market state and civil organizations in latin america beyond the debt crisis the context for rural development abstract the development strategy emerging in latin america implies a sharply redefined balance in the relative roles of the market the state and civil organizations market liberalization has been extensive and intense efforts have been undertaken to make the new rules credible the state has been divested of many productive and regulatory activities but descaling is a reflection of short run stabilization policies and signaling not of long term tendencies since an active state remains strongly in demand civil organizations are assuming active roles as alternative forms to produce and service members and as pressure groups agriculture has gained considerably from the policy reforms together with democratic representation and decentralization of governance this gives renewed opportunities for successful rural development initiatives

taxing agriculture instruments and incidence abstract this paper analyzes the ways in which individual instruments of tax subsidy policy involving agriculture affect income distribution production and trade in developing countries it highlights the interactions among policy instruments in effecting income transfers among government farmers and nonagricultural sectors these interactions and indirect effects become intelligible only when the multiplicity and characteristic forms of government interventions in international trade and the domestic economy are explicitly recognized in developing countries terms of trade taxes on agriculture cannot be easily replaced hence attempts to remove trade distortions with hypothetically nondistorting taxes can be counterproductive

price distortions in agriculture and their effects an international comparison the central thesis of this paper is that agricultural pricing policies pursued by developing countries produce effects which are diametrically opposite to those produced by the pricing policies of many developed countries and that the policies of both are costly in terms of global welfare in general the agricultural sector in developing countries is heavily taxed while that in the developed countries receives substantial price protection the effects of agricultural price distortions on output consumption trade and rural employment are estimated for nine countries in addition the effects of price distortions on the distribution of income between producers and consumers on government revenue and foreign exchange and the net social losses of the policies are calculated the results indicate that there are large income transfers and impacts on migration from the rural to the urban sector in developing countries and from the urban to the rural sector in developed economies

stabilization adjustment and the poor abstract this paper attempts to survey the recent literature on the impact of stabilization and adjustment programs upon the poor and to consider some of the key issues in the context of a particular equity oriented low income country tanzania after looking at some of the approaches of earlier studies this paper analyzes the effects of restructuring policies macroeconomic restraint and strategic policy change the author then reviews available evidence on the recent experience of tanzania with external shock efforts at stabilization and relations with the imf in conclusion the author argues that in order to better understand their impact on poverty we need more detailed analyses of specific countries experience with different kinds of macroeconomic imbalance and different short to medium term policy responses however he does indicate with some certainty that when equivalent external blows impact upon very low income countries there must be a presumption that other things being equal including the distribution of income the proportion of households and people pushed over the line into absolute poverty will be greater than in middle income countries the international community should provide external finance to aid these low income countries in limiting the negative impact on the poorest

official intervention in the foreign exchange market in an article in this journal dean taylor 1982 proposes a simple statistical test of the significance of central bank losses in the exchange market would random intervention be likely to result in as large a loss this comment shows that as it stands his test statistic does not allow properly for the effect of the mean level of intervention there is in fact an element of ambiguity in the question taylor poses and this is illustrated with examples taken from his empirical work the connection between the taylor test and regression analysis is noted and explored

smuggling and price disparity abstract this paper proposes a model of smuggling consistent with the coexistence of smuggling legal trade and price disparity defined as a domestic price which exceeds is less than the return from legal export import these phenomena have been found to characterize indonesian smuggling a framework is presented in which legal trade is used to cloak smuggling activity with the implication that the greater the volume of legal trade the less the costs of smuggling this model is then used to explain the observation noted above and to show that smuggling may be welfare increasing vis a vis the non smuggling situation and that even if the suppression of smuggling is costless tax revenue maximization may require a positive level of smuggling in addition the model is applied to coffee and rubber exports from indonesia

agricultural performance and development strategy retrospect and prospect abstract the slow pace and inequitable pattern of past agricultural growth have been major factors in the continuing problems of poverty hunger and unemployment especially in the poorer regions of the third world past experience shows that agriculture has an important potential in economic development given appropriate structures and policies these historical lessons are of strategic significance for poor countries as they confront severe problems of adjustment this paper examines the main payoffs and obstacles to the pursuit of an agriculture led industrialization strategy together with proposals for appropriate policies that can support such a strategy

on the transmission of world agricultural prices two questions are asked about the relationship between domestic prices and world prices of agricultural commodities are variations in world prices transmitted to domestic prices domestic prices are regressed on world prices in various forms taking into account the possible effects of exchange rates and inflation the empirical analysis is based on data from the food and agriculture organization of the united nations for 58 countries from 1968 78 and for the countries of the european community from 1961 85 the results show that most of the variations in world prices are transmitted and that they constitute the dominant component in the variations of domestic prices

pro competitive effects of trade reform results from a cge model of cameroon abstract how likely is trade liberalization to produce efficiency gains in the presence of imperfect competition scale economies and higher than average wages in the modern sectors all common features in developing economies these features create a potential conflict to the extent that traditional notions of comparative advantage lead us to expect that the modern sectors will be squeezed with liberalization in this paper we investigate this issue by using an applied general equilibrium model calibrated to cameroonian data under perfect competition we find that the welfare effect is a wash since the beneficial consequence of expanded imports is offset by the reduction in employment in the modern high wage sectors under imperfect competition by contrast trade liberalization produces welfare gains of the order of 1 to 2 percent of income the key is the pro competitive effect of liberalization domestic firms in the modern sectors now perceive themselves as facing a higher elasticity of demand which spurs them to increase production

