the economic role of jumps and recovery rates in the market for corporate default risk using an extensive cross section of u s corporate credit default swaps cdss this paper offers an economic understanding of implied loss given default lgd and jumps in default risk we formulate and underpin empirical stylized facts about cds spreads which are then reproduced in our affine intensity based jump diffusion model implied lgd is well identified with obligors possessing substantial tangible assets expected to recover more sudden increases in the default risk of investment grade obligors are higher relative to speculative grade the probability of structural migration to default is low for investment grade and heavily regulated obligors because investors fear distress rather through rare but devastating events

implementation of food distribution policies a case study in south india abstract public policy for foodgrains distribution and consumption in coimbatore district of south india involves processing through state trading institutions and distribution through fair price shops food for work and employment guarantee schemes policies are evaluated in terms of their objectives and institutions for the implementation of policy are analysed in terms of the way in which they mobilize and distribute resources foodgrains capital and labour although this deficit district has captured shares of tamil nadu state s publicly distributed grain which are disproportionate to its share of the state s vulnerable population nevertheless schemes to increase the latter s foodgrain consumption have been patchily implemented over space and time and they have had little measurable impact on intended beneficiaries

the financial accelerator and monetary policy rules abstract comparing bernanke et al s 1999 financial accelerator model to a comparable model without an operational financial accelerator mechanism we find that financial acceleration is reduced when monetary policy reacts to the output gap and when firm specific volatility rises

the asymmetric behavior and procyclical impact of asset correlations abstract this paper examines the behavior of asset correlations with the market returns in the asymptotic single risk factor asrf approach of the basel ii accord on regulatory capital requirement over a sample period from 1988 to 2007 we find that asset correlations are positively related to firm size but negatively related to firm default probability asset correlations are also industry specific as firms in media transportation pharmaceutical and semiconductor industries exhibit higher asset correlations than those in retail and consumer staples most importantly asset correlations are asymmetric and have a procyclical impact on the real economy after controlling for these effects they tend to rise during economic downturns but decline during economic upturns the average magnitude of the rise is larger than that of the decline these findings suggest that asset correlations may be underestimated during economic downturns and may provide policy implications for the capital requirement framework

credit risk drivers evaluating the contribution of firm level information and of macroeconomic dynamics abstract understanding if credit risk is driven mostly by idiosyncratic firm characteristics or by systematic factors is an important issue for the assessment of financial stability by exploring the links between credit risk and macroeconomic developments we observe that in periods of economic growth there may be some tendency towards excessive risk taking using an extensive dataset with detailed information for more than 30 000 firms we show that default probabilities are influenced by several firm specific characteristics when time effect controls or macroeconomic variables are also taken into account the results improve substantially hence though the firms financial situation has a central role in explaining default probabilities macroeconomic conditions are also very important when assessing default probabilities over time

fire sales and the financial accelerator abstract during financial turmoil increases in risk lead to higher default foreclosure and fire sales this paper introduces a costly liquidation process for foreclosed collateral and pro cyclical recovery rates in a dynamic stochastic general equilibrium model of the financial accelerator links between endogenous recovery rates risk premia and default risk generate a liquidity spiral magnifying financial accelerator effects we illustrate how collateral liquidation and monetary policy alter the real impact of financial shocks operating through macro financial linkages and the way a government subsidy on collateral liquidity and required liquidity buffers can help dampen the liquidity spiral by shoring up recovery rates

the role of agriculture and its prerequisites in economic development a vision for foreign development assistance abstract the aim of this paper is to establish a vision for foreign development assistance based upon the evolution of thought and empirical evidence found in the development literature the paper spotlights the agricultural led approach the empirical record shows that agricultural growth had a more pronounced impact on increases in developing country income than did growth in the nonagricultural sector the reason for the differential impact is that developing countries focusing on agricultural development experienced more broad based income growth and increases in the demand for domestically produced goods whereas the developing countries promoting rapid industrialization experienced narrow based income growth with a demand pattern oriented toward nonfood and capital intensive products a precondition for agriculture to play its proper role is the existence of a conducive environment in which private enterprise can flourish developing country governments need to assume responsibility for the creation and maintenance of essential institutions government investments are required in education infrastructure and other areas where the commercial market is not capable of delivering critical services finally governments must responsibly manage the macroeconomy pursuing sustainable pricing policies and fiscal and monetary policies that are consistent with real equilibrium exchange rates

ethiopia food for work or food for relief abstract this article examines the aims context and experience of food aid projects in ethiopia the major focus is a case study of an ethiopian food for work project the largest in sub saharan africa and favourable conclusions are drawn factors are identified which have made for this apparent success since one factor is local food shortage consideration is also given to the proposition that the concept of relief aid needs a wider definition than heretofore

guaranteeing employment to the rural poor social functions and class interests in the employment guarantee scheme in western india abstract numerous observers rightly term the landless rural population the most intractable development problem in poor societies given the extraordinary political and administrative obstacles to redistrubution of rural assets in india the widely recognized failture land reforms attention and finances have recently been focused on public rural employment programmes to alleviate rural distribution within india the state of maharashtra with a size and population of a large european nation has instituted a striking departure from traditional rural works programmes a guarantee of employment to rural adults on demand the employment guarantee scheme in one state has since become a significant policy model and the experience in that state provides something like a laboratory for its analysis based on analysis of previous studies and original field work in rural maharashtra the article argues that the scheme is something of a rare bird a programme which seems to be in the objective and subjective interests of the rural poor as well as consistent with the interests of the rural landed elite despite their early political objections the fiscal structure of the scheme is a direct contradiction of lipton s 1977 model of urban bias in third world development strategies the employment guarantee scheme is rather more a manifestation of kulak power though promulgated as an alternative to policies entailing redistribution of rural assets and clearly superior to doing nothing about rural distribution the scheme is inferior to genuine redistribution in terms of altering the rural political economy the functions if not the motivations of the scheme are profoundly conservative in a structural sense politically and economically the philosophical underpinnings and perhaps potentially the consequences for mobilization of the rural poor are quite the opposite

rural public works and food for work a survey abstract there are three separate strands to the debate on food for work first issues concerning labor intensive public works more generally in particular the tension between short run employment creation income generation and the size and distribution of the longer term income stream second how useful is food as a wage good in rural works overall generalizations as to the superiority of cash as against wages in kind are not sustainable third is food aid an appropriate resource to support rural works the relative success over the past decade of major schemes in south asia with food widely used as wage good justifies a reassessment of the potential of rural works both as food security mechanism and in expanding employment of disadvantaged groups in a situation of widespread structural underemployment less satisfactory longer term income distributional and asset generating impact of such schemes must remain a serious source of concern the impact of food aid to rural works appears more problematic in sub saharan africa scope exists for more flexible and innovative use of this resource

