primary commodity prices and the oecd economic performance abstract the relationship linking primary commodity prices to the oecd economic performance is analyzed by explicitly accounting for the presence of a two way causality the macroeconomic model is built on a relatively small number of equations which represent the interplay of five markets primary commodity financial oecd labour oecd and ldc product market the difference between primary commodity and manufactured good price formation is emphasized quantitative results are provided on the basis of historical estimations and dynamic simulations

rethinking the global food crisis the role of trade shocks although fundamental factors were clearly responsible for shifting the world to a higher food price equilibrium in the years leading up the 2008 food crisis there is little doubt that when food prices peaked in june of 2008 they soared well above the new equilibrium price numerous arguments have been proposed to explain overshooting including financial speculation depreciation of the united states us dollar low interest rates and reductions in grain stocks however observations that international rice prices surged in response to export restrictions by india and vietnam suggested that trade related factors could be an important basis for overshooting especially given the very tangible link between export volumes and export prices in this paper we revisit the trade story by closely examining monthly data from thailand the largest exporter of rice and the united states the largest exporter of wheat and maize and the third largest exporter of soybeans in all cases except soybeans we find that large surges in export volumes preceded the price surges the presence of these large demand surges together with back of the envelope estimates of their price impacts suggests that trade events played a much larger and more pervasive role than previously thought

the continuing commodity crisis of developing countries abstract since the early 1980s the dominant feature of the international commodity markets has been a sharp downtrend in prices though short term instability has also remained excessively high for many commodities international policy should therefore be focused on supply management to raise depressed levels of commodity prices the problem of short term commodity price instability is best tackled by a series of international buffer stocks rather than by hedging on the financial markets a technique which has serious limitations for exporters in developing countries

the 1990s rise in swedish earnings inequality persistent or transitory this article decomposes the rise in the cross sectional variance of male annual earnings in sweden between 1991 and 1999 into its persistent and transitory components the results show that the persistent component accounts for basically all of the increase in earnings dispersion this implies that the answer to the 1990s trend reversal in swedish earnings inequality is to be found in explanations that focus on persistent changes in the labour market such as changes in the price of skills

long run prices of primary commodities and oil prices acutely volatile movements in primary commodity prices have drawn considerable interest from empirical researchers exports of these commodities account for the bulk of export earnings of developing countries the traditional demand based framework was unable to explain the marked deterioration in these prices during the 1980s this paper tries to ascertain the role played by real oil prices in explaining the extremely volatile movements in real prices of primary commodities by taking into account oil price shocks over the period 1973 1996 using monthly data real primary commodity prices and real oil prices are cointegrated additionally the error in the cointegrating relation stimulates real commodity price adjustment not real oil price adjustment

dynamics in transitory and permanent variation of wages in germany abstract we employ covariance structure models to decompose the cross sectional variance of male wages in germany into its permanent and transitory parts we find that the steep growth of cross sectional inequality during the early 2000s is predominantly driven by transitory factors

a review of residential tiered electricity pricing in china abstract at present the unformed market oriented pricing mechanism has become a great challenge faced by china s electricity pricing and the unreasonable electricity pricing caused by cross subsidization has become increasingly serious with the economic development and energy shortage tiered electricity price tep which was developed and used since 1970s was introduced into china as a new electricity pricing method for residential electricity consumption the tep can also improve the tariffs the behaviors and the efficiency of residential electricity consumption in this study we use the fundamental theory of the electricity economics to analyze the pricing methods and the forms of china s power market with the reform of electric power industry we also point out the characteristics of residential tiered electricity pricing in china which is also compared with other countries such as the united states and japan the main factors influencing the residential tiered electricity pricing design are discussed in this paper from the perspectives of users the electric power enterprise and government regulation then we point out the main problems of china s existing tiered electricity pricing including inadequate level of public awareness and acceptance unreasonable tiered and electricity price standard insufficient reflection in regional differences less combination with other electricity pricing forms and low level of smart meter application