agriculture in recent development theory abstract this paper is a critical review of recent contributions to the literature on agriculture in development theory it considers and compares the main lines of advance made within neoclassical neo marxian and structuralist approaches recent neo marxian and structuralist studies of agrarian development reveal that traditional agriculture is neither stationary nor efficient that resource allocation cannot be separated from wealth distribution or production organization that forms of surplus appropriation do not necessarily follow the dictates of efficiency that the social relations of production may inhibit accumulation and determine the forms of technological change that the state s role in primitive accumulation is more economic than explicitly coercive political and that political and macroeconomic constraints preclude a simple get the prices right view of the intersectoral terms of trade the thrust of these developments is to challenge both neoclassical and some orthodox marxian formulations of agrarian development issues and add to the insights to be gleaned from a political economy of development

a variance ratio test of random walks in foreign exchange rates the separate variance ratio tests under homoscedasticity and heteroscedasticity both provide evidence rejecting the random walk hypothesis using five pairs of weekly nominal exchange rate series over the period from august 7 1974 to march 29 1989 the rejections cast doubt on the random walk hypothesis in exchange rates which has received support in the existing literature furthermore since the rejections are robust to heteroscedasticity they suggest autocorelations of weekly increments in the nominal exchange rate series which may be consistent with the exchange rate overshooting or undershooting phenomenon in the past decade there has been a consensus that nominal exchange rates follow a random walk process since a unit root and uncorrelated increments are both required for a random walk process the random walk is usually supported in the existing literature either because a unit root component is detected in the exchange rate series or because the increment in the exchange rate is found to be serially uncorrelated for example meese and singleton 1982 and baillie and bollerslev 1989 both find a unit root component in the exchange rate series and the evidence provided in giddy and dufey 1975 cornell and dietrich 1978 logue sweeney and willett 1978 and hsieh 1988 all suggest that the exchange rate series contains uncorrelated increments in this paper the random walk hypothesis for the nominal exchange rate series is reexamined by applying a variance ratio test developed in lo and mackinlay 1988 to five pairs of weekly nominal exchange rate series over the period from august 7 1974 to march 29 1989 while there are two implications of the random walk unit root and uncorrelated increments this paper focuses on the uncorrelated increments aspect this is not only because there are some important departures from the random walk that unit root test cannot detect but also because the autocorrelation aspect may yield

poverty and public policy the problem of poverty is particularly acute in india with 14 of the world s population we have the misfortune of having almost twice as large a share of the world s poor indeed as i shall presently underline the question of poverty and its amelioration has been at the center of our concerns from the beginning of our planning efforts almost four decades ago little therefore can be said on it that some distinguished indian economist has not already said in some ways therefore to talk on the design of public policy for poverty to an indian audience is to carry coal to newcastle or as the old saying goes to teach your grandmother how to suck eggs nonetheless i hope to provide a fresh perspective by putting the problem into an explicit analytical framework that permits alternative policy designs to be sharply defined and contrasted i also intend to draw on international experience to put our efforts and problems into both historical and comparative perspectives

implications of agricultural trade liberalization for the developing countries abstract the developing countries as a group could expect to experience only small welfare gains if they chose not to actively participate in agricultural trade liberalization and relied solely on the benefits of partial liberalization in the oecd countries participation along the lines of the dunkel package with the developing countries reducing positive assistance by less than the developed countries would yield gains of the order of us 20 billion more comprehensive participation in trade liberalization involving reductions of both positive and negative protection would almost triple these welfare gains while some developing countries do not gain from trade liberalization even with full participation the number of such countries and the magnitude of their losses are greatly reduced

official intervention in the foreign exchange market or bet against the central bank evaluating official foreign exchange intervention during the 1970s using friedman s profit criterion shows that central banks have failed to stabilize the exchange markets and have lost billions of dollars the monetary authorities have resisted rate movements which results in a misallocation of resources when there is a shift in the equilibrium exchange rate counterspeculation by exchange traders reduces the destabilizing effect of central bank intervention and the consequent loss in economic welfare

domestic constraints on export led growth a case study of india abstract in light of the 1991 1993 indian policy reforms this paper assesses the feasibility of a strategy of manufacturing export led growth for india by means of simulation experiments using a nine sector seven income classes computable general equilibrium model developed for india s seventh plan period 1985 1990 the relative merits of this strategy are compared to those of an alternative open development strategy agricultural demand led industrialization under both a fixed and flexible exchange rate regime compared to earlier models the analysis adds disaggregated agricultural supply and income distribution and export demand response the results suggest that industrial growth can be self defeating by raising the relative price of domestic goods and thereby running into an export demand bottleneck hence if a step up in manufacturing exports is to contribute to a non inflationary acceleration of gdp growth it needs to be supplemented by adequate policies aimed at raising agricultural output and income

prices and productivity in agriculture developing countries often tax agriculture heavily a practice that might affect the productivity as well as the quantity of resources allocated to agriculture a variable coefficient cross country agricultural production function is estimated with past price expectations among the determinants of the production coefficients productivity s responsiveness to those expectations implies that had these developing economies eliminated price interventions agricultural productivity would have increased on average by about a fourth copyright 1993 by mit press