reconciling food for work project feasibility with food aid targeting in tigray ethiopia abstract food for work ffw projects face the challenge of addressing three kinds of objectives to feed hungry people to build public works where needed and to be feasible for prompt project implementation in the debate over how to target ffw to the poorest of the poor the last two program objectives are often overlooked this research examines ffw afforestation and erosion control programs in central tigray ethiopia during 1992 95 in order to understand how these sometimes conflicting objectives were reconciled statistical analyses examined the factors that influenced 1 in which villages ffw projects were located 2 which households were deemed eligible to participate in ffw in those villages having ffw projects and 3 which eligible households elected to participate and 4 how much time the participating households dedicated to ffw activities project feasibility outweighed the needs for food security or natural resource conservation in influencing whether an ffw project would be located in one of the 25 villages surveyed in villages where ffw was available anti poverty targeting appears to be taking place since smaller households with less land were more likely to be eligible to participate in ffw projects but although the poor were likely to be eligible for ffw some non poor households were also eligible which suggests that anti poverty targeting was not efficient among households eligible for ffw those that were relatively better off larger families that did not lease out land tended to participate and supply more days of ffw labor than the poorest households the only households eligible for ffw which did not participate were headed mostly by elderly women and hence unable rather than unwilling to participate overall anti poverty targeting was sub optimal but reasonable considering that these resource conservation projects need to be located where labor and materials could be made available

user industry spinouts downstream industry knowledge as a source of new firm entry and survival recent scholarship on entrepreneurship suggests that the pre entry know how of start ups embodied in their founders affects not only entry but also performance although prior work focuses on new entrants from the focal industry i e employee spinouts and academic organizations i e university spinoffs this study identifies and examines a hybrid category of start ups from downstream user industries which we call user industry spinouts we draw from the literature on evolutionary theory user innovation and industrial dynamics to propose that given the unique combination of knowledge inherited by these entrants their choices at entry and their ability to survive in the focal industry will differ with respect to other start ups we do this by extending existing work on new firm creation to investigate entry and performance in different product markets our findings based on a dataset of start ups in the semiconductor industry over a 10 year period 1997 2007 show that user industry spinou

economic reform and armed conflict in mozambique abstract this paper discusses the evolution of the mozambican economy in the 1980s particular emphasis is placed on the effects of the policy reform package implemented by the government beginning in 1987 this reform centered around the restoration of economic incentives to the agricultural sector is an example of a structural adjustment package pursued under extremely adverse conditions the new strategy has yielded some favorable results but also illustrates some of the limits of price policy in sub saharan africa

default recovery rates and aggregate fluctuations abstract default recovery rates in the us are highly volatile and pro cyclical we show that state of the art models with a bernanke gertler gilchrist financial accelerator mechanism imply that recovery rates are flat over the cycle we propose a model where financially constrained entrepreneurs face an idiosyncratic cost of redeploying liquidated capital the resulting endogenous liquidation costs magnify the effect of the financial accelerator we fit the model to us data and find that it explains a substantial amount of variation in recovery rates including their sharp contraction at the onset of the great recession our mechanism delivers a more flexible relationship between credit spreads and macroeconomic variables and leads to novel policy implications about the effectiveness of subsidies for liquidated assets

technological change rediscovering the engine of productivity growth in china s rural economy abstract this paper focuses on measuring the relative importance of the role of technology versus that of institutional innovation in china s rural economy a six equation rice sector model explaining provincial level technology adoption yield and factor demand are econometrically estimated using data from china s 13 rice growing provinces for the period 1975 1990 growth decomposition analysis identifies technology adoption as the most important determinant of rice yield growth during 1978 1984 accounting for nearly 40 percent the change institutional reform accounted for 35 percent of the growth in 1985 1990 technology accounts for all of the increase in rice yields the study demonstrates earlier studies may have over estimated the impact of decollectivization

economic efficiency and supply response of women as farm managers comparative evidence from western kenya summary this paper assessed the relative economic efficiency and output supply and input demand responses of women farmers in western kenya the results showed that women are as technically and allocatively efficient as men however neither men nor women have absolute allocative efficiency women farmers are equally responsive to price incentives in terms of output supply and input demand while education and extension contact have significant effects on overall maize supply and input demand only extension contact has significant effects among women farmers the paper discusses a number of significant results and concludes with implications for policy

analyzing the impact of credit migration in a portfolio setting abstract credit migration is an essential component of credit portfolio modeling in this paper we outline a framework for gauging the effects of credit migration on portfolio risk measurements for a typical loan portfolio we find credit migration can explain as much as 51 of volatility and 35 of economic capital we compare through the cycle migration effects implied by agency rating transitions with point in time migration implied by edf expected default frequency transitions and find that migration of point in time credit quality accounts for a greater fraction of total portfolio risk when compared with through the cycle dynamics in a stylized analytic setting we show that when controlling for pd term structure effects higher likelihood of moving away from the current credit state does not necessarily imply greater risk finally we review methods for generating high frequency transition matrices needed for analyzing instruments with cash flows or contingencies whose frequencies are asynchronous to an available transition matrix we further demonstrate that the naive application of such methods can result in material deviations to portfolio analytics

technological innovation in canada a comparison of independent entrepreneurs and corporate innovators abstract this paper compares a sample of 124 independent high technology entrepreneurs with 112 corporate entrepreneurs intrapreneurs involved in developing and introducing high tech innovations across canada the study investigates the general management and technical problems faced by these entrepreneurs and contrasts their approach to such issues as market research financing and production the approaches used by the two groups in analyzing their markets and in planning and financing of innovations are compared and contrasted in general the independent entrepreneurs were technically trained usually possessing engineering training but no general management training or experience neither themselves nor members of their management team corporate entrepreneurs were as likely to come from management backgrounds as technical or else supported their lack of general management skills by adding people to their team with skills in marketing finance and manufacturing their problems were more often defending their ideas to management within the corporation obtaining funding and other resources within the firm and finding a corporate mentor to assist them in such areas as fighting political battles providing rewards and incentives for team members and creating the proper overall environment or culture for innovation within the corporation the lack of general management training and experience by the independent entrepreneurs led them to rate various marketing problems as the most serious difficulties in rating the obstacles to launching their innovations the innovations of the independent entrepreneurs were all new products while some of the corporate innovations were new systems or processes often installed within the corporation so the markets for these innovations were also within the corporation and required less of a marketing effort corporations were also much better prepared to handle problems in the marketing planning and operational areas but they had more problems of an interpersonal nature such as the unwillingness to consider alternative approaches the most significant difference in the obstacles encountered was that independent entrepreneurs listed their five most important problems as marketing difficulties in launching their new products corporate entrepreneurs also rated imperfect market analysis as their most important problem but it was closely followed by the lack of entrepreneurial talent within the company these obstacles lead to the primary recommendation of cooperative agreements of partnerships between large and small firms to solve some of these difficulties corporate responses indicated significant difficulty in gaining support within the corporation while independent entrepreneurs did not have to justify their efforts to a corporate hierarchy

