the conditions under which innovations in short term inflation will be transmitted to long term as well as short term interest rates cointegration tests find support for both the fisher effect and the expectations theory of the term structure copyright 1993 by mit press

simple solutions to the initial conditions problem in dynamic nonlinear panel data models with unobserved heterogeneity i study a simple widely applicable approach to handling the initial conditions problem in dynamic nonlinear unobserved effects models rather than attempting to obtain the joint distribution of all outcomes of the endogenous variables i propose finding the distribution conditional on the initial value and the observed history of strictly exogenous explanatory variables the approach is flexible and results in simple estimation strategies for at least three leading dynamic nonlinear models probit tobit and poisson regression i treat the general problem of estimating average partial effects and show that simple estimators exist for important special cases copyright 2005 john wiley sons ltd

evidence of nonlinear mean reversion in the real interest rate this article utilizes tests for a unit root that have power against nonlinear alternatives to provide empirical evidence on the time series properties of the ex post real interest rate in the g7 countries we find that the unit root hypothesis can be rejected in the presence of a nonlinear alternative motivated by theoretical literature on optimal monetary policy rules this represents a reversal of the results obtained using standard linear unit root and cointegration tests tests for linearity reject this hypothesis for canada france italy and japan for which we estimate nonlinear models capturing the dynamics of the interest rate for these countries ex post real interest rates follow a nonlinear model characterized by mean reversion and provide statistical evidence for the fisher effect

an analysis of drawings on the international monetary fund by developing countries the nature of relations between the imf and developing countries has come under close scrutiny in recent years this has partly been the result of the deteriorating economic situation in which a large number of non oil developing countries have found themselves a situation characterised by falling rates of economic growth increasing balance of payments deficits and rising debt service ratios and partly it has resulted from the particular but public experiences of a number of developing countries such as jamaica peru and tanzania in their dealings with the fund

comparing the profitability of organic and conventional production in family farming empirical evidence from brazil abstract several studies have compared the profitability of organic and conventional producers but present very conflicting results although in the majority of these papers selection bias due to observables is accounted for the possibility of selection based on unobservables has been largely overlooked in this paper we compare these two types of producers using a large and unique data of about 4 2 million family farmers in brazil standard propensity score matching techniques are used together with the procedure recently developed by oster forthcoming to address concerns about omitted variables our results confirm the working hypothesis that organic producer s profits are lower than conventional ones

price relationships between qualitatively differentiated agricultural products organic and conventional wheat in germany organic agriculture which produces commodities that can be qualitatively differentiated from conventional food products has grown into an important market in many countries the dynamics of commodity prices in both sectors are partly interdependent but are also shaped by independent determinants and have rarely been studied we analyze organic food markets and their interdependencies with conventional markets in the context of wheat markets in germany which have been subject to a number of fundamental changes during the last two decades based on institutional market characteristics we suggest a flexible markov switching asymmetric time series model we find a pronounced temporal sequence of market phases that differ in their asymmetric dynamics and the extent to which the organic price is influenced by the conventional price organic wheat prices tend to be increasingly connected to prices of conventional wheat

cointegration results of farm incomes and production costs in us agriculture this study analyses the dynamic relationships between farm incomes and production costs in the us agricultural industry by applying the cointegration technique the results provide evidence of long run equilibrium relationships between cash marketings and production costs however the results do not show such relationships between total revenues which include cash marketings and government payments and production costs chief conclusions of this study are that if market forces alone were to guide farmers decisions one could expert long run equilibrium relationships between the cash receipts and costs however government interventions seem to disrupt this equilibrium the results also suggest that production costs can be forecast using cash marketings which are found to be weakly exogenous the error correction model and vector autoregression model are used to estimate and compare simulation performances of the cointegrated system of cash marketings and production costs