long run trends in 26 primary commodity prices abstract this paper uses time series techniques to re examine the prebisch singer hypothesis that there has been a secular deterioration in primary commodity prices in terms of manufactured goods instead of using price indices it considers 26 individual commodity prices over the period 1900 1983 this avoids possible aggregation and interpretation problems associated with the use of aggregate indices the study finds that 16 of the 26 prices are trendless five have statistically significant negative trends the remaining five have positive trends it concludes that the prebisch singer hypothesis should certainly not be considered a universal phenomenon or stylized fact

does the fed beat the foreign exchange market abstract this paper s estimates and tests of fed intervention profits are the first that explicitly adjust for foreign exchange risk premia failure to adjust may grossly affect estimated profits profits appear economically and statistically significant whether risk premia are modeled as time constant or as appreciation s market beta depending on fed intervention the estimates are sensitive to the method of risk adjustment and to the periods used because a key variable cumulative intervention is i 1 test statistics may have non standard distributions a problem affecting past tests this paper s tests account for non standard distributions possible explanations of these profits have mixed empirical support in the literature

the profitability of us intervention in the foreign exchange markets abstract using a formula for intervention profits in which profitability measured as of date t depends on how well intervention operations predict ex post deviations from interest parity this paper shows that us intervention since the beginning of generalized floating in 1973 has earned profits for the us monetary authorities fundamental explanations for the profitability of us intervention are difficult to isolate but statistical tests suggest that it is unlikely the profits are merely the outcome of chance or a normal return to bearing time invariant risk

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

transmission effects of foreign exchange reserves on price level evidence from china abstract we investigate the transmission effects of foreign exchange reserves on price level in china by utilizing a nonparametric model first of all we employ var co integration analysis to obtain the number of lagged periods in every stage and then we estimate the elasticity of foreign exchange reserves to money supply and the elasticity of money supply to consumer price index respectively with nonparametric estimations finally we use the results from nonparametric estimations to calculate the cross elasticity of foreign exchange reserves to consumer price index we find that an increase in foreign exchange reserves will lead to an increase in money supply which in turn will result in an increase in price level

price setting in indian industry abstract price setting models with variable mark up rates are specified and estimated for four sectors of indian industry it is found that capacity utilisation has a significant effect on mark up rates implying a phillips curve type trade off between output and prices international prices do not appear to be as important in the price setting behaviour of firms

directly unproductive profit seeking dup activities this paper propses directly unproductive profit seeking dup activities as a general concept that embraces a wide range of recently analyzed economic activities including the subset of rent seeking activities considered by krueger it then proceeds to provide a synthesis and generalization of the welfare theoretic analysis of such activities by developing a fourfold categorization of cases depending on the levels of distortions before and after the dup activity thus a unification and overview of the subject are achieved

the desirable form of openness for indian agriculture how open should a developing country s agriculture be to the world economy what are the medium term effects for growth and income distribution of close integration with world agricultural markets through trade liberalisation and domestic reform and what are the implications of the strategic integration of agriculture with world markets using a dynamic computable general equilibrium model these questions are addressed for the indian economy the simulation results show that the costs of close integration are large and unevenly distributed irrespective of whether the agricultural reform is immediate or gradual one form of strategic integration is operationalised that yields more desirable outcomes in terms of growth and income distribution the paper also compares the effectiveness of the two policy regimes in coping with an adverse supply shock copyright 2001 by oxford university press

international trade and agricultural development in developing countries significance of the uruguay round of gatt negotiations abstract liberalization of world trade in agricultural products ranks high on the agenda of the uruguay round after a period of more than six years however the negotiations have not been concluded nevertheless an outcome seems to be in sight the agreement will most likely not result in a move to freer trade it seems that domestic policies will become even more regulative than in the past in an attempt to cut exportable surpluses and to ease trade tensions among the main exporting nations this paper explores possible impacts of the gatt round on agricultural development in developing countries agricultural development is more than only growth in agricultural production or productivity however it is argued in the paper that other variables which also indicate agricultural development are often closely correlated with growth in production and productivity trade in agricultural products is not always an engine for agricultural development if internal divergences are not accounted for by appropriate domestic policies trade may be even harmful to agricultural development hence empirical research based on cross country analysis does not provide a clear answer about the role of trade for development past policies in industrialized countries have most likely had a negative effect on developing countries as a group however the effects differ widely across countries liberalization policies in industrialized countries would not just reverse these negative effects for developing countries price reduction in industrialized countries may not result in the often cited production decline in the short term present x inefficiency in agriculture will be reduced by liberalization leading to an outward shift of the supply curve hence liberalization may not lead to higher world market prices for temperate zone products in the short and medium term apart from this empirical models differ widely in the price effects they predict the expected outcome of the uruguay round increased regulation of domestic policies is likely both more negative for developing countries than past protectionist policies and worse than an overall liberalization world market prices will increase uncertainty and instability can be expected to grow and food aid may become less available there will be a need to react to these challenges with measures on the international and national level initiatives to deal with food crises in developing countries and to stimulate liberalization in developing countries should be considered finally developing countries should be made aware that their own domestic policies have a much greater economic impact than policies in other countries even if the latter are as protectionist as current agricultural policies in the industrialized world