forecasting bank loans loss given default abstract with the advent of the new basel capital accord banking organizations are invited to estimate credit risk capital requirements using an internal ratings based approach in order to be compliant with this approach institutions must estimate the loss given default the fraction of the credit exposure that is lost if the borrower defaults this study evaluates the ability of a parametric fractional response regression and a nonparametric regression tree model to forecast bank loan credit losses the out of sample predictive ability of these models is evaluated at several recovery horizons after the default event the out of time predictive ability is also estimated for a recovery horizon of 1 year the performance of the models is benchmarked against recovery estimates given by historical averages the results suggest that regression trees are an interesting alternative to parametric models in modeling and forecasting loss given default

alternative bankruptcy prediction models using option pricing theory abstract we examine the empirical properties of the theoretical black scholes merton bsm bankruptcy model we evaluate the predictive ability of various existing modifications of the bsm model and extend prior studies by estimating volatility directly from market observable returns on firm value we show that parsimonious models using our direct market observable volatility estimate perform better than alternative more sophisticated models our findings suggest the adoption of simpler modelling approaches relying on market data when implementing the bsm model

global growing area elasticities of key agricultural crops estimated using dynamic heterogeneous panel methods we estimate the short and long run global response of corn soybeans wheat and rice growing areas to output price changes allowing responses to vary across countries using methods from the panel time series literature our estimates of growing area response are considerably lower than estimates obtained using more traditional models previous findings appear biased due to the assumption of homogeneous response across countries our aggregate estimates of short and long run elasticities of four crop growing areas with respect to average price are 0 024 and 0 143 respectively crop specific results indicate that both corn and soybean growing areas are generally more responsive than wheat and rice for corn and soybeans the long run own price growing area elasticities are 0 274 and 0 793 respectively the long run own price elasticities for wheat and rice are 0 279 and 0 045 respectively the short run own price elasticities for corn and soybeans are 0 133 and 0 199 respectively which are higher than wheat 0 037 and rice 0 00001

the effects of a large discrete maize price increase on the distribution of household welfare and poverty in rural kenya1 this study estimates the effects of a large discrete maize price increase on the welfare of a sample of rural kenyan households the usual first order welfare approximation formula is extended to a second order formula that allows for supply and demand responses to the price change results show that many rural households are not affected greatly by the price change and there are about as many gainers as losers however these full sample results mask important differences across regions welfare gains generally take place in major production areas while losses are in areas where most households are net buyers of maize semiparametric methods are used to investigate the relationship between income and the size of the welfare effect and poverty dominance techniques are applied to study the impacts of the maize price increase on rural poverty

repatriation of debt in the euro crisis with the beginning of the euro crisis the long standing trend of european financial integration reversed investors unwound cross border positions of debt obligations and increased holdings of locally issued debt in other words debt obligations were repatriated we use data on bank portfolios to document three new empirical regularities of the financial disintegration i repatriation affected mainly debt of crisis countries ii repatriation affected mainly public debt iii the public debt of crisis countries that was not repatriated was reallocated to large and politically influential countries within the euro area we read these results in light of standard theories of cross border portfolio allocation and argue that the sum of these patterns constitutes evidence for the secondary market theory of public debt

assessing venture capital investments with noncompensatory behavioral decision models abstract this article examines the prospect of a decision support system for the assessment of venture capital investments it approaches the task of developing decision models from the perspective of the venture capitalist thus venture capitalists have played an active role in defining the predictor variables and in providing data on their own investments venture capitalists and recent research underscore the importance of the entrepreneur in new ventures and the predictor variables selected reflect this bias the literature is now replete with studies demonstrating the superiority of multiattribute actuarial models over human judgment for diverse decision environments ranging from medical science to finance this class of behavioral decision models consists of the simultaneous consideration of several attributes relevant to a decision actuarial models of this kind can be applied to attribute and decision data based on the decision maker s judgments i e expected outcomes before the events transpire termed judgment based models they can also be applied to data on past events or actual outcomes where known termed environment based models again it needs to be emphasized that actuarial models whether based on the decision maker s judgments or on the environment usually outperform the decision maker these general principles are applied here among actuarial models a particular subclass of models is called noncompensatory in these models a low value for one attribute cannot be compensated by a high value for another attribute as an example in selecting a place kicker in football athletic skills other than kicking ability are irrelevant in this study two types of noncompensatory actuarial models conjunctive and disjunctive are used to model both venture capitalists judgments and the environment interviews with venture capitalists reveal that some place strong emphasis on one or two attributes in judging a potential investment this type of decision making behavior indicates a disjunctive decision process at the same time there can be a tendency to ensure that a prospective investment is satisfactory at a minimum the entrepreneur s tenacity courage is a redundant variable that is sublimated in desire for success and enthusiasm capacity for work

agricultural supply response a survey abstract this paper surveys the literature on agricultural supply response to prices in developing countries empirical estimates of elasticities depend both on the methodology adopted and on country specific factors relating to technology economic structure and macro constraints the paper seeks to establish some general conclusions on supply responsiveness within these limitations supply response to output prices at the aggregate and at the crop levels is considered first crop specific acreage elasticities range between zero and 0 8 in the short run while long run elasticities tend to be higher between 0 3 and 1 2 yield elasticities are smaller and less stable than acreage elasticities clearly inter crop pricing can be relied upon to effect shifts in the commodity composition of agricultural output evidence also suggests that supply elasticities vary systematically with such factors as price and yield risks multiple cropping the importance of the crop farm incomes farm size tenancy and literacy the most controversial and important aspect of supply response is the effect on aggregate agricultural output of agriculture s terms of trade conventional time series estimates range from 0 1 to 0 3 a major cross country study reports an aggregate elasticity as high as 1 66 it is argued that cross country estimates are apt to exaggerate aggregate responsiveness while time series studies underestimate it somewhat for ldcs a tentative range of 0 4 to 0 5 seems plausible hence the distributive effects of the terms of trade are likely to be more significant than the allocative effects asian evidence shows that only a third of the inter country differences in fertilizer use can be attributed to fertilizer price policies provided new technologies and infrastructure are in place fertilizer subsidies can help in technology diffusion and in over coming credit constraints the choice between price supports and input subsidies will depend on a variety of country or situation specific factors nevertheless a significant general factor favoring price supports is that they can more easily be coupled with price stabilization goals than input subsidies though sparse the available evidence on the response of marketed surplus suggests that price policy is not a reliable instrument for regulating inter sectoral trade