the imf and precautionary lending an empirical evaluation of the selectivity and effectiveness of the flexible credit line abstract this paper provides an empirical evaluation of the flexible credit line fcl the imf s prime precautionary lending instrument since 2009 to which so far only mexico colombia and poland have subscribed we consider both questions of selectivity and effectiveness first which variables explain the three countries participation in fcl arrangements and second to which extent has the fcl delivered on its promise of boosting market confidence in its respective users based on a probit analysis we show that fcl selectivity can be explained by both demand and supply side factors the probability of participation in the fcl was greater in countries that experienced larger prior exchange market pressures that had lower bond spreads and inflation that accounted for higher shares in us exports and that exhibited a higher propensity of making political concessions to the us using a synthetic control approach we find evidence for some but generally limited beneficial effects on sovereign bond spreads and gross capital inflows into the three fcl countries overall our results suggest that any economic stigma that may prevent eligible countries from entering into an fcl arrangement is unwarranted conversely the apparent link of fcl participation with us interests is not conducive to overcoming political stigma

economic theory and farm politics what can economics offer in the explanation of politics the first accomplishment is to reduce the subject to a maximization problem analogous to others encountered in economic theory a second accomplishment is to make this problem interesting to make it really illuminating about politics both steps are difficult and the accomplishments have been only partial viewing politics as maximization may seem unreasonably austere and narrow but it is what distinguishes the contribution of economics from that of political scientists or more general social observers empirical work by economists on farm politics typically brings in these broader concerns but this paper attempts instead to justify the narrower approach and to explore its implications its organization is first to spell out details of the contribution of economic theory to explaining politics second to review work on agricultural policies in relation to this theory and finally to discuss implications for positive versus normative economics in policy analysis

the time series properties of norwegian inflation and nominal interest rate this article investigates the time series properties of norwegian inflation and nominal interest rate using annual data from 1850 to 2004 a number of different univariate unit root tests are employed to examine whether the time series are mean reverting or generated by unit root processes results show very strong evidence in favour of mean reversion in inflation but a unit root in the nominal interest rate this implies that there exists no long run relationship between these two variables a conclusion which is further supported by cointegration tests and estimated vector error correction models the cointegration analysis also points to an important potential pitfall when using cointegration techniques on systems where some variables are stationary processes

the fisher hypothesis revisited new evidence the nominal interest rate is examined with the is lm model incorporating the fisher hypothesis eight different interest rates are considered for different sample periods ending in 1993 when the livingston survey data are used the coefficients for the expected inflation rate real quantity of money and government spending are significant in most cases when the adaptive expectations model is applied the coefficients for real quantity of money and government spending are insignificant in most cases the fisher hypothesis only holds for the federal funds rate or the aaa bond rate the linear form regression can be rejected at the 1 level in favour of the box cox general functional form

on the marginal welfare cost of taxation this paper develops a rigorous partial equilibrium analysis of the determinants of margin al welfare cost mwc of taxes on labor earnings it shows that four key parameters interact to determine the magnitude of mwc using aggregate data and plausible ranges of values for the parameters mwc can vary from under 10 percent to more than 300 percent of marginal tax revenue intermediate parameter values sugge st mwc is in the 25 50 percent range however the more extreme estimates cannot be ruled out on the basis of available evidence suggesting that mwc cannot yet be copyright 1987 by american economic association

decomposition of productivity growth using distance functions the case of dairy farms in three european countries within an output distance function framework the total factor productivity growth index is decomposed into four components technical change technical and allocative efficiency and scale component we estimate stochastic translog output distance functions using panel data from dairy farms over the period 1991 94 for three european countries germany the netherlands and poland results indicate that the change in the productivity growth index in germany 6 and poland 5 are mainly dictated by the technical change component in contrast the productivity growth index in the netherlands 3 is influenced by allocative efficiency components