beating the foreign exchange market filter rule profits found in foreign exchange markets in the early days of the current managed float persist in later periods as shown by statistical tests developed and implemented here the test is consistent with but independent of a wide variety of asset pricing models the profits found cannot be explained by risk if risk premia are constant over time inclusion of the home foreign interest rate differential in computing profits has little effect on the comparison of filter returns to those of buy and hold in the early years of the generalized managed floating that began in march 1973 filter rule profits in excess of buy and hold were found for many countries logue sweeney and willett 18 dooley and shafer 6 cornell and dietrich 5 it was unclear however whether such profits indicated inefficiencies first it was not clear that risk was adequately handled in such tests and often risk was ignored second there was no evidence such profits would be available postsample and third there was no statistical test of the significance of these profits this paper uses the logic of risk return tradeoffs to analyze the role of risk in such tests and illustrates the logic in a discussion using the sharpe lintner capital asset pricing model capm although a breeden consumption based capm a merton intertemporal capm or an arbitrage pricing model apm could easily be used the paper develops a test of statistical significance appropriate to foreign exchange markets section i analyzing the rate of return on foreign exchange speculation less the foreign domestic interest rate differential the test explicitly assumes that risk premia are constant over the sample the excess rates of return observable in using filters in going from a risk free dollar asset to a risk free deutsche mark dm asset persist into the 1980 s section ii and this is true even when taking account of transactions costs it turns out that these results for the dm case do not depend very much on the interestrate differential but primarily on exchange rate behavior this is useful to know because it is often quite difficult to find matching interest rate data of high quality for a sample of nine other currencies using only exchange rates section iii shows that the excess returns made in the first 610 days of the float persist in the next 1 220 days into the 1980 s dooley and shafer 7 find similar persistence in experiments that do not use buy and hold and have no significance tests when filter rule profits have been found in spot exchange markets it has often been argued that the profits are due to risk this paper uses the capm to analyze rates of return both to buy and hold and to filter strategies it turns out that the claremont mckenna college and claremont graduate school arthur d warga douglas joines and thomas d willett offered helpful comments and ning ning koo provided research assistance

rent seeking from a property rights perspective james buchanan 15 15 has suggested that rent seeking analysis can readily be incorporated within the property rights approach and as with public choice the theory of rent seeking can be interpreted as an appropriate extension yet no one has really explored rent seeking or revenue premium tariff or directly unproductive profit seeking from a property rights perspective buchanan 14 15 16 17 clearly indicated that property rights assignments actually underlie the rent seeking process and others have also recognized this 4 20 23 28 but there are further insights into the workings of the political economy which can be derived for instance lobbying activities with nonpecuniary goals clearly fit into the rent seeking framework when viewed through the property rights paradigm this contrasts strikingly with the perception of rent seeking held by some writers 9 10 11 12 13 furthermore a property rights approach to rent seeking provides predictions of a spiraling process of government growth since successful rent seeking by one interest group generally requires expansion of bureaucratic powers while at the same time creating incentives for the formation of additional rent seeking interest groups legislative responses to these new groups requires further expansion of the bureaucracy and creates incentives for more rent seeking so the growth process continues in this paper a brief summary of the conclusions of the rent seeking literature will be presented followed by an explanation of how the same conclusions have been deduced using the property rights paradigm various extensions of the rent seeking concept such as those alluded to above are then obtained by emphasizing a property rights approach following this the terms used to describe rent seeking e g directly unproductive profit seeking etc will be discussed to determine which if any is the most appropriate characterization of the phenomenon

food price policy the rationale for government intervention abstract policy makers in the most successful developing countries have not accepted either of the two major schools of thought on food price policy the neo classical school favours free trade to maximize efficiency of resource allocation the structuralist school favours interventions to satisfy goals for income distribution especially in the rapidly growing rice based economies of asia policy makers have been more concerned about stability of domestic prices than their level relative to world prices this concern traditionally dismissed by economists as purely political is justified on economic grounds because of improved macroeconomic and dynamic efficiency from stable food prices the paper identifies both the benefits from food price stability and the costs of achieving it

liberalization of indian trade and industrial licensing a disaggregated econometric model with simulations abstract a simultaneous model of production labor demand capital formation international trade and price determination with intersectoral linkages is specified for india s organized manufacturing sector disaggregated into 37 industries this model estimated from annual time series data spanning 1959 60 through 1979 80 and comprising 408 equations and identities fits well in a dynamic ex post simulation in counterfactual simulations it is found that trade liberalization alone in the sense of relative price restructuring to track world prices might actually have been slightly harmful to organized manufacturing production however such trade liberalization combined with capital formation allocated across sectors such as to reflect private profitability removing any constraints imposed by industrial licensing and investment planning is demonstrated to offer very substantial gains

the profitability of forward currency speculation by central banks abstract a methodology is proposed to convert stock data on a central bank s official forward position in the foreign exchange market into flow data regarding its purchases and sales of forward exchange over time the flow data enable us to determine whether the central bank s forward currency operations have been profitable or not the methodology is applied to the forward currency operations of the bank of canada we find that on the whole the bank of canada did not make systematic profits or losses on its operations

