Changes In Output Prices Research Articles

Climate, Agroecology and Socio-Economic Determinants of Food Availability from Agriculture in Bangladesh, (1948–2008)

The paper examines the impacts of prices, resources, technology, education, public investments, climatic variables and agroecology on Food Availability (FA) from domestic agriculture in Bangladesh using a panel data of 17 regions covering a 61-year period (1948–2008) by utilising a dynamic agricultural supply response framework and Generalised Methods of Moments (GMM) estimator. Results revealed that FA has increased at the rate of 1.32% p.a. with significant regional variations. Significant regional differences exist with respect to climatic variables, resources, Green Revolution (GR) technology and education. Among the output prices, rise in the prices of rice, vegetables and pulses significantly increase FA whereas an increase in spice price significantly reduces FA. Among the input prices, a rise in labour wage significantly increases FA. FA increases significantly with an increase in GR technology expansion, as expected. Among the resources, increases in average farm size and labour stock per farm significantly increase FA, as expected. Among the climatic factors, a rise in annual minimum temperature significantly increases FA. FA is also significantly influenced by agroecological characteristics. FA is significantly higher in Karatoa floodplain and Atrai Basin but significantly lower in Ganges Tidal floodplain. Major disasters/events (i.e., the Liberation War of 1971 and 1988 flood) also significantly reduced FA, as expected. The key conclusion is that, over the past six decades, Food Availability in Bangladesh was significantly shaped by changes in climate, agrocology, output prices, resources and GR technology diffusion.

An Assessment of Risks Along the Sweet Potato Value Chain in Ghana

This study was aimed at examining risks and the various risk management strategies adopted by actors along the sweet potato value chain in Ghana by focusing on Fanteakwa (Southern sector) and West Mamprusi (Northern sector) districts. Data were collected from both primary and secondary sources. Selection of 200 producer respondents was done using the simple random sampling technique whilst a combination of accidental sampling and snowballing techniques were used to select 100 traders and 80 processors of sweet potato. Descriptive statistics were used to identify and analyze risks and management strategies employed by value chain actors. The Random Variability Index (RVI) was used to determine the level of predictability of the various risks. The study results revealed that, risks along the sweet potato value chain were seen to be identical along the chain with wide variations in predictability and management strategies employed by actors. All the levels of the sweet potato value chain identified sudden changes in output price as the most important risk. However, output level variability, market cost variability and variability in post-harvest (rotten) losses were the least predicted at the production, trader and processor levels of the chain respectively. Also, actors generally devised management strategies that mainly reduced the impact of these risks and ultimately maximize their utility. It is therefore recommended that actors should be encouraged to form associations and contract prices in advance since it is seen as being the best risk management tool for dealing with price risk especially when the said risk is seen to be the most important along the entire chain.

Decomposing Value Added Growth into Explanatory Factors

A method for decomposing nominal value added growth is presented, which identifies the contributions from efficiency change, growth of primary inputs, changes in output and input prices, technical progress and returns to scale. In order to implement the decomposition, an estimate of the relevant cost constrained value added function for the two periods under consideration is required. This is taken to be the free disposal hull of past observations. Aggregation over sectors is also considered. The methodology is illustrated using U.S. data for two sectors over the years 1960-2014.

Intertemporal production and intertemporal substitution in output supply and input demand

ABSTRACTThis article presents an intertemporal model of production with multiple inputs to investigate substitution opportunities facing firms over time. The firm’s intertemporal profit maximization problem is characterized with the familiar cost function, and various intertemporal substitution elasticities are delineated for output supply and input demand. The absence of intertemporal substitution in production can imply production smoothing, and allowance for intertemporal substitution in labour demand reinforces the prediction of the real business cycle model. For aggregate US manufacturing, we find substantial substitution in output supply and labour demand over time due to intertemporal changes in output price and wage rates.

Profitability development of Czech dairy farms

The paper deals with the development and main determinants of the profitability of Czech dairy farms. The aim of the paper is to evaluate the differences in the dynamics of profitability for two types of milk producers - specialized dairy farms and mixed farms - within the context of the agricultural policy changes. This aim is achieved by decomposing profitability into output growth, output and input price changes, changes in decoupled subsidies, technical change, scale, mark-up, and technical efficiency change components based on input distance function estimation. Based on the panel data obtained from the FADN database in the time period 2004-2011, it was found that the change in profitability was positive in the analysed time period, and slightly higher for the specialized dairy farms than for the mixed ones. The changes in output price, mark-up component and technical change are the main determinants of the development of profitability. Agricultural policy measures had different effects on these components. The strongest correlation was between the operational subsidies and the technical change and technical efficiency change, and this correlation was negative.