macroeconomic performance and adjustment under policies commonly supported by the international monetary fund the fundamental objective of any adjustment program whether supported by the international monetary fund imf or otherwise is to eliminate disequilibrium between aggregate demand and supply which is typically reflected in balance of payments deficits and rising prices in the past the imf stabilization programs were basically demand side the focus on the demand management is based on the absorption and especially the monetary approach to the balance of payments in recent years however the imf has recognized the importance of supply factors and thus adjustment programs include policy tools that deal with production bottlenecks ways to improve resource utilization and so forth this shift in policy does not however imply that the imf attaches less significance to demand than supply factors in his recent paper mohsen khan states that although supply shocks can cause disequilibrium between aggregate demand and supply often such imbalances can be traced to inappropriate policies that expand aggregate demand too rapidly relative to the growth of the productive capacity in the economy the purpose of this article is to examine directly the effects that a typical stabilization program may have on three important macroeconomic variables the growth rate in real output economic growth the inflation rate and the current account balance to provide some empirical foundation for the analysis the effects of such programs are illustrated through regression analysis three models that examine the relationship between relevant macroeconomic variables and the imf s instrumental tools are introduced the analysis covers 43 countries of which 27 are program countries that used imf financial resources during 1977 the period under study is 1977 83 during 1976 77 the

alleged instability of the okun s law relationship in australia an empirical analysis the determinants of the long run equilibrium unemployment rate are modelled through a cointegrating regression the residual term which represents the error correction mechanism is used in the testing of a general dynamic model to obtain a simplified representation of the data generation process over the period 1968 2 1989 2 the long period equilibrium unemployment rate which is i 1 is shown to be related to the rate of capacity utilization a structural change variable and the rate of capacity growth steady state rates of unemployment are calculated which are based on different assumptions about the magnitudes of the independent variables in contrast to the other two variables changes in the rate of capacity utilization are shown to have only modest effects on the steady state unemployment rate the okun coefficient is inversely related to the steady state unemployment rate which accords with intuition the statistically significant decline in the trend growth rate of non farm gdp in the 1970

organic or conventional optimal dairy farming technology under the eu milk quota system and organic subsidies this paper assesses the competitiveness of organic and conventional dairy farms under different milk market and organic farming policy scenarios we use a dea based model to estimate for each policy scenario the sample farms profit potential in both technologies the model enables identification of a farm s optimal technology based on its input output observations the empirical analysis is based on the annual accounts of 1300 bavarian dairy farms results indicate that approximately 69 78 of the organic conventional farms have chosen their optimal farming system the remaining organic conventional farmers could increase their profit on average by roughly 6 10 by switching to the other technology abolishment of the eu milk quota results in a considerable decline in the number of sample farms for which organic farming is the optimal technology suggesting that ceteris paribus organic dairy farms may lose competitive advantage with the deregulation of the eu s milk market regime in 2015 organic maintenance payments more than double the number of farms with a higher earning potential in organic farming but their effectiveness could decline when the milk quota is abolished c 2010 elsevier ltd all rights reserved

the political economy of imf lending in africa why has imf lending achieved such poor results in africa is it because the fund imposes the wrong conditions or because it fails to enforce them analysis of monthly data on 53 african countries from 1990 to 2000 shows that the imf s loans for reform contract lacks credibility because donor countries intervene to prevent rigorous enforcement countries that have influence with developed country patrons as measured by u s foreign aid membership in postcolonial international institutions and voting profiles in the un are subject to less rigorous enforcement shorter program suspensions they have more frequent program suspensions because they violate their conditions more often the imf will have to become more independent in order to become an effective champion of reform

us politics and world bank ida lending this paper studies the role of us political factors in the allocation of world bank concessional lending where us political interests are proxied by voting similarity in the united nations general assembly on issues identified as important by the us department of state in contrast to previous studies we find that the us exerted a significant influence on ida lending during the period 1993 2000 we demonstrate that the influence was both statistically as well as economically significant finally we demonstrate that our result is robust with respect to the omission of the ida country performance rating index

does the fisher effect apply in australia the fisher hypothesis claims that changes in the expected inflation rate will be fully reflected in nominal interest rates and hence that real interest rates will remain constant over time evidence with australian data from 1965 to 1990 suggests that the fisher effect does not hold in the long run analysis is performed using recently developed econometric techniques which take account of possible nonstationarity in the date attention is also given to the effects of financial market deregulation on interest rates