excess returns and official intervention some cross country evidence this paper presents a simple model of foreign exchange market intervention which shows that such intervention introduces positive structure into exchange rate changes evidence linking this structure to observable filter rule profits is also provided

cooperative lobbying and endogenous trade policy this paper considers trade policies in a small open economy in which two influential interest groups lobby the government since competitive lobbying leads to excessive rent seeking expenditures the lobbies have an incentive to cooperate the outcome of cooperative lobbying is characterized in terms of lobbying and bargaining power of the two groups two important results are derived first if the power of competing interest groups is balanced then cooperation leads to free trade second if it is unbalanced cooperation may on the contrary increase protection

distortions in world food markets in the wake of gatt evidence and policy implications abstract although the principle of trade liberalization has gained wide acceptance in recent years many policy makers in developing countries especially in latin america are exploring temporary import restrictions in the form of additional tariff protection to insulate domestic farmers from the impact of depressed prices until the uruguay round accord leads to higher world market prices for agricultural products the paper argues that there is little reason to believe that current world market prices will rise substantially in real terms even with the uruguay round accord fully implemented this finding suggests that additional tariff protection would not make economic sense

the uruguay round agreements impact on developing countries abstract implementation of the results of uruguay round will bring about significant increases in trade investment income and welfare for developing countries this derives from increased market access to developed countries markets and from enhanced efficiency originating from their own liberalization commitments although the distribution of benefits will be uneven developing countries will also benefit from improved rules for trade and investment coupled with enhanced institutional enforcement of these rules and greater exposure to global competition within a more predictable secure and credible international trading environment to maximize the benefits however developing countries will need to continue with recent unilateral reforms to improve their supply response

immiserizing growth and endogenous protection abstract this paper focuses on immiserizing growth in the two senses of bhagwati 1958 and johnson 1967 and how both the likelihood that either may occur and their extent can be affected by the presence of endogenous protection i e quota and other forms of protection for which the ad valorem equivalent level of protection is endogeneously determined we use a general equilibrium model of the philippines due to clarete 1984 to compute counterfactual equilibria involving changes in domestic policies terms of trade and resource endowments immiserizing growth in the sense of bhagwati is less likely because the terms of trade fall required to offset the growth of resources has to be significantly larger if no distortions are in the model immiserizing growth in the sense of johnson tends to be more likely if endogeneous protection is present as unbalanced growth occurs focused on the factor intensive in the protected sector resources are drawn out of the export sector and export earnings decline and if the level of protection is endogenously determined the welfare costs of protection increase

lobbying dup activities and welfare a response to tullock professor tullock 1981 in trying to understand the results in my 1981 paper on lobbying and welfare has raised issues that require further clarification and analysis for brevity s sake i shall concentrate here on the essentials leaving minor remarks of tullock s aside 1 the specific case of lobbying which i addressed originally was tariffseeking by pr otectionist lobbies so that the tariff would be endogenous i then showed that one could not argue in this instance that an exogenouslyspecified tariff at x was necessarily welfare superior to an endogenous tariff at x0 all other forms of lobbying were excluded of course 2 tullock argues that this result obtains because he and krueger 1974 think whereas i do not that tariff rcvcnucs can be wasted as it happens krueger 1974 made no such assumption she explicitly compared in her analysis of the specific cast of premium seeking for import quotas aircad in place quotas with such premium seeking with tariffs that had no corresponding revenue seeking or for that matter any waste resulting from the government directly expending the tariff revenue bhagwati and srinivasan 1980 were the first to introduce the revenue seeking concept and to argue that it was wholly inappropriate for krueger to compare tariffs and quotas on the assumption that the latter gave rise to fill premium seeking whereas the former gave rise to zero revenue seeking

agriculture under trade policy reform a quantitative assessment for india abstract under the impetus of the general agreement on tariffs and trade gatt accord the indian government is likely to extend the ongoing trade liberalization process to the agricultural sectors this paper provides a fresh quantitative assessment of such a policy of agricultural trade reform using a dynamic nine sector seven income classes computable general equilibrium model developed for india s seventh plan period 1985 90 the simulation outcomes suggest that the gains from agricultural trade liberalization may not be as large or as unambiguous as is often suggested the results also high light the possible conflict between successful agricultural trade liberalization and the requirement to reduce agricultural subsidies under gatt

on the role of agriculture in india s longer term development strategy two contrasting views on agriculture s role in india s longer term development strategy are identified and evaluated with the help of a dynamic multisector model capturing the structural features of india s mixed economy the simulation results show that policy recommendations favoring industrial growth in which the interdependence between agriculture and industry is not taken into account turn out to be self defeating while policies succeeding in raising agricultural production and income also lead to improved industrial performance because they augment the size of the domestic market hence the results suggest that indian industrialization can be only sustained by agriculture c 1995 academic press limited copyright 1995 by oxford university press

beyond export led growth abstract in light of the adverse conditions in the current international economic environment this paper reassesses the feasibility of continuing to rely on manufacturing export led growth as the major development dynamic for most ldcs during the next decade this paper argues that after the initial stages of industrial development the emphasis in policy toward agriculture should shift from surplus extraction to surplus creation and to the generation of demand linkages with the rest of the economy the author compares the relative merits of two alternative open development strategies export led industrialization and agricultural demand led industrialization adli by means of several simulation experiments the experiments are performed with a computable general equilibrium model of a small low income semi industrial open economy which is a stylization of south korea of 1963 they are carried out in an international environment assumed to represent the next decade based on a rate of growth of international demand for imports of about half the 1960 1973 rate the results support the adli approach on all counts

