Changes In World Prices Research Articles

The Distributional Impact of Developed Countries’ Climate Change Policies on Senegal: A Macro-Micro CGE Application

In this paper, we present a distributional impact analysis of climate change policies envisaged or implemented to reduce greenhouse gas emissions in Senegal. We consider policies implemented in developed countries and their impact on a developing country. Moreover, we simulate the diminishing productivity of agricultural land as a potential result of climate change (CC) for Senegal. This country is exposed to the direct consequences of CC and is vulnerable to changes in world prices of energy, given its lack of substitution capacity. Past researches have shown that countries with this profile will bear the greatest burden of CC and its mitigation policies. Our results reveal slight increases in poverty when the world price of fossil fuels increases and the negative impact is further amplified with decreases in land productivity. However, subsidizing electricity consumption to protect consumers from world price increases in fossil fuels is shown to provide a weak cushion to poverty increase.

Fixed Exchange Rate or Flexible Exchange Rate for Saudi Arabia: optimal solution of CGE model

When analyzing the impact of changes in oil and petroleum prices on Saudi Arabia’s economy the results indicate that adjustments in foreign savings, supporting an unchanged real exchange rate in the context of changes in oil world prices, quite effectively can insulate the domestic economy from international price fluctuations. If the economy is forced to adjust to the fall in world prices without offsetting changes in foreign savings, the resulting loss of export earnings and associated depreciation have major impacts on aggregate absorption, and the structure of production.

Lobbying: Buying and Utilizing Access

This paper introduces an alternative to the lobbying literature's standard assumption that money buys policies. Our model - in which influence-seeking requires both money to buy access and managerial time to utilize access - offers three significant benefits. First, it counters criticism that the money-buys-policies assumption is at odds with reality. Second, its much stronger lobbying incentives weaken the free-rider problem and raise incentives for lobby formation. Third, the model yields testable hypotheses on: the determinants of lobbying incentives; the number of lobbying firms in an industry; and the impact on industry lobbying by the size distribution of firms, contribution limits on firms, world price changes, and the ability to adjust labor employment.

Sources of Macroeconomic Fluctuations in a Volatile Small Open Economy

This paper studies the sources of macroeconomic fluctuations in a typical small open economy, Turkey, using a structural vector autoregressive (SVAR) model. The study finds that supply‐side shocks are the main source of output fluctuations in the long run, explaining almost half the variance of domestic output. However, most of the short‐run variability in domestic output is dominated by relative demand shocks. Aggregate demand shocks do not appear to play any significant role in output fluctuations in the long run. Changes in fiscal policy play a moderate role in determining the real exchange rate in the short term, while changes in world output and prices of imported inputs are the major determinants of the long‐term real exchange rate. The long‐run price variations are mainly due to oil price and world output shocks.

The potential impact of the Doha Development Agenda on the South African economy: liberalising OECD agriculture and food trade

This article reports the results of a static computable general equilibrium (CGE) model on the possible liberalisation of agriculture and food trade in the OECD countries. Liberalisation of trade was simulated assuming a reduction in import tariffs, the tax rate on factor use and export subsidies in four steps of 25% points each. Such simulations were run in the GLOBE model then adjusted and used as a policy shock to the PROVIDE model. The results show that the weighed average world price (adjusted) changes will range between −19.6 to +3.8% for imports and between −3.0 and +29.7% for exports at 75% liberalisation. The results from the single country CGE model show that the South African economy would respond positively to the world price changes, with government and macro variables showing minimal but positive responses. Household consumption expenditures generally show positive changes, implying increased factor incomes. Not all sectors will be positively affected even though the overall effect is positive.

Sugar Prices, Labor Income, and Poverty in Brazil

This paper assesses the impact that a potential liberalization of sugar regimes in OECD countries could have on household labor income and poverty in Brazil. The authors first estimate the extent of price transmission from world markets to 11 Brazilian states to capture the fact that some local markets may be relatively more isolated from changes in world prices. They then simultaneously estimate the impact that changes in domestic sugar prices have on regional wages and employment depending on worker characteristics. Finally, they measure the impact on household income of a 10 percent increase in world sugar prices. Results suggest that workers in the sugar sector and in sugar-producing regions have better employment opportunities and experience larger wage increases. More interestingly, households at the top of the income distribution experience larger income gains due to higher wages, whereas households at the bottom of the distribution experience larger income gains due to movements out of unemployment.

Producer price and price transmission in a deregulated Ethiopian coffee market

Coffee producers in Ethiopia have historically received a very small share of the export price of green coffee. Reasons that are often mentioned are heavy government intervention and high marketing and processing costs. Prior to 1992, government regulation of the domestic coffee market in the form of fixed producer prices and the monopoly power of the Ethiopian Coffee Marketing Corporation put a substantial wedge between the producer price and the world price of coffee by imposing an implicit tax on producers. The domestic coffee marketing system in Ethiopia was liberalised after 1992, which was envisaged to have a positive effect on producer prices and price transmission signals from world markets to producers. This paper, with the help of Cointegration and Error-Correction Model (ECM), attempts to analyse its impact. As findings indicate, the reforms induced stronger long-run relationships among grower, wholesaler and exporter prices. The estimation of the ECM shows that the short-run transmission of price signals from world to domestic markets has improved, but has remained weak in both auction-to-world and producer-to-auction markets. This might be explained by the weak institutional arrangement coordinating the domestic coffee system and contract enforcement. In general, the domestic price adjusts more rapidly to world price changes today than it did prior to the reforms. However, there is an indication that negative price changes transmit much faster than positive ones.