corporate failure prediction in the european energy sector a multicriteria approach and the effect of country characteristics this study examines the development of corporate failure prediction models for european firms in the energy sector using a large dataset from 18 countries the construction of the models is based on a multiple criteria decision aid mcda approach taking into account both ordinal criteria and nominal country sector effects the analysis is based on different modeling specifications first traditional financial variables are examined which are then extended with additional country level data related to the economic and business environment as well as data about the energy efficiency policies of the countries and the characteristics of their energy markets and networks the results indicate that energy related attributes have high discriminating power and add valuable information compared to the other attributes

cyclicality in losses on bank loans based on unique data we show that macro variables the default rate and loss given default of bank loans share common cyclical components the innovation in our model is the distinction between loans with either severe or mild losses the variation in the proportion of these two types drives the cyclic behavior of the loss given default and constitutes the links with the default rate and macro variables these links vary according to loan and borrower characteristics during downturns the proportion of defaults with severe losses increases but the distribution of losses conditional on their being mild or severe does not change although loans are monitored more closely than bonds and are more senior the cyclical variation in their losses resembles those for bonds albeit around a lower average level this variation leads to an increase in the capital reserves required for loan portfolios

a dynamic perspective of internal fit in corporate venturing abstract managers of corporate parents and their ventures have long been faced with the question of how closely to tie the parent and venture a close connection may enable a venture to capitalize on the competencies and resources of the parent however venture autonomy could prevent corporate inertia and bureaucracy from constraining venture growth the lack of consensus on this issue leads us to the first of two complementary research questions that we address in this paper what is the effect of internal strategic fit between a corporate parent and its venture on venture performance we suggest that a tight fit is positively associated with venture performance because of the venture s access to its parent s resources managers and researchers alike have often observed that growing enterprises are dynamic entities in the case of corporate ventures this implies that the relationship between parent and venture evolves over time our second research question directly addresses this issue by asking does the relationship between a corporate parent and its venture s evolve over time and if so how we identify two dimensions of the fit between corporate parents and their ventures relational and economic a relational fit reflects organizational culture and structure while an economic fit is a function of the needs of the venture and the resources of the parent we develop a series of hypotheses and test them with survey data from 97 canadian corporate ventures for the purposes of this study we define success as the ability of a firm to meet internal milestones on schedule we find that the degree of fit between a corporate parent and its venture does affect the success of a venture and that success is associated with high levels of awareness commitment and connection further the relational dimension of the parent venture interface appears to have a greater association with venture success than does the economic dimension our data support the idea that the parent venture relationship is dynamic in nature as ventures in our sample generally lessened their economic connections with their parents as they matured or vice versa we did find however that the relational bonds remained more or less intact the exceptions to these general trends were an increasing emphasis on financial targets along with decreasing ceo involvement as ventures matured both of these findings make intuitive sense greater financial independence is accompanied by greater financial accountability and as a venture gains in both independence and accountability there is less need for the ceo to provide air cover these two issues aside the basic model of enduring relational ties and diminishing economic ties was supported as well the increasing accountability is consistent with our expectation that a close connection is preferable to high venture autonomy

modeling the loss distribution in this paper we focus on modeling and predicting the loss distribution for credit risky assets such as bonds and loans we model the probability of default and the recovery rate given default based on shared covariates we develop a new class of default models that explicitly accounts for sector specific and regime dependent unobservable heterogeneity in firm characteristics based on the analysis of a large default and recovery data set over the horizon 1980 2008 we document that the specification of the default model has a major impact on the predicted loss distribution whereas the specification of the recovery model is less important in particular we find evidence that industry factors and regime dynamics affect the performance of default models implying that the appropriate choice of default models for loss prediction will depend on the credit cycle and on portfolio characteristics finally we show that default probabilities and recovery rates predicted out of sample are negatively correlated and that the magnitude of the correlation varies with seniority class industry and credit cycle this paper was accepted by wei xiong finance

third world development food employment and growth interactions over the next few decades an unprecedented number of people and proportion of the world s population will reside in countries passing through a development phase in which domestic demand for food grows at a high rate relative to domestic production of food that phase is described by high per capita income growth rates in a context of low base incomes and rapid population growth in this phase the innate difficulty for food production growth rates to keep pace with demand growth is enhanced by the still immature system for shifting agricultural supply schedules which is characteristic of this relatively early stage of economic growth a substantial proportion of the population now experiencing accelerating economic growth falls in countries which derive a major portion of income from exports of oil but increasingly the source is greater resource productivity through economic development and technological change the latter is the result of the past few decades of concentrated effort to lay the institutional and physical infrastructure of a modern economic system rising real food prices caused by greatly accelerated growth in demand for food will tend to restrain growth in developing countries and increase relative and absolute poverty the extent of real price increase for food will be substantially determined by the rate of technological change and supply elasticity in developed countries this is because in the eveloping countries says law tends to operate in the market for food and so accelerated growth in food production tends to create a roughly commensurate or even greater increase in demand for food in this context it becomes economic for developing countries to place a greater emphasis on agricultural production in their development strategies than was justified in earlier decades success in such an effort will diffuse the benefits of growth more widely than alternative strategies and will even accelerate growth if as has often been the case previous emphasis on agriculture was suboptimal for the earlier conditions thus over the next decade the economic pressures on the food front may well have a salutary effect on the pace and pattern of development

worldwide acreage and yield response to international price change and volatility a dynamic panel data analysis for wheat rice corn and soybeans this study estimates a worldwide aggregate supply response for key agricultural commodities namely wheat rice corn and soybeans by employing a newly developed multi country crop and calendar specific seasonally disaggregated model with price changes and price volatility applied accordingly the findings reveal that although higher output prices serve as incentives to improve global crop supply as expected output price volatility acts as a disincentive depending on the crop the results show that own price supply elasticities range from about 0 05 to 0 40 output price volatility however has negative correlations with crop supply implying that farmers shift land other inputs and yield improving investments to crops with less volatile prices simulating the impact of price dynamics since 2006 we find that price risk has reduced the production response of wheat in particular and to a lesser extent rice thus dampening price incentive effects the simulation analysis shows that the increase in own crop price volatility during the 2006 2010 period has dampened yield by about 1 2 for the crops considered