the cost of a central bank leaning against a random walk abstract using a stochastic model we show that a central bank is expected to suffer a loss when it temporarily affects the exchange rate by sterilized intervention against a random walk we also demonstrate that the methodology used in several studies of the profitability of official central bank intervention biases their results towards finding positive profits this bias created by only observing periods where cumulative intervention sums to zero accounts for the seemingly contradictory empirical results of several intervention profitability studies

sources of agricultural productivity growth and stagnation in sub saharan africa this paper examines sources of agricultural growth in sub saharan africa growth in the stock of traditional inputs land labor livestock remains the dominant source of output growth growth in modern input use was of secondary importance but still accounted for a 0 2 0 4 annual growth rate in three of four sub regions econometric results support earlier studies that suggest that land abundance may be a constraint on land productivity growth growth in agricultural exports and historic calorie availability had positive impacts on productivity these latter results suggest that positive feedback effects exist between export performance and food security on one hand and agricultural productivity on the other

central bank intervention and trading rule profits in foreign exchange markets abstract moving average trading rules are utilized in both futures and spot foreign currency markets to show that significant positive profits can be earned in four of five currencies examined the results are consistent for both in sample and forward simulation tests regression results demonstrate that central bank intervention is strongly associated with the profitability of trading returns for the three major currencies dm yen and pound and partially explains returns for the sf and cd consistent with conjectures in previous studies that news concerning intervention tends to be revealed over weekends we find that moving average trading rule returns are significantly positive on fridays and mondays and not significantly different from zero in the middle of the week

balance of trade announcements and asset prices influence on equity prices exchange rates and interest rates abstract this paper examines the informational impact of traded balance announcements on asset prices including equities currrencies long and short term debt instruments and financial futures this study finds that in the 1980s prior to the 1985 plaza agreement for international economic cooperation information in trade balance announcements seem to have influenced only interest rates however in the 1985 1987 period such announcements also influenced stock prices and currency values these influences intensity further in the 1987 1988 period thus asset prices are sensitive to news in trade balance announcements and this sensitivity seems to have increased significantly in recent years with important implications for asset pricing models and economic policy formulation jel f30

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

cross country disparity in agricultural productivity quantifying the role of modern seed adoption inequality of agricultural labour productivity across the developing world has increased substantially over the past 40 years this article asks to what extent did the diffusion of green revolution seed varieties contribute to increasing agricultural labour productivity disparity across the developing countries we find that 22 per cent of cross country variation in agricultural labour productivity can be attributed to the diffusion of high yielding seed varieties across countries and that the impact of such diffusion differed significantly across regions we discuss the implications of these findings for policy directed at increasing agricultural labour productivity in the developing world

the rocky road to reform trade industrial financial and agricultural strategies abstract this paper reviews recent issues of economic reform in developing countries based on studies undertaken for the world institute for development economics research wider emphasis is placed on a novel 3 gap adjustment model for savings investment trade and fiscal limitations at the macro level and a distinction between allocative and productive efficiency microeconomically issues of stabilization and adjustment and trade industrial policy financial reform privatization market deregulation and the agrarian question are discussed

challenges of trade and agricultural development for east central europe and states of the former ussr abstract the agricultural transition in central and eastern europe and the former ussr reflects a fundamental change in development strategy and will have a profound impact on agricultural trade the greatest impact will be indirect through agriculture s contribution to general economic reform and acceleration of regional and global growth the direct impact on trade in food and fiber will in aggregate consist of a fall in net imports most of the decline in net imports will derive from reduction in demand and improved utilization potential for productivity increase is substantial but not all of the increased productivity will be reflected in the traditional supply response of increased production instead marginal resources will shift out of farming and producers will restructure and adopt new technologies in pursuit of lower costs shifts in the commodity composition of trade will occur and the changes in grain and livestock markets will be greatest if the reform is successful the former soviet union could become a modest net grain exporter instead of a large importer wheat would be the leading export grain and levels of wheat exports and corn imports could become quite sensitive to relative prices on world markets

relative export competitiveness of agricultural commodities and its determinants some evidence from india abstract in this paper we derive time varying relative export competitiveness rec of india s top agricultural exports rice wheat cotton and sugar against india s share of world agricultural exports rec wa and world exports rec we from 1961 to 2012 we reveal that india s exports of all four commodities became relatively competitive over time but these were not as competitive as the top or selected emerging exporters of the four commodities we also examine the determinants of rec in these four commodities focusing on factors including crop specific and aggregate factor endowments domestic price export prices and gdp per capital preferential trade agreements export restrictions and bans and india s green revolution the regression analysis was mainly confined to the 1981 2012 due to data constraints we find that the time series regression results are similar in sign and significance for rec we and rec wa our key findings suggest the rec in wheat rice and cotton deteriorated as a result of export restrictions capital had negative effects on cotton rec labor and farm size did not influence the rec in the commodities the green revolution improved the rec in rice and cotton in phase 3 the wto had a positive effect on the rec in rice the south asian free trade area safta agreement adversely affected the rec in wheat and rice but strengthened the rec in cotton and sugar higher domestic price reduced the rec in cotton higher per capita income strengthens the rec in wheat with a lag we explain these results and suggest policy implications