money talks supplementary financiers and international monetary fund conditionality what explains the changes in international monetary fund imf conditionality i argue that imf conditionality agreements are influenced by supplementary financiers the imf regularly relies on external financing to supplement its loans to countries facing payments imbalances as a result these supplementary financiers are able to exercise leverage over the imf and the design of its conditionality programs i consider the influence of one type of supplementary financier private financial institutions on imf conditionality conclusions are supported by a data set of 249 conditionality arrangements coded according to their terms and two case studies

reconsidering the political economy of farm animal welfare an anatomy of market failure abstract animal welfare is often cited as a classic public good which implies market failure and thus that government intervention is required however the current literature does not provide an accessible account of how governed markets are supposed to cope with the issues of animal welfare this paper seeks to fill this gap by re considering the political economy of animal welfare conceptual analysis shows that the major cause of market failure in the case of farm animal welfare is a problem of consumption externalities it is the specific regulation of animal welfare conditions which is a public good or bad two important conclusions follow from this analysis which are largely unexplored in the literature on animal welfare first measurement of potential market failure through identifying actual willingness to pay wtp for animal welfare friendly products is potentially misleading the difference between citizen votes and consumer wtp for animal welfare is not prima facie evidence for either market failure or a gap in the market second conventional arguments in favour of subsidies and assistance to producers for better animal welfare are misconceived and potentially counterproductive a more rational policy is to subsidise the consumption of animal welfare friendly products

further evidence on the fisher effect the strong form of the fisher hypothesis states that the nominal rate of interest fully adjusts to anticipated inflation weaker forms of the hypothesis identify circumstances where the nominal interest rate either overadjusts or underadjusts previous tests of the hypothesis using australian data and error correction techniques have found conflicting results vector autoregressive innovations are used to estimate the fisher equation and in general the strong form of the hypothesis is rejected in favour of underadjustment however the strong form of the hypothesis cannot be rejected in the period following deregulation of the financial system

the high politics of imf lending analysts have long suspected that politics affects the lending patterns of the international monetary fund imf but none have adequately specified or systematically tested competing explanations this paper develops a political explanation of imf lending and tests it statistically on the developing countries between 1985 and 1994 it finds that political realignment toward the united states the largest power in the imf increases a country s probability of receiving an imf loan a country s static political alignment position has no significant impact during this period suggesting that these processes are best modeled dynamically an analysis of two subsamples rejects the hypothesis that the imf has become less politicized since the end of the cold war and suggests that the influence of politics has actually increased since 1990 the behavior of multilateral organizations is still driven by the political interests of their more powerful member states

how much do decoupled payments affect production an instrumental variable approach with panel data how much decoupled payments such as direct payments in the u s affect agricultural production remains an open empirical question with implications for policy using data from multiple years of the census of agriculture we exploit a provision of the 2002 farm act that departed from previous policy by making oilseeds eligible for direct payments thus increasing payments to areas that historically produced more oilseeds our instrumental variable estimates in contrast to ols estimates suggest that changes in payments over the period 2002 to 2007 had little effect on aggregate production at the zip code level copyright 2012 oxford university press

dependency of organic farms on direct payments in selected eu member states today and tomorrow this paper examines the development of the role of government support in the financial situation of organic farms in selected western and eastern european countries contrasting dependency on direct payments with that of conventional farms and assessing the impact of foreseeable changes in the political and economic environment the results show that direct payments play an important role in the financial viability of organic farms in both western and eastern european countries the level of specific support for organic farming is put into perspective as other support payments and market returns contribute larger shares to total farm revenue in all the countries analysed modelling analyses show that support payments will continue to play an important role in the profitability of organic farms in western europe after implementation of the 2003 reform of common agricultural policy in the eu for organic farmers in eastern european countries the importance of support payments increases strongly with eu accession as first pillar payments are introduced and environmental payments are expanded significantly

economic determinants of imf financial arrangements abstract we analyze factors that lead to imf approval of financial arrangements we account for both economic variables that induce a country to seek an imf arrangement demand side factors and macroeconomic policy commitments that the imf considers when deciding whether to approve it supply side factors using a pooled sample of annual observations for 91 developing countries over 1973 1991 we obtain maximum likelihood bivariate and univariate probit estimates of the approval of an imf arrangement for a given country in a given year a number of demand side and supply side variables are statistically significant determinants of the approval of an imf arrangement