Raw materials world price changes and exchange rates in a small open economy

This paper studies the impact of a rise in the world price of imported raw materials (oil) on the small open economy exchange rate. We obtain a depreciation which magnitude depends on the share and substitutability in the productive structure.

An Analysis of Latin American Peanut Trade

The U.S. export share in the world peanut market has decreased due to heavy competition. In this paper, the Latin American peanut industry is modeled using seemingly unrelated regression (SUR). Based on these estimations, a scenario analysis was conducted. The results show that the Latin American demand is not affected dramatically by either domestic or world price shocks. The effects of price changes on net trade are noticeable. However, the world price does not significantly affect the Latin American peanut supply. The results imply that Latin American peanut farmers are more sensitive to changes in domestic prices than world price changes.

Poverty Effects of Expansion and Policies in Cotton Economies in Rural Mozambique: An Economy-wide Approach

This paper uses a Regional Computable General Equilibrium (CGE) model calibrated with a Social Accounting Matrix (SAM) for the Mozambique Zambezi Valley cotton concession sub-region to examine the economy-wide impacts and relative changes in the levels of income poverty of grower and non-grower household groups, following exogenous shocks, such as contract faming specific capital expansion, technology improvements, changes in world prices, and Government policies. Simulation results indicate that productivity gains have a broad-based income growth and poverty reduction potential, even greater than increased cotton world prices; because sustained increases in world prices are unlikely, this result is encouraging. While employment linkages are relatively weak in these economies when compared to tobacco growing areas, income diversification strategies by non-grower households, particularly through non-farm selfemployment and food crop marketing, ensure that they are not left behind when interventions are focused on cotton growers. Even when impacts are limited among growers, any expansion in cotton production results in some positive effects to nongrowers. The implied potential of interventions focused on increasing cotton productivity present a great opportunity for concession firms and policy makers to design strategies that are beneficial to both grower farmers, firms and the population at large. This will require public-private coordination efforts stressing better research and extension, the use of high yielding seed varieties, and emphasis on quality. Although results indicate limited negative effects of high import prices for inputs, measures aimed at reducing the costs of importation and transportation are highly encouraged as they can help minimize or counterbalance any negative effects from factors outside the control of domestic agents. While current poverty impacts of cotton cropping are relatively small, there is high potential for significant broad based gains under a more productive system.

Trade Reforms, Deforestation and Industrial Pollution in Developing Countries: One Size Does Not Fit All

Many developing countries possess comparative advantage both in natural resources and in labor-intensive industries, and experience both industrial pollution and natural resource degradation. We present a model that incorporates these stylized facts together with key spatial features and property rights failures typical of developing economies. We explore consequences of anticipated domestic and global trade policy and world price changes. Similar exogenous or policy shocks are seen to have contrasting effects, depending on initial economic structure, trade orientation and policy regime. Further, when there is more than one sectoral source of environmental damage, a policy or price change may have unexpected environmental and welfare results. Nevertheless, in many empirically important cases, reducing protection for capital intensive manufactures is likely to improve both income and environmental quality, a point that we illustrate by reference to some Asian case studies. These results stand in contrast to those obtained in much of the current analytical literature.

Trade Liberalization, Resource Degradation and Industrial Pollution in Developing Countries: An Integrated Analysis

Environmental damage is in reality many different types of phenomena, each with a unique set of causes and characteristics. We present an analytical model identifying intersectoral and interregional links of economy and environment, and explore consequences of trade policy and world price changes. The model contains explicit spatial and institutional features relevant to developing economies. We show that similar trade or policy shocks can have different effects, depending on initial economic structure, trade orientation and policies. Further, when there is more than one sectoral source of environmental damage, a policy or price shock may have unexpected environmental and welfare results.

The transmission of world commodity prices to domestic markets under policy reforms in developing countries

This paper examines the degree to which world price signals have been transmitted into domestic prices for eight countries and ten commodities, a total of 31 country/commodity pairs. The main characteristic of these countries was that they all undertook substantial policy reforms during the mid‐1980s to early 1990s. The paper investigates the effect of reforms on the speed at which signals were transmitted to domestic markets and on the extent of price transmission. We find that Chile, Mexico, and Argentina are the only countries whose domestic commodity markets were integrated with world markets. For the remaining cases (Ghana, Madagascar, Indonesia, Egypt, and Colombia) in only a few country/commodity pairs is there some passthrough of world price changes. In terms of the effects of policy reforms, in the majority of the cases the hypothesis of a structural break following the reform year is rejected.