peak load pricing in postal services the peak load pricing problem for postal service is addressed in practice primarily by means of service differentiation according to class of mail the authors demonstrate that lower priority mail at peak times helps to ameliorate but does not eliminate the peak load problem they derive welfare optimal service differentiated prices under peak load conditions for a diverse mail processing technology the authors show the relationship between this class of problems and the traditional natural monopoly peak load literature the paper discusses the implications of the theory for u k and u s postal service practice and policy copyright 1990 by royal economic society

electricity demand in kazakhstan properties of electricity demand in transition economies have not been sufficiently well researched mostly due to data limitations however information on the properties of electricity demand is necessary for policy makers to evaluate effects of price changes on different consumers and obtain demand forecasts for capacity planning this study estimates kazakhstan s aggregate demand for electricity as well as electricity demand in the industrial service and residential sectors using regional data firstly our results show that price elasticity of demand in all sectors is low this fact suggests that there is considerable room for price increases necessary to finance generation and distribution system upgrading secondly we find that income elasticity of demand in the aggregate and all sectoral models is less than unity of the three sectors electricity demand in the residential sector has the lowest income elasticity this result indicates that policy initiatives to secure affordability of electricity consumption to lower income residential consumers may be required finally our forecast shows that electricity demand may grow at either 3 or 5 per year depending on rates of economic growth and government policy regarding price increases and promotion of efficiency we find that planned supply increases would be sufficient to cover growing demand only if real electricity prices start to increase toward long run cost recovery levels and policy measures are implemented to maintain the current high growth of electricity efficiency

trends in the transitory variance of earnings in the united states we decompose the rise in cross sectional variance of male annual earnings in the united states from 1969 to 1996 into permanent and transitory components we find that the variance of permanent earnings began rising in the the late 1970s and has continued to rise in the 1980s the variance of transitory earnings also rose in the 1980s but declined in the 1990s there are lags in the earnings process which require a structural model to pinpoint the exact calendar times at which the changes in trends occurred

on the comovement of commodity prices we present strong evidence against the excess comovement hypothesis that the prices of commodities move together beyond what can be explained by fundamentals prior studies employ broad macroeconomic indicators to explain common price movements and potentially correlated fundamentals are not controlled for we use inventory and harvest data to fit a partial equilibrium model that more effectively captures the variation in individual prices the model explains the majority of the comovements among commodities with high price correlation and all of the comovements among those with marginal price correlation common movements in supply factors appear to play an important role in the observed comovements in commodity prices

application of ramsey model in transition economy a russian case study this case study uses the ramsey model to analyze whether the current electricity prices charged by the natural monopoly novosibirskenergo in a major industrial region of the russian federation are socially optimal our estimates of demand elasticities for two major groups of consumers namely households and industrial users show that prices are not socially optimal a decrease in price for industrial users and an increase in price for households would bring the prices closer to socially optimal

the impact of uncertainty shocks on the volatility of commodity prices in this paper we empirically examine the impact of uncertainty shocks on the volatility of commodity prices using several alternative measures of economic uncertainty for the u s we estimate their effects on commodity price volatility through var analysis we find that the latent uncertainty shocks have the most significant impact on commodity price volatility when compared to observable measures of economic uncertainty in specific our results show that the unobservable economic uncertainty measures of jurado et al 2015 have a significant and long lasting positive effect on the volatility of commodity prices our findings indicate that a positive shock in unobservable macroeconomic and financial uncertainty leads to a persistent increase in the volatility of the broad commodity market index and of individual commodity prices with the macroeconomic effect being more significant finally we show that the impact is stronger in energy commodities compared to agricultural and metals markets

modelling market fundamentals a model of the aluminium market the standard approach to modelling primary commodity markets under rational expectations is to relate the commodity price to the production and consumption surprises i e the innovations on the equations using the world aluminium market we show how this approach can be modified so that both the price and stock can be written in terms of one or more market fundamentals which reflect the supply demand balance on the market this approach allows joint estimation of production consumption stock demand and price equations subject to cross equation restrictions it may be seen as a formalization of the approach adopted by metals industry analysts