on us politics and imf lending abstract the political factors shaping imf lending to developing countries have attracted attention in recent empirical work this goes in particular for the role and influence of the us however scant formal modelling makes interpretation of empirical results difficult in this paper we propose a model in which the us acts as principal within the imf and seeks to maximize its impact on the policy stance of debtor countries we derive an optimal loan allocation mechanism which leads to the testable hypothesis that the probability of an imf loan is increasing in the amount of political concessions countries make a political concession is defined as the distance between a country s bliss point and its actual policy stance measured relative to the us we introduce a bliss point proxy and demonstrate that our hypothesis is strongly supported in the data moreover we show that not accounting for bliss points may lead to endogeneity bias in empirical work

national interests and the cap abstract development of the cap is heavily circumscribed by differing national interests reflecting the usual agricultural policy conflicts between different regional and sectoral interests but as a supranational policy with principles of community preference and common financing the cap also redistributes the burdens and benefits of agricultural support between member states the implications of these features of the cap with reference to specified alternative policies are explored and conclusions drawn the conflict between national and supranational interests is inadequately reflected to decision makers the single instrument of price support at a common level is inadequate to meet a mix of differing national objectives and the assumption that the common policy serves unification and integration of the community may be incorrect

judging agricultural policies a survey this survey provides a structured picture of 40 years of literature which uses welfare economic tools to judge agricultural policy challenges and developments of normative agricultural policy analysis are discussed in an easily accessible graphical framework it is shown how the literature has gone from examining a very small discrete set of simple policies to a much broader often continuous set of policies that combine policy instruments simultaneously the importance of the pareto criterion used to explore the limits of how government can affect welfare is revealed moreover given the importance of the objective of income redistribution in agricultural policy agricultural economists have often departed from the purely efficiency oriented tradition in economics it is shown that they have tried to incorporate equity considerations by either adding these criteria as constraints to the social welfare function or directly incorporating these criteria in the functional form of the social welfare function

imf lending programs participation and impact abstract participation in imf programs has been an option that more and more developing countries have exercised in recent years in this paper a detailed analysis of such participation over the period 1976 1986 provides a number of insights into the motivations for and the macroeconomic effects of such participation participation is driven by a combination of past performance present external influences and sluggish adjustment of developing countries the ability to predict which countries will participate in the imf program is quite good with nearly 90 percent of variation in such choices accounted for by the explanatory variables employed increased participation has as contemporaneous effects a reduction in economic growth and domestic investment and an improvement in the current account lagged effects of increased participation on economic growth and domestic investment are positive and in most estimates quantitatively greater than the contemporaneous effects there is also evidence of significantly lower public investment an increased budget surplus and real depreciation of the exchange rate with increased participation results for domestic credit creation and government current expenditure although they have a sign consistent with more austere policy cannot be shown to be significantly different from those not participating

fisher s paradox and the theory of interest irving fisher s theory of interest has proved to be a most durable and influential contribution to economic theory a central element of fisher s contribution is the fisher hypothesis that over the longer term the real rate of interest is approximately constant being determined largely by time preference with movements in the nominal interest rate reflecting movements in the rate of inflation one for one the paradox of the fisher hypothesis is that despite its wide acceptance as the cornerstone of interest rate theory most empirical evidence appears to be inconsistent with the hypothesis at least in its strictest form this empirical anomaly was noted by fisher himself who attributed it to money illusion in the fifty years following the publication of the theory of interest a considerable literature has evolved around this paradox the unifying theme of this literature is a common acceptance of the essence of fisher s hypothesis most of the energy in this literature has been devoted to explaining systematic movements in the real rate of interest and to providing reasons why the relationship between the nominal interest rate and inflation may only be approximate in