Competitiveness, Profitability, Input Demand and Output Supply of Maize Production in Bangladesh

The study assesses international competitiveness, profitability, output supply and input demand of maize production using a farm survey data of 165 farmers from two major maize growing areas (i.e., Dinajpur and Lalmonirhat districts) of northwestern Bangladesh. Results revealed that maize production is globally competitive and, therefore, can successfully substitute its import. Maize production is also profitable at the farm level (Benefit Cost Ratio = 1.21) with no adverse influence of farm size on yield and profitability. Maize farmers are also responsive to changes in market prices of inputs and outputs. A 1% increase in maize price will increase output supply by 0.4%. The most dominant driver of maize supply and other input demands is land. A 1% increase in available land will increase maize supply by a substantial 3.9%. In addition, landless laborers will benefit through an increase in hired labor demand when land area increases. Policy implications include investments in R&D, tenurial reform to consolidate land holding and smooth functioning of the hired labor market in order to increase maize production and profitability in Bangladesh.

Average-cost pricing: Some evidence and implications

We present new survey evidence on pricing behavior for more than 14,000 European firms, and study its macroeconomic implications. Among firms that are price setters, roughly 75% respond that their prices are set as a markup on total costs, a business practice termed “full cost pricing”. Only 25% set prices as markups over variable or marginal costs. Moreover, using industry data for the U.S., we find that the correlation between changes in output prices and changes in variable input prices is significantly lower when fixed costs are likely to be more important.Since our results are similar to the findings in the classic and controversial paper of Hall and Hitch (1939) and subsequent survey evidence, we believe it worth studying the implications of full cost pricing for macroeconomics. We first propose a problem for the firm where full cost pricing can arise as optimizing behavior. We embed this problem, featuring an occasionally binding constraint, into a simple general equilibrium model. We show that when the model is hit by a shock that makes the constraint binding, the response of endogenous variables is amplified significantly more than it would be under the unconstrained regime.

What Drives the Global Interest Rate

In this paper we study the drivers of global interest rate. Global interest rate is defined as a principal component for the largest developed and developing economies’ discount rates (the US, Japan, China, Euro area and India). A structural global factor-augmented error correction model is estimated. A structural change in the global macroeconomic relationships is found over 2008:09-2008:12, but not pre or post this GFC period. Results indicate that around 46% of movement in central bank interest rates is attributed to changes in global monetary aggregates (15%), oil prices (13%), global output (11%) and global prices (7%). Increases in global interest rates are associated with reductions in global prices and oil prices, increases in trade-weighted value of the US dollar, and eventually to reduce global output. Increases in oil prices are linked with increase in global inflation and global output leading to global interest rate tightening indicated by increases in central bank overnight lending rates.

What Drives the Global Interest Rate

In this paper we study the drivers of global interest rate. Global interest rate is defined as a principal component for the largest developed and developing economies’ discount rates (the US, Japan, China, Euro area and India). A structural global factor augmented error correction model is estimated. A structural change in the global macroeconomic relationships is found over 2008:09-2008:12, but not pre or post this GFC period. Results indicate that around 46% of movement in central bank interest rates is attributed to changes in global monetary aggregates (15%), oil prices (13%), global output (11%) and global prices (7%). Increases in global interest rates are associated with reductions in global prices and oil prices, increases in trade-weighted value of the US dollar, and eventually to reduce global output. Increases in oil prices are linked with increase in global inflation and global output leading to global interest rate tightening indicated by increases in central bank overnight lending rates.

What Drives the Global Official/Policy Interest Rate?

We construct a GFAVAR model with newly released global data from the Federal Reserve Bank of Dallas to investigate the drivers of official/policy interest rate. We find that 62% of movement in global official/policy interest rates is attributed to changes in global monetary aggregates (21%), oil prices (18%), global output (15%) and global prices (8%). Global official/policy interest rates respond significantly to increases in global output and prices and oil prices. Increases in global policy interest rates are associated with reductions in global prices and global output. The response in official/policy interest rate for the emerging countries is more to global inflation, for the advanced countries (excluding the U.S.) is more to global output, and for the U.S. is to both global output and inflation.