the potential benefits of herbicide resistant transgenic rice in uruguay lessons for small developing countries abstract in many developing countries the potential benefits from adopting a transgenic variety developed by a multinational corporation are limited by the crop s small production base this paper presents an ex ante evaluation of the economic impact of herbicide resistant transgenic rice in a small developing country uruguay to fully account for the multinational s market power the firm s seed markup is assumed to affect the adoption rate for the variety stochastic simulation techniques are employed to understand how potential benefits may vary with changes in technology yield costs and adoption parameters the results indicate a 1 82 million mean net present value for producers from the development and utilization of transgenic rice in uruguay and 0 55 million for the multinational these relatively small multinational firm benefits suggest that a firm will not undertake significant efforts to develop transgenic varieties adapted to local conditions without either strategic partnerships with local institutions or access to wider regional markets

facilitators of organizational innovation the role of life cycle stage abstract one of the most serious challenges facing an entrepreneurial company particularly a high technology firm is knowing how to manage innovation as the organization evolves macro level facilitators inhibitors of innovation i e organizational and environmental conditions of a firm that promote or restrain innovation such as the structure of an organization its incentive system resources provided by its environment or its ways of analyzing firm external information and their relationship to the innovativeness of the firm are considered in this study two basic arguments have been put forward previously as to why the innovativeness of an organization may change as it evolves first it has been suggested that facilitators of innovation change over time and so will firm innovativeness that is the relationship between the facilitator and innovation stays unchanged but the facilitator itself is transformed causing changes in firm innovativeness as it develops for instance it has been suggested that mature firms become less innovative because their structure becomes overly formalized to perform other functions more efficiently which then stifles innovative processes second other researchers have proposed that the relationship between a facilitator and innovation changes as firms evolve for instance a formal structure may support innovation in a younger firm because it allows the entrepreneur to focus her energy whereas it may suppress innovation later since it inhibits an innovator s interaction with other environments the results of our analysis using data from 326 u s firms in different stages of their development and involved in many kinds of high tech industries support the second theory however the results for the relationships of the individual facilitators to innovation were not always as expected we found that formally structured young firms were less innovative than informal ones and that in older organizations formalization had no negative impact on innovation this finding possibly can be explained with micro level facilitators of innovation younger firms may have more entrepreneurial personnel whose ability for innovation is more inhibited through a formal structure than the more seasoned employees in older larger firms however this finding implies that the concern for formal structures with respect to firm innovativeness does not necessarily apply as typically assumed of similar significance was our finding with respect to the relationship between financial incentives and innovation it has been suggested that younger rather than older firms use incentives such as equity to encourage an innovative environment results of this research however show that innovation is associated with stock incentives especially in older firms this may be an indication for older firms to use differentiated incentives that reflect the individual s contribution to the firm to retain innovative personnel whereas start ups might rely on the excitement of working in a new venture as an incentive for innovative behavior more in line with expectations were the results for how firms process external information environmental scanning and data analysis were positively associated with innovation and this more so in older firms presumably because they have become more remote from developments outside the organization this result confirms the notion that much innovation by a firm is initiated externally however the results also indicate that the conditions of the environment itself are of lesser importance to firm innovativeness than the firm s active pursuit of information from its environment an often discussed implication of these findings is that the boundaries of a firm must be permeable at least from the outside in and systematic information gathering from customers competition research institutions etc may be necessary to the success of a firm that depends on its product development this seems especially important for older firms as expected the centralization of power in an organization also affected innovation centralization correlated positively with innovation in new ventures and negatively in older firms this indicates the importance of the entrepreneur and strong leader in a start up it also suggests though that as the firm matures this person has to give up some of her control and may have to relinquish the job at the head of the organization to someone else finally there are some more general implications of this work to managers involved with organizational innovation first reliance on past experience may be detrimental to future performance whereas a firm evolves through different stages means that have facilitated innovation earlier may be detrimental to it now or tomorrow and vice versa second copying successful strategies for innovation from other firms may not necessarily work not because their implementation was worse but because the conditions of the other firm for instance its evolutionary stage or its micro level facilitators were different researchers who study innovation should consider including life cycle stage as a potential moderating variable factors that facilitate innovation at some point during an organization s evolution actually hinder it in another also factors that were unimportant to innovation at the inception of a firm may facilitate it in later stages this study supports the conclusion that the consideration of contingency factors such as life cycle stage may enhance the development of a theory of organizational innovation

the determinants of bank loan recovery rates in good times and bad new evidence abstract we find that factors explaining bank loan recovery rates differ depending on the state of an underlying credit cycle our modelling approach incorporates a two state markov switching mechanism to capture underlying economic conditions this latent credit cycle variable helps to explain differences in observed recovery rates over time using us bank default loan data from moody s ultimate recovery database and covering the pre and post global financial crisis gfc period the paper develops and implements a dynamic model for bank loan recovery rates we accommodate the distinctive empirical features of the recovery rate data while incorporating a large number of possible determinants we find that certain loan specific and other variables hold different explanatory power with respect to recovery rates in good versus bad times in the credit cycle i e depending on underlying credit market conditions our findings demonstrate the importance of accounting for counter cyclical expected recovery rates when determining capital retention levels

recovery rates uncertainty certainly matters abstract previous studies identify default rate as the main systematic determinant of bond recovery rates we revisit this paradigm by investigating the impact of another factor economic uncertainty based on a wide sample of american default issues and relying on beta regression models well suited for the bounded heteroskedastic and skewed sample of recovery rates we analyze the determinants of recovery rate distributions we find economic uncertainty to be of paramount importance as it proves to be the most important systematic determinant of recovery rate distributions significant for both their mean and dispersion by contrast default rate remains a key determinant of the dispersion of these distributions but not for their means considering this evidence is critical to the sound implementation of stochastic recovery rate models used by financial institutions for the computation of regulatory capital

systematic effects among loss given defaults and their implications on downturn estimation abstract banks are obliged to provide downturn estimates for loss given defaults lgds in the internal ratings based approach while downturn conditions are characterized by systematically higher lgds it is unclear which factors may best capture these conditions as lgds depend on recovery payments which are collected during varying economic conditions in the resolution process it is challenging to identify suitable economic variables using a bayesian finite mixture model we adapt random effects to measure economic conditions and to generate downturn estimates we find that systematic effects vary among regions i e the us and europe and strongly deviate from the economic cycle our approach offers straightforward supportive tools for decision makers risk managers are enabled to select their individual margin of conservatism based on their portfolios while regulators might set a lower bound to guarantee conservatism in comparison to other approaches our proposal appears to be conservative enough during downturn conditions and inhibits over conservatism