cointegration how short is the long run abstract when testing for cointegration and faced with short sample periods it is common for researchers to turn to more frequently sampled observations that is to move from annual to quarterly or monthly data in order to increase the number of observations we argue that such a gain in the degrees of freedom is more apparent than real essentially cointegration is a long run concept and hence requires long spans of data to give tests for cointegration much power rather than merely large numbers of observations using monte carlo simulations we demonstrate this for four popular tests for cointegration

allocation of fixed costs in distribution networks with distributed generation in this paper we propose a method for the allocation of fixed capital and nonvariable operation and maintenance costs at the medium voltage mv distribution level the method is derived from the philosophy behind the widely used mw mile methodology for transmission networks that bases fixed cost allocations on the extent of use that is derived from load flows we calculate the extent of use by multiplying the total consumption or generation at a busbar by the marginal current variations or power to current distribution factors pidfs that an increment of active and reactive power consumed or generated in the case of distributed generation at each busbar produces in each circuit these pidfs are analogous to power transfer distribution factors ptdfs unlike traditional tariff designs that average fixed costs on a per kwh basis across all customers the proposed method provides more cost reflective price signals and helps eliminate possible cross subsidies that deter profitable in the case of competition or cost effective in the case of a fully regulated industry deployment of dg by directly accounting for use and location in the allocation of fixed costs an application of this method for a rural radial distribution network is presented

long run commodity prices economic growth and interest rates 17th century to the present day a significant proportion of the trade basket of many developing countries is comprised of primary commodities this implies relative price movements in commodities may have important consequences for economic growth and poverty reduction taking a long run perspective we examine the historical relation between a new aggregate index of commodity prices economic activity and interest rates initial empirical tests show that commodity prices present a downward trend with breaks over the entire industrial age providing clear support for the prebisch singer hypothesis it would also appear that this trend has declined at a faster rate since the 1870s conversely several gdp series such as world chile china uk and us trend upwards with breaks such trending behaviour in both commodity prices and economic activity suggests a latent common factor like technological innovation to assess the relationships between economic series we apply a stationary var vector autoregression to model movements around trends strikingly there is evidence that commodity prices granger cause income and interest rates whilst interest rates granger cause commodity prices from these results and the related impulse response function analysis the historical perspective provides some useful information for contemporary policy makers for example loose monetary policy has tended to support higher commodity prices more over commodity price movements have an asymmetric country effect on economic activity periods of falling commodity prices will support gdp growth for com modity importers like the us but depress growth for commodity exporters such as chile

anatomy of a crisis the causes and consequences of surging food prices although the potential causes and consequences of recent rising international food prices have attracted widespread attention many existing appraisals are superficial and or piecemeal this article attempts to provide a more comprehensive review of these issues based on the best and most recent research as well as on fresh theoretical and empirical analysis we first analyze the causes of the current crisis by considering how well standard explanations hold up against relevant economic theory and important stylized facts some explanations turn out to hold up much better than others especially rising oil prices the depreciation of the u s dollar biofuels demand and some commodity specific explanations we then provide an appraisal of the likely macro and microeconomic impacts of the crisis on developing countries we observe a large gap between macro and micro factors which when identifying the most vulnerable countries often point in different directions we conclude with a brief discussion of what ought to be learned from this crisis

some observations on the efficiency of british postal pricing unlike in the more competitive areas such as parcels and international mail the inland letters segment of the british post office s business is marked by an inefficient pricing structure where own price elasticities and cost differences between urban and rural and first and second class letters are not reflected in prices compared with a ramsey pricing structure the existing prices cause a significant welfare cost of about 20m p a 1985 86 pounds which does not appear to be outweighed by the additional administrative costs of a four tier pricing structure the proposal to introduce ramsey prices appears worthy of further investigation by those with access to the necessary data