do central banks lose on foreign exchange intervention a review article abstract estimates of central bank intervention losses or profits vary widely some estimates find substantial losses others profits in most cases estimated profits are not risk adjusted and risk adjustment can have large effects furthermore profit estimates involve variables integrated of order one and because of this test statistics may have nonstandard distributions few studies take this into account estimates of risk adjusted profits for the us fed and the swedish riksbank with allowances for possible nonstandard distributions suggest that neither made losses and might have made significant profits

primary commodity prices manufactured goods prices and the terms of trade of developing countries what the long run shows the authors revisit in this article the empirical foundation of the alleged secular decline in the prices of primary commodities relative to those of manufactures they use a newly constructed index of commodity prices and two modified indexes of manufactured good prices and find that from 1900 to 1986 the relative prices of all primary commodities fell on trend by 0 5 percent a year and those of nonfuel primary commodities by 0 6 percent a year they thus confirm the sign but not the magnitude of the trend implicit in the work of prebisch but even the more limited secular decline shown by their relative price indexes may be magnified by an incomplete account of quality improvements in manufactures they then show that the evolution of terms of trade of nonfuel primary commodities is not the same as that of the net barter terms of trade of non oil exporting developing countries finally they find that despite the decline that has probably occurred during the current century in the terms of trade of nonfuel primary commodities the purchasing power of total exports of these products has increased considerably similarly the fall that may have occurred after world war ii in the net barter terms of trade of developing countries seems to have been more than compensated for by the steady improvement in their income terms of trade

the uruguay round and agricultural policies in developing countries and economies in transition abstract this paper reviews changes in the global trade policy environment as a result of the uruguay round agreement on agriculture and their potential impact on developing countries and economies in transition the agreement is except in a few cases not likely to present these countries with major policy adjustment problems in latin america unilateral reforms have proceeded further than required by the agreement in africa countries that have experienced structural adjustment are liberalizing faster than the agreement requires in asia the situation is mixed but in general agricultural trade liberalization appears to be moving more slowly especially when compared to latin america progress in reducing quantitative restrictions has been show in eastern europe and the cis the progression and completeness of liberalization varies widely though gatt notions of tariffication and tariff bindings have strengthened the position of reformers in those countries that are members of the wto while the short term impact of the agreement may be modest the bringing of agriculture under the rules of gatt should help prevent reintroducing non tariff restrictions in the future however given that much of the food imports particularly in parts of asia are still conducted by parastatals if state trading in gatt legal it is hard to anticipate how strong discipline on trade distorting support could be brought about

agricultural incentives in developing countries measuring the effect of sectoral and economywide policies the impact of sector specific direct and economywide indirect policies on agricultural incentives for 18 developing countries for the period 1975 84 are estimated the direct effect is measured by the proportional difference between the producer price and the border price adjusting for distribution storage transport and other marketing costs the indirect effect has two components 1 the impact of the unsustainable portion of the current account deficit and of industrial protection policies on the real exchange rate and thus on the price of agricultural commodities relative to nonagricultural nontradables and 2 the impact of industrial protection policies on the relative price of agricultural commodities to that of nonagricultural tradable goods the authors found that a in almost all cases the direct effect is equivalent to a tax on exportable goods and to a subsidy for importables b the indirect effect also taxes agriculture and dominates the direct effect and c the direct policies for both importables and exportables stabilize domestic producer prices

the welfare costs of price controls for cars and color televisions in poland contrasting estimates of rent seeking from recent experience the welfare costs of price controls can vary enormously depending on the method of allocating the goods in shortage and the possible rent seeking costs that may result with full rent dissipation the welfare loss from price controls on polish color televisions in 1989 was about ten times the standard estimates of distortion costs which ignore rent seeking and was more than 100 percent of the value of domestic producers sales the methods of allocating cars however did not result in rent seeking costs the domestic price controls were an unintended implicit subsidy to imports subsidies for cars were estimated at 43 percent and for color televisions at 22 percent

a case study on the effectiveness of foreign exchange market intervention the italian lira september 1975 march 1977 this paper discusses italy s policies of official intervention on foreign exchange markets and their role in restoring orderly conditions after the foreign exchange crisis of february 1976 for these purposes daily time series of official intervention the exchange rate and interest rates have been collected and analyzed with standard statistical methods as well as with vector autoregression techniques the results seem to show that intervention had some effect in moderating exchange rate variability and perhaps in avoiding an unwarranted depreciation of the lira and lend some support to the contention that intervention can increase the authorities room for maneuver

investment strategies to combat rural poverty a proposal for latin america abstract the economic crisis that started in 1980 has forced the latin american countries to implement drastic stabilization policies and structural adjustment programs the consequent appreciation of the real exchange rate has transformed agriculture into the most dynamic sector of the economy this creates the possibility of defining a forward looking rural development strategy that is consistent with this new role for agriculture and that has the potential of significantly lessening rural poverty starting from a social poverty map for the rural areas we identify a five pronged approach that includes 1 farm oriented rural development projects for the upper subfamily and family farms 2 household oriented rural development projects for the lower subfamily farms 3 access to addtional assets for the landless and subfamily farmers through land reform and colonization 4 employment creation and labor market rationalization and 5 the promotion of backward forward and final demand linkages with agriculture located in the rural areas