effects of debt collection practices on loss given default abstract in this article we propose an lgd model that is solely based on legal and internal debt collection actions our model is supported by empirical tests in which it performs better than a usual firm specific model this result is noteworthy when we recall that the model has only binary variables that indicate whether an action was taken our model can be applied to update the lgd of distressed firms in a timely manner reflecting the actions taken during the debt collection period it also can be used to assess the effect of a recovery action and to determine whether to apply an action to certain types of debt

evaluating density forecasts with applications to financial risk management density forecasting is increasingly more important and commonplace for example in financial risk management yet little attention has been given to the evaluation of density forecasts the authors develop a simple and operational framework for density forecast evaluation they illustrate the framework with a detailed application to density forecasting of asset returns in environments with time varying volatility finally the authors discuss several extensions copyright 1998 by economics department of the university of pennsylvania and the osaka university institute of social and economic research association

technology strategy and new venture performance a study of corporate sponsored and independent biotechnology ventures abstract new ventures companies eight years or younger play a major role in the development of an emerging high technology industry corporate sponsored new ventures those supported by an established corporation and independent ventures those founded by independent entrepreneurs frequently battle for industry leadership and financial success whereas both venture types use technology to achieve financial and market success little is known about the differences in their technology strategies technology strategy is the plan that guides a new venture s decisions on the development and use of technological capabilities this strategy covers six major areas the first is selecting the pioneering posture where a venture decides whether or not be among the industry s first companies to introduce new products technologies to the market the second is determining the number of products to be introduced to the market the third is choosing the extent of a venture s use of internal and external r d sources internal sources usually refer to in house r d activities external sources may include purchasing or licensing of technology from other companies or joining strategic alliances to acquire that technology the fourth is deciding the level of r d spending the fifth is selecting the combination portfolio of applied and basic research projects whereas basic r d advances science applied r d leads to new products and technologies the sixth and final dimension is the venture s use of patenting to protect any competitive advantages it might gain from its r d activities this article reports the results of a study that explored the differences in the technology strategies and performance of corporate and independent ventures the biotechnology industry was chosen to test the study s hypotheses using 112 ventures seven of the study s hypotheses focused on the potential variations in technology strategy between corporate and independent ventures independent ventures ivs were expected to surpass corporate ventures cvs in pioneering new products technologies using internal r d and emphasizing applied r d cvs were expected to surpass ivs in introducing new products using external r d sources spending on r d and patenting the study s remaining three hypotheses covered possible variations in new venture performance nvp and their sources the results showed that ivs focused more on pioneering pursued a more applied r d portfolio and emphasized internal r d more than cvs cvs utilized external technology sources spent more heavily on r d stressed basic r d and used patenting more intensively than ivs these results were consistent with the hypotheses however contrary to expectations there were no significant differences between cvs and ivs in the frequency of new product introductions probably because most ventures were at the invention rather than the commercialization stage the results on the nvp of cvs and ivs were counter to expectations ivs outperformed cvs probably because of the high motivation of the iv owners who reaped the rewards of growth and profitability also whereas cvs may have greater access to the resources of their sponsors political conflicts and rigid corporate controls might have reduced their ability to achieve competitive advantages the results also indicated that cvs and ivs appeared to gain competitive advantages from different technological choices pioneering a focus on applied r d and extensive use of the internal r d sources were also positively associated with the performance of ivs heavy r d spending the use of both internal and external r d sources frequent product introductions and patenting were positively associated with the performance of cvs finding that technology strategies significantly impacted nvp should encourage executives to consider pursuing a formal technology strategy likewise the finding that different dimensions of technology strategy influenced the performance of cvs and ivs in different ways has practical implications cv managers can learn from their higher performing iv rivals also because established companies frequently acquire ivs information about their technology strategies can be valuable in assimilating the acquired ventures overall the results show that technology strategy is an important factor in enhancing new venture performance

forecasting bankruptcy more accurately a simple hazard model i argue that hazard models are more appropriate than single period models for forecasting bankruptcy single period models are inconsistent while hazard models produce consistent estimates i describe a simple technique for estimating a discrete time hazard model i find that about half of the accounting ratios that have been used in previous models are not statistically significant moreover market size past stock returns and idiosyncratic returns variability are all strongly related to bankruptcy i propose a model that uses both accounting ratios and market driven variables to produce out of sample forecasts that are more accurate than those of alternative models copyright 2001 by university of chicago press

downturn loss given default mixture distribution estimation abstract the internal estimates of loss given default lgd must reflect economic downturn conditions thus estimating the downturn lgd as the new basel capital accord basel ii establishes we suggest a methodology to estimate the downturn lgd distribution to overcome the arbitrariness of the methods suggested by basel ii we assume that lgd is a mixture of an expansion and recession distribution in this work we propose an accurate parametric model for lgd and we estimate its parameters by the em algorithm finally we apply the proposed model to empirical data on italian bank loans

out of the frying pan why small business managers introduce high risk products abstract some managers in small firms who are disappointed with their firm s current performance will introduce new products to improve the situation although untested in a small business context prospect theory suggests that managers who are less satisfied may be more likely to introduce products with riskier characteristics the current study confirmed this finding that managers who were less satisfied introduced products into less familiar markets and required more resources the study also provided tentative evidence that these characteristics may decrease the product s economic performance and the manager s subsequent satisfaction with the business suggesting that a dangerous downward spiral may occur

pricing derivatives on financial securities subject to credit risk this article provides a new methodology for pricing and hedging derivative securities involving credit risk two types of credit risks are considered the first is where the asset underlying the derivative security may default the second is where the writer of the derivative security may default we apply the foreign currency analogy of jarrow and turnbull 1991 to decompose the dollar payoff from a risky security into a certain payoff and a spot exchange rate arbitrage free valuation techniques are then employed this methodology can be applied to corporate debt and over the counter derivatives such as swaps and caps the purpose of this article is to provide a new theory for pricing and hedging derivative securities involving credit risk two sources of credit risk are identified and analyzed the first is where the asset underlying the derivative security may default paying off less than promised this is the case for example with imbedded options on corporate debt the second is the credit risk introduced by the writer of the derivative security who may also default examples include over the counter writers of options on eurodollar futures swaps and swaptions for pricing derivative securities involving credit risk there are currently two approaches the first views these derivatives as contingent claims not on the financial securities themselves but as compound options on the assets underlying the financial securities this is the case for example with the pricing of imbedded options on corporate debt see merton 1974 1977 black and cox 1976 ho and singer 1982 chance 1990 and kim ramaswamy and sundaresan 1993 or the pricing of vulnerable options see johnson and stulz 1987 in practice however this valuation methodology is difficult to use first the assets underlying the financial security are often not tradeable and therefore their values are not observable this makes application of the theory and estimation of the relevant parameters problematic second as in the case of corporate debt all of the other liabilities of the firm senior to the corporate debt must first and simultaneously be valued this generates significant computational difficulties as a result this approach has not