on the effects of world stock market and oil price shocks on food prices an empirical investigation based on tvp var models with stochastic volatility abstract transmission of price shocks from one market to another one has long been investigated in the economic literature however studies have namely dealt with the relationship between financial and energy markets with the recent changes in market conditions investors policy makers and interest groups are giving special attention to food market this paper aims at analyzing shock transmission between international food energy and financial markets and to provide some insights into the volatility behavior during the past years and discuss its implications for portfolio management to do this we present a new time varying parameter var tvp var model with stochastic volatility approach which provides extreme flexibility with a parsimonious specification we resort also to a generalized vector autoregressive framework in which forecast error variance decompositions are invariant to the variable ordering for the assessment of total and directional volatility spillovers our main findings suggest that volatility spillovers increase considerably during crisis and namely after mid 2008 when stock markets become net transmitter of volatility shocks while crude oil becomes a net receiver shocks to crude oil or msci markets have immediate and short term impacts on food markets which are emphasized during the financial crisis period moreover we show that augmenting a diversified portfolio of food commodities with crude oil or stocks significantly increases its risk adjusted performance

the economic efficiency impacts of alternatives for revenue reconciliation about a dozen electric utilities in the us offer rates that possess real time characteristics in these implementations the real time prices are updated at half hourly or hourly intervals and in no case are the prices spatially differentiated the implemented rates are based upon marginal generating costs with markups to account for system transmission and distribution costs or other revenue reconciliation needs this paper analyzes how great is the impact of alternative price markup methods on measures of social welfare and the time pattern of real time prices a case study and sensitivity results are also presented

electricity tariff design for transition economies application to the libyan power system this paper presents a general electricity tariff design methodology especially applicable for transition economies these countries are trying to modernize their power systems from a centralized environment with normally a public vertically integrated electric company to a liberalized framework unbundling electricity companies and eventually starting a privatization process two issues arise as crucial to achieving a successful transition i ensuring cost recovery for all future unbundled activities generation transmission distribution and retailing and ii sending the right price signals to electricity customers avoiding cross subsidies between customer categories the design of electricity tariffs plays a pivotal role in achieving both objectives this paper proposes a new tariff design methodology that complying with these two aforementioned criteria requires a low amount of information regarding system data and customer load profiles this is important since typically volume and quality of data are poor in those countries the presented methodology is applied to computing tariffs for the libyan power system in 2006 using real data

a robust methodology for ramsey pricing with an application to uk postal services the policy relevance of ramsey pricing calculations naturally turns on their robustness this paper sets out a methodology for a minimal information approach in examining the sensitivity of ramsey prices to changes in demand and cost parameters the minimal information required for the approach to be operational is 1 a set of estimated demand functions for the products involved and 2 some idea of the ball park for marginal costs for these products a case study of the u k letters business is used to illustrate the approach copyright 1996 by blackwell publishing ltd

distribution charges for consumers and microgeneration considering load elasticity sensitivity abstract this paper presents an approach for calculating a tariff for electrical energy distribution systems the methodology is similar to the standard tariff calculation method used in brazil the approach combines the concepts of time of use tariffs and ramsey prices the process initially designed for energy consumers can be used to establish tariffs for micro generation units the resulting regulated distribution tariffs for both consumer and generation units has an hourly signal associated with long run marginal costs moreover while minimizing any loss of social benefits the tariffs comply with the revenue reconciliation constraint the proposed approach is applied to a real brazilian distribution system and compared to the current procedure used by the brazilian electricity regulatory agency

cross national trends in earnings inequality and instability abstract we compare trends in earnings inequality in the united states germany and great britain estimation of a heterogeneous growth model of permanent and transitory earnings variation reveals substantial convergence in the permanent component of inequality in these countries during the 1990s

the evolution of individual male earnings in great britain 1975 95 i study the dynamic structure of male wages in great britain using the new earnings survey panel from 1975 95 computing auto covariances of individual wages by cohort i find evidence of a permanent component of earnings that increases over the life cycle and a highly persistent serially correlated transitory component in addition the estimated variances of both these components have risen over this period each explaining about half the rise in inequality using individual s occupation at age 22 i split the sample into four skill groups i find some differences across these groups with the rise in the permanent variance most important for the manual groups