efficient redistribution through commodity markets efficiency in redistribution is measured in terms of deadweight loss generated per dollar of economic surplus transferred between consumers and producers of a commodity by means of market intervention the implications of supply and demand elasticities for efficiency in redistribution are examined with special attention to the comparison of production control and deficiency payment programs the results may be used to aid in the evaluation of commodity programs and as a basis for consideration of the hypothesis that observed policies are efficient given the political power of interest groups

is the pragmatic response to international monetary fund quotas and credit limits favourable under the international monetary fund imf s recently developed pragmatic response the amount a member can borrow is not determined by its quota we consider two pragmatic responses that produce a pareto improvement compared with the imf rule one mandated by the imf and the other related to the trade of the additional credit limit in the market both these responses indicate that the additional credit limit on top of the imf rule should be positive negative for a country whose investment return is larger smaller than the average investment return across all imf member developing countries the rule for the imf credit limit does not reflect the demand for credit which induces inefficiency the first pragmatic response which has an appropriately small negotiation and distribution cost per unit incurred by the imf may dominate the second one

phasing out of environmentally harmful subsidies consequences of the 2003 cap reform abstract subsidies linked to production have been classified as environmentally harmful by the oecd a core element of the eu 2003 common agricultural policy cap reform is to decouple income support from production this paper estimates the environmental consequences of this policy reform an agricultural sector model using a modified version of the positive mathematical programming method depicts the complex natural structural and political relationships of austrian farming changes in management measures can be analyzed with respect to their environmental effects by using appropriate indicators simulation results show that the 2003 cap reform will reduce the average cost of production and may improve environmental conditions regarding soil water and greenhouse gases when compared to a scenario without reform thus the new cap is likely to bring about outcomes which the previous reform agenda 2000 promised but did not deliver

technical efficiency of alternative farming systems the case of greek organic and conventional olive growing farms abstract olive growing is a major farming activity in greek agriculture this paper analyzes empirically the technical efficiency of organic and conventional olive growing farms using a stochastic production frontier methodology and a translog functional specification findings indicate that the organic olive growing farms examined exhibit a higher degree of technical efficiency relative to their production frontier than do conventional olive growing farms reasons may include lower profit margins and restrictions on inputs permitted thus forcing organic farmers to be more cautious with input use however both input and output oriented technical efficiency scores are still relatively low for both types of olive farming thus there is considerable scope for cost reducing and farm income improvement in both farming modes this could prove crucial for the long run viability and the future course of the sector

policy dependency and reform economic gains versus political pains economic analysis condemns market intervention in favour of farmers as inefficient and ineffective and therefore worthy of radical reform practical experience however indicates that such lessons are hard to learn and implement economic analysis tends to ignore the path dependencies generated by the policy evolution process without reform strategies that take full account of these dependencies policy reform will continue to be reluctant slow and frequently counterproductive this paper reconsiders the evolution of farm policies and the economic assessment of their costs and benefits in so doing it re phrases conventional economic arguments in terms which seem to accord better with sensible intuition which may prove more accessible and credible to policymakers and advisors the difficulties of reconciling economic efficiency with political acceptability are identified the paper concludes with a substantial challenge to the agricultural economics profession

the political economy of conditionality an empirical analysis of world bank loan disbursements abstract traditional aid conditionality has been attacked as ineffective in part because aid agencies notably the world bank often fail to enforce conditions this pattern undermines the credibility of conditionality weakening incentives to implement policy reforms the standard critique attributes this time inconsistency to bureaucratic factors within the aid agency such as pressure to lend defensive lending or short sighted altruism pressure from powerful donors provides another potential explanation for lax enforcement this paper presents an empirical analysis of the political economy of conditionality in international organizations using the case of the world bank and the united states the analysis examines panel data on world bank disbursements to 97 countries receiving structural adjustment loans between 1984 and 2005 using un voting as an indicator of alignment with the u s the paper presents evidence that world bank structural adjustment loan disbursements are less dependent on macroeconomic performance in countries aligned with the united states