the welfare consequences of directly unproductive profit seeking dup lobbying activities price versus quantity distortions abstract this paper is a contribution to the growing literature on the theory of what bhagwati 1982 has christened the theory of dup activities these are activities that use up real resources in making profits i e income without producing directly or indirectly a good they result therefore in the contraction of the availability set defined on goods for one generic subset of such dup activities namely distortion triggered lobbying activities the paper establishes asymmetrical propositions on the possibility of such dup lobbying resulting in a paradoxical improvement of welfare

trade reform with quotas partial rent retention and tariffs quotas are the predominant means of protection in developed countries with quota rents commonly shared between exporter and importer this paper derives shadow prices appropriate to evaluating trade reform under these circumstances and provides a number of useful sufficient conditions for welfare improving piecemeal reform in doing so the authors apply the distorted quantity constrained expenditure function and use implicit separability to derive more powerful results than have previously been available

fed intervention dollar appreciation and systematic risk abstract in a four factor asset pricing model estimated on daily data fed intervention significantly affects betas of surprises in the market return expected inflation rate yield curve and corporate bond risk premium fed foreign currency sales cause economically and statistically significant increases in the systematic risk premium in appreciation and thus in the dollar s expected appreciation rate the direction the fed desires and consistent with the signaling but not the portfolio balance channel intervention s effects on actual appreciation are less reliable they depend on unpredictable risk factor realizations even successful intervention to strengthen the dollar may be costly by increasing the dollar s systematic risk intervention reduces the attractiveness of u s relative to foreign investments further uncertainty about future fed interventions may induce resource misallocation ceteris paribus investors find it harder to estimate risk adjusted discount rates and forecast the home currency value of cash flows

measurement error and the profitability of interventions a closer look at snb transactions data abstract several studies argue that central bank profits from foreign exchange interventions should be calculated using daily data the rationale is that intra month exchange rate volatility is larger than the intra day volatility this note tests this hypothesis with transactions data

a dual approach to evaluating research benefits in the presence of trade distortions we present a new approach for evaluating the welfare consequences of technical change a major feature is its ability to incorporate multiple distortions and multiple sources of technical change in interrelated markets a modified balance of trade function provides money measures of welfare change in terms of producer profits consumer expenditures and tax revenues alternative specifications of technical change are presented to capture the effects of differences in the form of technical change in an illustrative numerical example the approach is applied to a case involving two distortions and technical changes in two related markets the example shows that the approach is reasonably easy to use and that accounting correctly for price distortions can have important implications for research benefit measures

agriculture in the uruguay round interests of developing countries agriculture has been favored and protected in developed countries while trade policies in developing countries frequently support industry at the expense of exportables and unprotected importables in agriculture this protection constrains expansion of temperate and subtropical agricultural exports from developing countries several studies have estimated the effects of liberalization of trade restrictions on world prices export earnings and import costs while developing countries generally would benefit from having the agricultural policies of the most powerful countries bound by international rules on trade there are differences among the developing countries as to which products should be liberalized even if such conflicts did not exist politically feasible means to obtain such compliance are elusive the potentially most feasible approaches for developing countries to obtain some measure of liberalization in the uruguay round of trade negotiations are discussed

excess returns and official intervention canada 1952 1960 research shows that filter rules in foreign exchange markets yield higher than normal profits other work indicates that central banks lean against the wind in those markets and some claim that this intervention generates profits for private speculators this study which uses daily data for exchange rates and official re serves indicates that excess profits from filter rules between the u s and canadian dollar during the 1950s are the result of intervention by the bank of canada

the foreign exchange costs of central bank intervention evidence from sweden abstract this study presents evidence on risk adjusted profits for the swedish central bank estimated profits can be quite sensitive as to whether rates of return are risk adjusted or not and how the risk adjustment is done various ways of adjusting for abnormal returns and extracting buy sell signals are tried results on daily data support the view that riksbank intervention did not make risk adjusted losses over the period 1986 1990 the results might be challenged as arising from inappropriate risk adjustment

distortion triggered lobbying and welfare a contribution to the theory of directly unproductive profit seeking activities abstract the paper considers the normative implications of lobbying for non exclusive income generated by an exogenously specified policy intervention such lobbying activities are a subset of what bhagwati has termed directly unproductive profit seeking dup activities it is demonstrated that the welfare effects of lobbying triggered by a policy distortion depend critically on whether the direct impact of the policy constraint is on price or an quantity it is also shown that several standard comparative static welfare analyses of alternative policy distorted states are significantly affected once the policy intervention is assumed to be continuously accompanied by lobbying for the associated non exclusive income

how to make the central bank look good a reply in his original 1982 paper dean taylor proposes a simple test of the significance of central bank losses in the exchange market would random intervention be likely to result in as large a loss my comment spencer 1985 took his model at face value but showed that his test statistic was misspecified and that the question he posed was ambiguous yielding two alternative criteria in his comment this issue taylor has shown that if in fact central banks lean into the wind then one of these criteria is biased but this analysis raises a general question about the use of profitability indicators it shows that the conditional nature of these calculations makes them unstable and prone to manipulation when central banks lean into the wind