debt crisis of the less developed countries and the transfer debate once again in the perspective of substantial amount of net transfers from the debtor less developed countries ldcs to the creditor developed countries dcs in the recent debt crisis years there is a renewed debate that started in the context of german reparation payments after the first world war on the question of transfer burden of debt the present study assembles some evidence to show that the ldcs in general expanded their export volumes and faced losses in their export unit values in the process of their debt repayments many ldcs faced this transfer burden of debt irrespective of whether their export drive was in the field of primary products or manufactures thus the keynesian analysis for german transfer problems seems to be relevant in the context of the present experience of the ldcs for some debtor countries the insoluble transfer problem mentioned by keynes exists as they are facing fisher s paradox the more the debtors pay the more they owe

dynamic persistence of primary commodity prices this article examines the persistence of shocks to international commodity prices from 1900 to 2008 using the updated grilli yang index the main innovation of this study is that it determines whether commodity prices are characterized by multiple changes in persistence specifically bootstrap methods are used to estimate persistence and the associated half life shocks are calculated we find that the persistence of shocks can vary widely depending on the individual commodity and the time period the results suggest that policy makers need to exercise caution when introducing measures to cushion the effect of shocks to world commodity prices

a roller coaster ride an empirical investigation of the main drivers of the international wheat price over the last decade commodity prices have registered substantial booms and busts marked by extreme volatility wheat in particular one of the main nonoil commodities has registered a roller coaster in price levels which seems to be inconsistent with supply and demand fundamentals to acutely investigate the drivers of wheat prices and quantify their impact a vector error correction model vecm has been used the exogenous variables have been distinguished into four groups market specific factors broad macroeconomic determinants speculative components and weather variables the quadriangulation of the determinants will enable us to better understand the movements in wheat price and identify the specific role of each component the results show that a mix of factors are contributing to wheat price movements including speculation global demand and real effective exchange rate

assessing usa postal ratemaking an application of ramsey prices in early rate cases the inverse elasticity rule was used explicitly in setting postal rates but more recently the usa postal service has eschewed its use since cross elasticities between mail classes are not all zero general ramsey prices would be more appropriate than the simple inverse elasticity rule using usps estimates of revenues costs and elasticities postal rates are simulated under several different conditions the simulated prices are then compared to the rates suggested in the 1980 rate case to determine whether the principles being followed by the usps lead to ramsey prices

a factor model for co movements of commodity prices abstract we fit a factor model to two monthly panels of deflated prices of energy metals and agricultural commodities prices consistently display a tendency to revert towards the factor though the speed of reversion to the factor is slow using both in and out of sample metrics we compare the factor model to that of a no change model and to two simple models that tie changes in commodity prices to percentage change in either global industrial production or the u s dollar the factor model does relatively well at long 12 month horizons in terms of commodities the factor model s performance is best for energy prices worst for metals with agricultural prices falling in between

consumer s surplus without apology the purpose of this paper is to settle the controversy surrounding consumer s surplus and by so doing to validate its use as a tool of welfare economics i will show that observed consumer s surplus can be rigorously utilized to estimate the unobservable compensating and equivalent variations the correct theoretical measures of the welfare impact of changes in prices and income on an individual i derive precise upper and lower bounds on the percentage errors of approximating the compensating and equivalent variations with consumer s surplus these bounds can be explicitly calculated from observable demand data and it is clear that in most applications the error of approximation will be very small in fact the error will often be overshadowed by the errors involved in estimating the demand curve the results in no way depend upon arguments about the constancy of the marginal utility of income consequently this paper supplies specific empirical criteria which can replace the apologetic caveats frequently employed by those who presently apply consumer s surplus moreover the results imply that consumer s surplus is usually a very good approximation to the appropriate welfare measures to preview below i establish the validity of these rules of thumb for a

ramsey prices in the italian electricity market abstract in this paper we derive optimal zonal prices in the italian day ahead electricity market using estimation of a complete system of hourly demand in 2010 2011 in italy the hourly equilibrium price for all buyers is computed as a uniform average of supply zonal prices resulting from market splitting due to line congestion we model ex ante individual bids expressed by heterogeneous consumers which are distinguished by geographical zones using empirical estimations we compute demand elasticity values and new zonal prices according to a ramsey optimal scheme this is a new approach in the wholesale electricity market literature as previous studies have discussed the relative merit of zonal prices considering only the issue of line congestion our results show that the optimal pricing scheme can improve welfare in the day ahead italian electricity market with respect to both the existing uniform price scheme and the proposal to charge the existing supply zonal prices to the demand side