explaining price policy bias in agriculture the calculus of support maximizing politicians a model is developed to explain observed patterns of policy intervention in agriculture we analyze the interaction between political support seeking politicians and supportsupplying citizens society consists of a rural and urban group we determine the effects on transfers of relative group size disparities in income endowments between groups and the deadweight loss of redistribution the framework advanced is an alternative to that of the interest group model and is used to explain for example why the export sectors in developing countries are taxed more and why the united kingdom is less adamant for higher price supports than germany

unit roots and persistence in the nominal interest rate a confirmatory analysis applied to the oecd this paper investigates the stochastic properties of long term and short term nominal interest rates for the oecd over the post war era for that purpose we employ univariate unit root tests as well as panel unit root and stationarity tests that explicitly allow for cross sectional dependence overall we find overwhelming evidence that the nominal interest rate contains a unit root which may be driven by a stochastic common factor the computation of half lives through impulse response functions also points to a high degree of persistence this has important implications for the cointegration analysis of the fisher equation the uncovered interest parity and the term structure jel classification

the impact of coupled and decoupled government subsidies on off farm labor participation of u s farm operators with the 1996 farm act the united states introduced payments that were designed to be decoupled labor allocation choices are likely to be affected by receipt of payments and income from off farm jobs has been the major source of income for most farm households for sometime this article examines whether the 1996 change has affected the off farm labor participation of farm households we conclude that the observed increase in off farm participation of farm operators who received payments was not the result of the 1996 policy change government payments whether coupled or decoupled have a negative effect on off farm labor participation

will farmers trade profits for stewardship heterogeneous motivations for farm practice selection we investigate the trade off agricultural producers face between profits and stewardly activities when selecting farm practices instead of the profit maximization framework we model producer behavior in an expanded utility framework built on production technology and including two utility components self and social interests the framework introduces inherent heterogeneity and social environmental motivations into farmer behavior based on this model we hypothesize that there are farmers that are willing to forego some profit to engage in stewardly farm practices with an empirical study we provide evidence that some farmers are willing to make this sacrifice results are consistent with the multi utility hypothesis

capacity utilisation and profitability a decomposition of short run profit efficiency the principal aim of this paper is to measure the amount by which the profit of a multi input multi output firm deviates from maximum short run profit and then to decompose this profit gap into components that are of practical use to managers in particular our interest is in the measurement of the contribution of unused capacity along with measures of technical inefficiency and allocative inefficiency in this profit gap we survey existing definitions of capacity and after discussing their shortcomings we propose a new ray economic capacity measure that involves short run profit maximisation with the output mix held constant we go on to describe how the gap between observed profit and maximum profit can be calculated and decomposed using linear programming methods the paper concludes with an empirical illustration involving data on 28 international airline companies the empirical results indicate that these airline companies achieve profit levels which are on average us 815m below potential levels and that 70 of the gap may be attributed to unused capacity

interactions between cap agricultural and agri environmental subsidies and their effects on the uptake of organic farming we analyze the effects of the interactions that the two pillars of the european union common agricultural policy market support and rural development have on farmers uptake of organic farming practices special attention is given to the 2003 reform which substantially altered the relative importance of the two types of support by decoupling direct agricultural payments from the production of a specific crop in our empirical analysis we study the case of sweden making use of the variation in the timing of farmers decisions regarding participation in support programs we estimate a dynamic non linear unobserved effects probit model to account for unobserved individual heterogeneity and state dependence our results indicate the existence of a negative effect of the market support system in place when organic farming techniques were adopted before the 2003 reform however this effect is reversed by the introduction of decoupling furthermore the effects of support differ between certified and non certified organic production both pillars have significant effects on non certified organic farming whereas certified organic farming is exclusively driven by agro environmental subsidies

trend breaks and the fisher hypothesis in canada and the united states using the sequential estimation methodology developed by banerjee lumsdaine and stock journal of business and economic statistics 10 3 271 87 1992 zivot and andrews journal of business and economic statistics 10 3 251 70 1992 and extended by lumsdaine and papell review of economics and statistics 79 2 212 18 1997 empirical evidence is found consistent with the hypothesis that the 90 day treasury bill rate and the inflation rate in canada and the us are stationary around a deterministic trend with two breaks when the breaks are filtered out the data is consistent with partial long run adjustment of the nominal interest rate to an inflation shock but not of the size predicted by the fisher effect