Decompositions of productivity growth into sectoral effects

The paper provides some new decompositions of labour productivity growth and Total Factor Productivity (TFP) growth into sectoral effects. These new decompositions draw on the earlier work of Tang and Wang (2004). The economy wide labour productivity growth rate turns out to depend on the sectoral productivity growth rates, output price effects and changes in sectoral labour input shares. The economy wide TFP growth decomposition is similar but some extra terms due to input price inflation make their appearance in the decomposition.

A comparative analysis of the impact of oil prices on oil-rich emerging economies in the Pacific Rim

This paper examines the relationship between raw materials prices and economic growth through two channels, the terms of trade (ToT) and energy efficiency (EF), in three emerging Pacific Rim economies, Russia, Indonesia and Malaysia. We demonstrate positive relationships between changes in output and oil prices and between changes in GDP and energy efficiency (EF). We examine the impact of oil prices on output growth through the ToT and EF channels. The effect of oil prices on ToT in Russia and Malaysia is positive but negative in Indonesia. Oil prices have a positive effect on EF in all three countries.

Retort Pouch Technology for Ready to Eat Products – An Economic Analysis of Retort Processing plant

The research reported in this paper is carried out as a part of the larger project on retort processing. Evaluation of small scale retort processing plant with a capacity of 1,20,000 pouches of Deccan Chicken Curry per year is carried out using project evaluation techniques. Data is taken from the experiments of the larger project. Financial feasibility analysis indicates that the retort processing plant is economically feasible. The plant is financially viable with an Internal Rate of Return of 72% and a Net Present Value of Rs. 1,86,62,503 discounted at 12%. Risk is also found to be less. Sensitivity analysis showed that the project is less sensitive to changes in input and output prices but sensitive to changes in Sales volume. This study may be useful for the enterprenuers interested in processing sector to get first hand information on investment opportunities in retort processed ready to eat products.

Analysing monetary policy's transmission mechanisms through effective and expected interest rates: an application of MS-models, Bayesian VAR and cointegration approaches for Brazil

This work applies Markov-switching models , a Bayesian vector autoregressive (BVAR) and Cointegration approach to verify the empirical relationships between expected and effective short-term interest rates in Brazil. The main results corroborate the theoretical notion that the Central Bank can smooth adjustments in effective short-term interest rates, as the latter affect expected short-term rates, thereby influencing long-term interest rates, which are fundamental for controlling output activity and price changes. Moreover, the MS-models show that these empirical relationships are more significant under a ‘higher response regime’. In turn, the BVAR test yields impulse-response functions showing that shocks in expected rates have more persistent impacts on effective rates than the latter have on the former. Finally, the Cointegration and Vector Error Correction approaches are used as a robustness test and confirm the idea of a co-movement between expected and effective interest rates in Brazil. These results support the notion that Brazilian monetary policy is transparent, predictable and efficient.

Short run and long run in trade models: A note

This paper aims to capture key features of the Ricardo–Viner (RV) and Heckscher–Ohlin (HO) theories in a single dynamic general equilibrium framework. We use a simple 2-sector 2-factor model with adjustment costs associated with the movement of capital across sectors. We analyze the economy's response to exogenous changes in factor endowments and output prices. Our model reproduces the predictions of the RV theory in the short run (moment immediately after a parameter change) and the predictions of the HO model in the long run (steady state implied by a new set of parameters). Numerical examples of transition paths are also provided. Este artigo busca capturar as principais características dos modelos de Ricardo–Viner (RV) e de Heckscher–Ohlin (HO) em um único ambiente. Utilizamos um simples modelo de dois fatores e dois setores, com custos de ajustamento associados ao movimento de capital entre indústrias. Analizamos então a resposta desta economia a mudanças exógenas nas dotações de fatores e nos preços dos produtos. Nosso ambiente reproduz os resultados do modelo de RV no curto prazo (momento imediatamente posterior à mudança nos parâmetros) e do modelo de HO no longo prazo (estado estacionário correspondente ao novo conjunto de parâmetros). Exemplos numéricos de transições são também apresentados.