price and access charge discrimination in electricity distribution an application to the chilean case this paper presents and analyzes a model of electricity distribution in chile with three alternative regulatory pricing contract schemes for assigning a common capacity cost to final customers and competitive energy sellers the first scheme involves ramsey pricing while under the second and third schemes the monopoly chooses final prices and access charges subject either to a peak load physical cap or a total revenue price cap constraint in addition we consider circumstances in which the regulator does not know consumer demand the monopoly cannot price discriminate beyond a range defined by the marginal cost as a floor and the stand alone cost as a ceiling and access charges are set at the fully distributed cost allocation level currently in force the model is calibrated with chilean data and demonstrates that in terms of social welfare the fully distributed cost contract scheme currently in effect can be improved by discriminatory pricing complemented by certain of the analyzed constraints

price behaviour in the us sweetener market a cointegration approach the sweetener market in the united states is complicated because of the substitution possibilities between high fructose corn syrup hfcs and sugar this study focuses on the relationship between raw sugar prices and the prices for high fructose corn syrup sugar and hfcs are imperfect substitutes for several industrial uses sugar can be used for all industrial uses but hfcs has limited uses this study uses cointegration analysis to examine the relationship between sugar and hfcs prices as well as the relationship between raw and refined sugar prices over time the results indicate that sugar and hfcs prices move together for the 1983 1996 period however after this time period hfcs prices no longer follow sugar prices

solving the revenue reconciliation problem of distribution network providers using long term marginal prices in this paper the authors describe an integrated methodology to compute long term marginal prices in distribution networks long term marginal prices are considered the most interesting and economically sound way of allocating network costs to users additionally they inherently deal with the revenue reconciliation problem as they generally do not require other large supplementary tariff terms the proposed methodology uses fuzzy sets to model uncertainties in load forecasts and considers several criteria to guide the identification of solutions at the end there is a final decision making step to select the most adequate expansion plan according to the preferences of the decision maker

market reforms and commodity price volatility the case of east african coffee market the goal of this paper is to examine the impact of commodity market reforms on producer price volatility using evidence from the east african coffee market the results based on time varying volatility models and key summary statistics show that coffee market reforms in the east african community eac are associated with changes in producer price volatility and volatility persistence at both country and regional levels however reforms were not the only cause of changes in price volatility the study further shows that reforms had different effects on prices volatilities of arabica and robusta varieties of coffee grown in individual eac countries these findings have wider implication for commodity market reforms and producer price stabilisation policies in the eac and coffee producing countries in sub sahara africa

the impact of exchange rates and developing country debt on commodity prices a major feature of the international economy over the past decade has been the swings in the value of the us dollar the dollar fell to a historically low level in the late i970s but rose sharply over the period i982 4 by the beginning of i985 the dollar was generally considered to be over valued by between 2o and 40 since i985 there has been a depreciation of over one third these wide fluctuations in the value of the dollar have had implications for all major traded goods this paper focuses on the effects of changes in the value of the dollar on primary commodity prices and possible interactions between ldc indebtedness and these effects a rise fall in the value of the dollar must be expected to result in a fall rise in dollar commodity prices ridler and yandle i972 proposed a simple comparative static single commodity model to analyse the effects of exchange rate changes on the price of an individual primary commodity they showed that the commodity price change would be given by the change in an appropriately weighted exchange rate index write the price of commodityj as

optimal departures from marginal cost pricing focuses on departures from marginal cost pricing optimal allocation or resources level of tax revenue that will be collected by the government theorems developed for resource allocation ebsco

the prebisch singer hypothesis a reappraisal independent of stationarity hypotheses time series behaviour of the relative price of primary commodities raul prebisch i950 and hans singer i950 believed that the long term trend of primary commodity prices was negative the latter in an interesting discussion of the above quandary pp 482 3 viewed rises in primary commodity prices as purely temporary sources of surplus that offered short lived opportunities to increase industrial investment these opportunities were missed by private investors who instead increased primary sector investment in such circumstances because all private activity tends to be governed by the price