corporate versus independent new ventures resource strategy and performance differences abstract this study examines differences between independent ventures ivs which are established by individual entrepreneurs and corporate ventures cvs which are controlled by larger companies it focuses on differences between these ventures related to the resources strategies and performance of firms in the computer and communications equipment manufacturing industries thus the findings increase the understanding of the different challenges faced by each venture type and provide insight into how each venture type should be managed the study finds that managers of cvs and ivs emphasized different resources and strategies specifically cvs emphasized the following resources internal capital sources proprietary knowledge and marketing expertise ivs emphasized external capital sources technical expertise and development of brand identification they also differed in their strategies ivs pursued greater strategic breadth more customer service and focused more on specialty products the findings that cvs had less strategic breadth was surprising in that cvs emphasized resources such as internal capital sources which could make pursuing broad strategies more feasible for cvs it is possible that some cvs do not pursue broad strategies because they may be infringing upon someone else s turf within the corporation and thus may be discouraged in spite of finding significant strategy and resource differences the study found that ivs and cvs did not differ in performance and that resources were not directly related to performance based on the concept of equifinality it follows that both venture types can be equally successful even if they follow different roads to success success may be less a function of the different resources ivs and cvs have and more a function of what strategies the firms choose based upon their resources strategy variables did relate to performance a low cost strategy lowered performance regardless of venture type and the influence of an aggressive strategy i e wide strategic breadth on performance depended upon venture origin managers pursuing a low cost strategy may have had lower performance if they became penny wise and pound foolish missing opportunities in their efforts to lower costs this suggests that regardless of venture type managers of new ventures in these industries and perhaps in other volatile industries may need to be opportunistic this study indicates that pursuing broad strategies increased the performance of ivs and decreased the performance of cvs this finding was surprising in that cvs had greater resources which one might think would lead to successful implementation of aggressive strategies in securing enough resources to pursue aggressive strategies from their parents cvs may lose the freedom of action they need to cope with the dynamism of high technology industries this suggests that managers of cvs within the computer and communications equipment manufacturing industries should either not pursue broad strategies or if pursuing broad strategy they should maintain their flexibility in contrast ivs that pursued broad strategies achieved higher performance indicating that perhaps ivs unencumbered by the bureaucracy that characterizes cvs may be able to pursue aggressive strategies while simultaneously maintaining flexibility thus this study offers iv and cv managers several valuable insights first it argues that managers of each type of venture may need to pursue different strategies to increase venture performance and make optimal use of their unique resources furthermore it suggests that cv managers encounter difficulties in applying resources to strategies and not in accessing resources whereas political obstacles may occur cv managers may primarily encounter these difficulties when trying to implement strategies rather than when accumulating resources from the parent suggesting a pitfall that managers of cvs and their parents need to avoid although this study has indicated that both venture types can be equally successful it suggests that they may face different obstacles and follow different roads to success

the procyclical effects of bank capital regulation we assess the procyclical effects of bank capital regulation in a dynamic equilibrium model of relationship lending in which banks are unable to access the equity markets every period banks anticipate that shocks to their earnings as well as the cyclical position of the economy can impair their capacity to lend in the future and as a precaution hold capital buffers we find that under cyclically varying risk based capital requirements e g basel ii banks hold larger buffers in expansions than in recessions yet these buffers are insufficient to prevent a significant contraction in the supply of credit at the arrival of a recession we show that cyclical adjustments in the confidence level underlying basel ii can reduce its procyclical effects on the supply of credit without compromising banks long run solvency targets

food policy conflicts in bangladesh abstract the objective of this paper is to show that the reality of a food policy aim of self sufficiency is very complex and full of internal inconsistencies in particular the author stresses the conflicts of interest between the consumers and producers of foodgrains in bangladesh which create obstacles to the success of their recently devised development goals he sets the scene by providing details of foodgrain production food availability per capita and levels of malnutrition and then introduces the policy conflicts in increasing food production the author then discusses several attempts to resolve the conflict through price control consumer subsidies and direct aid to producers through encouraging the use of fertilizers and irrigation this leads to the conclusion that government policy and outside aid must aim at both the production and the consumption of food in order for increased food supplies to reach those who need them most

getting agricultural prices right abstract are agricultural price policies in developing countries inimical to both growth and equity in recent critiques of govenment policy such a view has been repeatedly affirmed this paper takes the view that a positive analysis of the constraints under which price and tax policies must be set is seriously lacking and that without such understanding both the direction and the consequences of reform must remain uncertain it attempts to lay the groundwork for such analysis by specifying a number of hypotheses concerning government policies and their consequences

simulating the impacts of credit policy and fertilizer subsidy on central luzon rice farms the philippines the effects of credit policy and fertilizer subsidy on farmers input choices production and income are examined with a multiseason decision making model stochastic production technology risk neutral and risk averse decision rules short term savings consumption behavior and a dual financial market are considered results indicate the risk neutral rule is more consistent with actual choices than risk averse rules estimated yields increased 21 to 30 from joint credit and fertilizer subsidies benefits are greater on irrigated than on rainfed farms a substantial default rate in the institutional market reduces credit program benefits

how accurate is food for work self targeting in the presence of imperfect factor markets evidence from ethiopia effective targeting of transfers is a key issue in public policy to combat poverty much faith is presently placed in self targeting mechanisms such as public employment schemes supported by food for work transfers where targeting errors have been observed these are usually attributed to mismanagement of key operational details such as the project s wage rate using a unique data set from rural ethiopia we demonstrate that targeting errors may also have structural causes in some low income countries we hypothesise that imperfect factor markets generate a predictable dispersion across households in reservation wage rates that breaks down the unconditionally positive relation between income and shadow wages on which the theory of self targeting public employment programmes rests our results confirm that the inaccuracy of ffw targeting stems from the fact that in rural ethiopia higher income households are endowed with more labour per unit of land or animal due to poor factor markets in land and liv