Optimal Investment under Price and Wage Uncertainty

The effects of future output price uncertainty and wage uncertainty on a firm’s investment decision are examined in this paper, by assuming the competitively risk-neutral firm maximizes the expected value of the sum of discounted cash flows. We find that the optimal investment behavior is such that the expected proportional growth rate of investment is invariant over time, although there exists a tradeoff between the effects of the two uncertainty on firm’s investment because the shift in output price has positive effects on firm’s investment, whereas the shift in wage has negative impacts on firm’s investment. And what’s more important, fluctuations in output price and wage are correlated so that changes in output price tend to be accompanied by changes in wage.

Relationships between Effective and Expected Interest Rates as a Transmission Mechanism for Monetary Policy: Evidence on the Brazilian Economy Using MS-models and a Bayesian VAR

This work applies Markov-switching models and a Bayesian VAR in order to verify empirical relationships between expected and effective short term interest rates in Brazil. The main results corroborate the theoretical idea according to which the Central Bank can smooth adjustments of effective short term interest rates, given that these last ones have effects on expected short term rates, thereby influencing long term interest rates, which are fundamental for controlling output activity and price changes. Besides, the MS-models show that these empirical relationships are more significant under a “higher response regime”. At last, the BVAR test yields impulse-response functions showing that shocks in expected rates have more persistent impacts on effective rates than what is observed from the opposite direction. This evidence gives support for the idea of a transparent and predictable monetary policy in Brazil.

PENDUGAAN ELASTISITAS PENAWARAN OUTPUT DAN PERMINTAAN INPUT USAHATANI JAGUNG

This study aims to determine the effect of changes in output and input prices, corn research expenditures and road infrastructure on output supply and input demand for corn in the Province of East Java and West Java. The data that are analyzed are those of structure of costs of corn farming in the Province of East Java and West Java in 1985-2009. Estimation model employed is the method of Seemingly Unrelated Regression. The results showed that the output supply of corn both in the province of East Java and West Java are elastic to its price changes, however it is inelastic to the price changes of: seed, urea, TSP and labor. Input demand of seed, urea, TSP and labor area inelastic to their price changes. Policy implications of this research is efforts to increase the supply of corn can be carried out by increasing its price, expenditures of corn research, and road infrastructure.

Less water: How will agriculture in Southern Mountain states adapt?

This study examined how agriculture in six southwestern states might adapt to large reductions in water supplies, using the U.S. Agricultural Resource Model (USARM), a multiregion, multicommodity agricultural sector model. In the simulation, irrigation water supplies were reduced 25% in five Southern Mountain (SM) states and by 5% in California. USARM results were compared to those from a “rationing” model, which assumes no input substitution or changes in water use intensity, relying on land fallowing as the only means of adapting to water scarcity. The rationing model also ignores changes in output prices. Results quantify the importance of economic adjustment mechanisms and changes in output prices. Under the rationing model, SM irrigators lose $65 in net income. Compared to this price exogenous, “land‐fallowing only” response, allowing irrigators to change cropping patterns, practice deficit irrigation, and adjust use of other inputs reduced irrigator costs of water shortages to $22 million. Allowing irrigators to pass on price increases to purchasers reduced income losses further, to $15 million. Higher crop prices from reduced production imposed direct losses of $130 million on first purchasers of crops, which include livestock and dairy producers, and cotton gins. SM agriculture, as a whole, was resilient to the water supply shock, with production of high value specialty crops along the Lower Colorado River little affected. Particular crops were vulnerable however. Cotton production and net returns fell substantially, while reductions in water devoted to alfalfa accounted for 57% of regional water reduction.

How Biased are Current Measures of Asian Output Growth and Price Change?

“Rational economic agents” making optimal choices, such as shifting to less expensive products, is a fundamental paradigm for theoretical and applied economics. This requires accurate and unbiased economic information on prices. Since the mid-1990s, several nations have switched to estimation methods for price indices that improve the accounting for the shifting basket of new goods and services produced in the economy. This change required the adoption of “ideal” measures of growth and price change. Nevertheless, many Asian nations continue to prepare non-ideal measures of growth and price change. This paper assesses the bias in current Asian measures of growth and price change and explores how such bias can lead to poor investor and policymaker decisions.