Efficient Tax Competition with Factor Mobility and Trade: A Note

This note shows that residence- and source-based taxes on capital income are not sufficient to sustain an efficient Nash equilibrium when several goods are internationally traded, apart from two special cases. With several traded commodities, domestic fiscal policies affect foreign welfare not only through changes in the world interest rate but also through changes in the equilibrium relative prices of traded commodities. In order to guarantee the existence of an efficient Nash equilibrium in the general case, additional tax instruments are required. In particular, destination-based taxes on traded commodities are needed to enable the government to control the relative commodity prices faced by domestic consumers. In addition, in order to shield domestic producers from changes in world prices, the government must levy either origin-based commodity taxes or taxes on the immobile factors.

China in 2005: Implications for the Rest of the Wo r l d

This paper analyzes the impact of continued rapid, growth in china on her trading partners using a multiregion, applied general equili,brium model. con_ trary to conuentional wisdom, we find that most deueloping countries benefit from china's growth. Product dffirentiation plays a key role in this flnding. systematic analysis of these welfare gains shows that, as exfected,, simple terms of trade calculations based on net trade positions and aaerage world price changes Predict a loss for the deueloping countries. Howeaer, with the exceptions of south Asia and rhailand, this /oss l's oaershadowed, by a positiue rnnue_

WHY SOUTH AFRICA'S APARTHEID ECONOMY FAILED

South Africa's apartheid system was enormously costly and ultimately collapsed because the inefficiencies created by apartheid policies escalated as the economy's structure changed. Labor market regulation and industrial decentralization policy inhibited efficient resource utilization, especially as the manufacturing sector became dominant. Apartheid educational policies generated skill shortages. A mercantilistic development strategy distorted trade patterns, exacerbated dependence on foreign capital inflows, and created chronic balance of payments difficulties. The administrative and defense costs of implementing apartheid were onerous and rising. These internal weaknesses enhanced South Africa's vulnerability to capital flight, changes in world prices and business cycle conditions, and political changes abroad. Ultimately, apartheid was abandoned because its costs came to exceed its benefits to white South Africans. The internal dynamics of the system dictated the retrenchment of apartheid, which in all probability would have occurred even without foreign sanctions

THE URUGUAY ROUND AGREEMENT ON AGRICULTURE AND THE INTERNATIONAL TRADE OF SUB-SAHARAN AFRICA / THE URUGUAY-RONDTE OOREENKOMS OOR LANDBOU EN DIE INTERNASIONALE HANDEL IN SUB-SAHARA AFRIKA

This paper discusses the Uruguay Round agreement on agriculture and highlights the incumbent reforms to farm policies in the major industrial countries. The main analysis investigates the implications of the agreement for the international trade of low-income and middle-income countries in Sub-Saharan Africa, for which food imports but also agricultural exports bulk particularly large. Based on consensus estimates of changes in world prices of agricultural commodities resulting from the Uruguay Round, the effects of the Round on Africa's trade are quantified using a simple economic model under alternative assumptions regarding the adjustment of real exchange rates, adoption of economic policy reforms to reduce the bias against agriculture in Africa, and compliance of countries in the region with the Uruguay Round requirement for the tariffication of administered restrictions on imports of agricultural goods.

A Critical Assessment of Supply‐Demand Models of Agricultural Trade

AbstractWe offer a critical assessment of static, deterministic, reduced form, supply‐demand (SD) models of agricultural trade. A commonly used and well‐documented model has significant limitations: no explicit treatment of factor mobility between farm and nonfarm sectors, nonzero profits in some sectors, no substitutability among feedstuffs in livestock sectors, violation of the law of one price, small marketing margins for some commodities, and incomplete coverage of the agricultural sector. Such limitations have significant impacts on the magnitude and direction of projected world price and welfare changes. We believe agricultural policy analysis should first focus on the remediation of these limitations before proceeding to more complex issues like dynamics and uncertainty.

Linkages in US and World Sugar Futures Contracts

In this paper we examine the relationship over time of the No. 11 (World) and the No. 14 (US) sugar futures contracts, traded on the New York Coffee, Sugar and Cocoa Exchange. Using daily price data for a 14 year period, we examine statistical linkages between domestic and world futures contracts. Our results suggest that the US and world markets exhibit strong linkages during periods when US imports are under tariff (1977–1982), but the US market is effectively insulated from world price changes by the operation of the quota program (1982–1990). The pattern of causality runs from the world to the US market during the tariff period. The US market does not appear to influence world market prices during either the tariff or the quota period.

Is market liberalization compatible with food security?: Storage, trade and price policies for maize in Southern Africa

Concern for the negative impacts of staple food price fluctuations limits the extent to which governments in low-income countries are willing to liberalize their agricultural markets. These concerns are legitimate, as such price fluctuations can lead to high transactions costs for poor consumers in the short run and low growth in the long run. However, past government attempts to stabilize food prices completely have been expensive and ineffective. Use of a dynamic programming optimization model suggests that a different type of policy regime could reduce price variability significantly compared to what would prevail in free markets, and could accomplish this at relatively low cost. This policy regime includes allowing some official price flexibility with respect to changes in production and world price, exporting when regional market opportunities exist, and holding considerably lower stocks than in the past.