agri environmental relationships and multi functionality further considerations multi functionality is a currently fashionable argument especially within the eu for continued support of the farming sector however there is a substantial danger that this will be used and be seen to being used as a facade for continued traditiona l support and protection if so the current trend towards liberalised agricultural markets on which much of the developing world depends will be frustrated nevertheless farming does matter to many communities over and above its marketable surplus and the incomes so generated it follows that any negotiations aimed at liberalising agricultural trade have to take these arguments seriously to do so requires that the critical elements of the debate be widely understood this paper outlines these critical elements in the light of a previous contribution from hodge 2000 it argues that there are ways in which quasi market systems can be used to correct market failures implicit in the notion of multi functionality it also argues that proper compensation to existing supported farmers is a necessary and separate condition for sensible policy reform much of the commentary on farm trade liberalisation confuses the two separate conditions for reform multi functionality and compensation this confusion threatens progress towards agricultural trade liberalisation without generating any reliable benefits of a more multifunctional agriculture

co integration error correction and the fisher effect 1989 co integration error correction and the fisher effect applied economics vol 21 no 12 pp 1611 1620

fisher hypothesis in japan analysis of long term interest rates under different monetary policy regimes this paper investigates the validity of the fisher hypothesis in japanese long term interest rates two three four five seven and ten years using non stationary time series models initially the entire sample period october 1987 june 2006 is investigated then the samples divided into three segments depending on each period s monetary policy regimes are investigated thus the asymmetric impacts of inflation expectation on japanese long term interest rates can be investigated the first period examined is from october 1987 june 1991 the second period is from july 1991 july 2000 the third period is from march 2001 june 2006 in the first period monetary policy is tightening but in the second and third periods it is easing thus it is concluded that the fisher hypothesis is valid only in all maturities of long term interest rates in the first period however it does not hold in any of the maturities in the entire sample period or in the second and third periods

farmers adoption of integrated crop protection and organic farming do moral and social concerns matter we investigate empirically the role of moral and social concerns in farmers decision to adopt integrated crop protection ip and organic farming of a survey questionnaire has been sent to 1286 fruit growers and vegetable producers located in the french areas of alpes de haute provence hautes alpes and vaucluse analysis of individual responses n 243 shows that although economic concerns play a strong role a significant number of respondents give high importance to moral and social ones we also examine how these considerations matter according to different crop protection strategies that is conventional farming ip and of using a multinomial logistic regression we find that 1 social concerns e g showing to others one s environmental commitment drive both ip and of adoption 2 moral concerns e g do not feel guilty about one s choices increase the probability of organic farming adoption only and 3 farmers who give high importance to economic concerns e g cutting production costs are less likely to adopt of

long and short run fisher effects new tests and new results we find fisher effects both long and short run in our full sample period and in the lengthy first sub period using mishkin s monthly data for treasury bill yields and the corresponding inflation rate recently developed cointegration techniques ahn and reinsel 1990 reinsel and ahn 1992 are used to detect a long run fisher effect the short run effect is analysed within a cointegration framework using a granger causality test that we developed in the two more recent but comparatively short sub periods since october 1979 our results indicate the fisher effect is not present in either long or short run form these methodologies and results differ from the conclusions of mishkin s 1992 recent study

the development of and prospects for organic farming in the uk abstract the organic sector in the uk is booming with the largest ever wave of farm conversions underway consumer demand is currently growing faster than supply the evidence regarding the factors that have been critical now and in the past in causing producers to establish organic systems is reviewed this review draws on the authors own work as well as that of other researchers in europe and the usa in the second part of the paper we report on a recent study of the factors that prompt organic producers to abandon registered organic production this analysis is based on a survey of producers formerly registered with the soil association who have left the scheme since 1990 finally the paper considers the current policy regime with respect to organic farming the scope for the continued growth of the sector and the debate regarding the design of future policy