supply response of u k milk producers short run own price response elasticities are estimated from two samples of panel data for specialist dairy farms in the northwest and southwest of england although these farms are subject to milk marketing quotas the free tradability of quotas enables them individually to adjust the output quite rapidly model specifications have been chosen to test the ability of panel data to directly reveal behavioral responses without the imposition of theoretical restrictions significantly the two independent samples generate quite similar results especially in terms of supply response measures stable and promising estimates are obtained with simultaneous models giving higher elasticities than single equation models

rules versus discretion in food storage policies this article compares various policies in a rational expectations food storage model with risk averse consumers and missing insurance markets calibrated to represent a developing country i consider an optimal storage policy under discretion and two optimal simple rules a constant private storage subsidy and a price band the storage subsidy achieves welfare gains similar to the discretionary policy the price band maximizing social welfare is a price peg scheme the floor and ceiling prices are the same and the capacity constraint represents 11 of the steady state production level this price band achieves three quarters of the gains from the optimal policy under discretion

ratings migration and the business cycle with application to credit portfolio stress testing the turmoil in the capital markets in 1997 and 1998 has highlighted the need for systematic stress testing of banks portfolios including both their trading and lending books we propose that underlying macroeconomic volatility is a key part of a useful conceptual framework for stress testing credit portfolios and that credit migration matrices provide the specific linkages between underlying macroeconomic conditions and asset quality credit migration matrices which characterize the expected changes in credit quality of obligors are cardinal inputs to many applications including portfolio risk assessment modeling the term structure of credit risk premia and pricing of credit derivatives they are also an integral part of many of the credit portfolio models used by financial institutions by separating the economy into two states or regimes expansion and contraction and conditioning the migration matrix on these states we show that the loss distribution of credit portfolios can differ greatly as can the concomitant level of economic capital to be assigned

correlated default and financial intermediation financial intermediation naturally arises when knowledge about the aggregate state is valuable for managing investments and lenders cannot easily observe the aggregate state i show this using a costly enforcement model in which lenders need ex post incentives to enforce payments from defaulted loans and borrowers payoffs are correlated when projects have correlated outcomes learning the state of one project via enforcement provides information about the states of other projects a large correlated portfolio provides ex post incentives for enforcement as a result intermediation dominates direct lending intermediaries are financed with risk free deposits earn positive profits and hold systemic default risk

inheriting knowledge and sustaining relationships what stimulates the innovative performance of small software firms in the netherlands abstract previous studies showed that firms established by experienced founders have higher survival rates and employment growth but the potential effect of pre entry experiences on innovation remains unclear using an original dataset we examine the effect of founder s experiences the relationship with the founder s previous employer and spatial proximity to the previous workplace on the innovative performance of small software firms in the netherlands apart from entrepreneurial experiences the results suggest no effect of pre entry experiences continued contacts with the founder s previous employer appear to limit the firm s innovative performance but firms do benefit from being established near the previous workplace

recovery rates default probabilities and the credit cycle in recessions the number of defaulting firms rises on top of this the average amount recovered on the bonds of defaulting firms tends to decrease this paper proposes an econometric model in which this joint time variation in default rates and recovery rate distributions is driven by an unobserved markov chain which we interpret as the credit cycle this model is shown to fit better than models in which this joint time variation is driven by observed macroeconomic variables we use the model to quantitatively assess the importance of allowing for systematic time variation in recovery rates which is often ignored in risk management and pricing models

uncertainty duality and perversity an empirical test of the schultz baron hypothesis it has been suggested that supply curves may be negatively sloped under conditions of output price uncertainty and risk aversion if the effect of an increase in expected price is offset by the effect of an associated increase in uncertainty risk this hypothesis first articulated by schultz and given a more rigorous theoretical exposition by baron is tested using aggregate time series data to estimate a stochastic model of us agriculture based on a generalized leontief certainty equivalent profit function evidence of risk aversion and a positive correlation between mean output price and its variance are found however these factors are not strong enough to generate perversity thus the own price elasticity of supply of agricultural output is found to be positive with a value of 0 25 although no evidence of perversity is found the empirical results suggest that ignoring price uncertainty may bias estimates of aggregate supply response downwards by between 5 and 47 as well as testing the schultz

estimation of dynamic maize supply response in zambia abstract increased attention on government pricing policies among african nations leads directly to a need for information about producer responses to price adjustments this is especially true in the case of zambian maize production maize is the most important crop grown in zambia it accounts for more than 80 of the value of marketed food crops is heavily relied on for subsistence consumption and is a staple food in the diet of all zambian citizens this paper analyzes the aggregate price response of maize supply in zambia using a dynamic regression analysis as a result short intermediate and long run multipliers elasticities are measured which can be used to analyze the effect of future price policy changes it was found that a second order rational distributed lag model best fits the available data estimates of short run elasticities of supply for maize and fertilizer prices are 0 54 and 0 48 respectively the corresponding estimated long run elasticities are 1 57 and 1 44

project food aid and equitable growth income transfer efficiency first abstract this paper discusses the income transfer properties of food aid in order to shed light on the inputs necessary to ensure a contribution to equitable growth particularly with reference to the alleviation of poverty and malnutrition the author defines the concepts of income transfer efficiency and nutrition efficiency and shows that food aid which is income transfer efficient is usually also nutrition efficient some empirical evidence of the income transfer efficiency of different commodities supplied to various countries is reviewed and policy implications for the selection of food aid commodities and projects are discussed the author concludes with some working propositions designed to stimulate further debate on the selection and administration of food aid projects

interaction of market and credit risk abstract experience during the financial crisis illustrates that the integrated measurement and management of different forms of risk remains a challenge for industry practitioners researchers and financial supervisors alike in the context of related literature this article summarizes new research on the interaction of market and credit risk and implications for risk management that is presented in this special issue the research covered highlights in particular the errors that can occur in the aggregation of the two types of risk and the strong relationships between them that suggest caution in the use of pragmatic distinctions between them the article also touches on some research based lessons for supervisory policies and suggests some directions for future research

a model of an agricultural household in a multi crop economy the case of korea it is the purpose of this paper to describe one method of extending the empirical applicability of the theory of the farm household to multi crop economies by integrating the econometric and linear programming models already available in the literature section i introduces the subject in section ii the theoretical model is presented in section iii korean data are used to assess the quantitative significance of the approach by calculating and comparing household response to changes in input and output prices for two different specifications of the models first the household is analyzed from the consumption side on the assumption that farm profits are exogenous this corresponds to the standard approach in consumer demand theory and second results are presented for a model in which consumption and production responses are integrated in a theoretically consistent fashion and farm profits are allowed to reflect production responses to price changes the results from this and other studies that use an integrated approach to production and consumption decisions highlight the need to change perceptions concerning agricultural household response to economic incentives in developing countries and to revise the design of economic projects and policies accordingly