Current Price Level Research Articles

Relationships of intercropped maize, stem borer damage to maize yield and land-use efficiency in the humid forest of Cameroon

Stem borers are the most important maize pests in the humid forest zone of Cameroon. Field trials were conducted in the long and short rainy seasons of 2002 and 2003 to assess the level of damage and yield reductions caused by stem borers in monocropped maize and in maize intercropped with non-host plants such as cassava, cowpea and soybean. The intercrops were planted in two spatial arrangements, i.e. alternating hills or alternating rows. All intercrops and the maize monocrop were grown with and without insecticide treatment for assessment of maize yield loss due to borer attacks. The land-use efficiency of each mixed cropping system was evaluated by comparing it with the monocrop. The temporal fluctuation of larval infestations followed the same pattern in all cropping systems, but at the early stage of plant growth, larval densities were 21.3-48.1% higher in the monocrops than in intercrops, and they tended to be higher in alternating rows than alternating hills arrangements. At harvest, however, pest densities did not significantly vary between treatments. Maize monocrops had 3.0-8.8 times more stems tunnelled and 1.3-3.1 times more cob damage than intercrops. Each percentage increase in stem tunnelling lowered maize grain yield by 1.10 and 1.84 g per plant, respectively, during the long and short rainy season in 2002, and by 5.39 and 1.41 g per plant, respectively, in 2003. Maize yield losses due to stem borer were 1.8-3.0 times higher in monocrops than in intercrops. Intercrops had generally a higher land-use efficiency than monocrops, as indicated by land-equivalent-ratios and area-time-equivalent-ratios of >1.0. Land-use efficiency was similar in both spatial arrangements. At current price levels, the net production of mixed cropping systems was economically superior to controlling stem borers with insecticide in monocropped maize. The maize-cassava intercrop yielded the highest land equivalent ratios and the highest replacement value of the intercrop. At medium intensity cropping this system is thus recommended for land-constrained poor farmers who do not use external inputs such as fertilizer and insecticides.

Relative Valuation Roles of Equity Book Value, Net Income, and Cash Flows during a Macroeconomic Shock: The Case of Mexico and the 1994 Currency Crisis

Using a sample of Mexican firms traded on the Mexican Stock Exchange during the period 1992–1997, we investigate whether the relation between the firms' stock prices and their book values, earnings, and cash flows changes during the 1994 Mexican currency crisis. In pooled cross-sectional tests we find the valuation coefficient on book value does not significantly change during the crisis period, while its incremental explanatory power increases. We also find the valuation coefficient on and incremental explanatory power of earnings decline during the crisis period. However, the decline in the valuation and explanatory power of earnings is attributable to the presence of negative earnings. These results are inconsistent with those from Barth et al. (1998) who find that the valuation and incremental explanatory power of book values (earnings) increase (decrease) as individual firms' financial health decreases in the U.S. Our results also differ from those of studies that examine the valuation of accounting information during the Asian financial crisis (Graham et al. 2000; Ho et al. 2001). Both Graham et al. (2000) and Ho et al. (2001) find that the relevance of earnings declines during the Korean currency crisis even after controlling for negative earnings. However, we find that when we control for negative earnings, the coefficient on earnings remains significant during the crisis period. We attribute the lack of significant changes in the valuation coefficients on book values and positive earnings and increased incremental explanatory power of book values at least in part to the use of current cost and price level accounting in Mexico. Related to this point, in additional analyses we find that the incremental valuation of two components of Mexican earnings, monetary gains and losses and exchange gains and losses, does not change during the crisis, implying that these features of Mexican inflation accounting contribute to its continued relevance during the crisis.

Modelling locational price spreads in competitive electricity markets; applications for transmission rights valuation and replication

The restructuring of the electric utilities industry has forced industry participants to rethink their approach to a number of decision processes. To manage risk and plan investment in generation assets, as well as to examine the efficient expansion of the current transmission grid, one needs to have a clear understanding of the interaction between the grid properties and the behaviour of the regional power markets. In this paper we discuss a fundamental modelling approach which extracts the stochastic properties of electricity prices by modelling the impact of physical and economic drivers affecting the production, delivery, and consumption of electricity. If the fundamental inputs are directly observable, we can use historical data to calibrate the model parameters. In the case of electricity, this simple and abundant set of training data can make a crucial difference. We present the bid‐based stochastic model (BSM) and look into its application to valuing of financial derivatives, especially options based on the locational spread in electricity price between two markets. The advantage of the bid‐based model is that one is able to link the capacity of the transmission line, in megawatts, directly to the correlation between electricity prices at the end nodes. This leads us to a valuation method for a locational spread option, the financial equivalent of a physical transmission right. The model represents an improvement over standard spread option formulation in that it accounts for the effect of the nonlinear flows in the transmission network on the correlation and distribution of locational prices. We also address the question of whether financial transmission rights can be replicated with a dynamic portfolio of forward contracts at the end nodes. This poses the possibility of model‐based arbitrage between existing forward markets and the emerging transmission rights markets. Furthermore, it allows users to simulate the effect of transmission outages or expansion. For example, a for‐profit transmission provider who is contemplating addition of a new transmission line between two markets needs to know whether he will be able to recover the fixed cost of investing in the line by selling transmission rights to market participants. By calibrating the bid‐based model according to current price levels and adding the capacity of the new transmission line, the transmission owner can simulate future cash flows and estimate the profitability of the investment.

Risk efficient juvenile haddock production systems: An ex‐ante recursive stochastic approach

The risk efficient live feed system for juvenile haddock production is derived through recursive ex‐ante stochastic cost estimation. Four alternative feeding technologies are simulated to capture the economic costs associated with live feed and juvenile production and scale economies are investigated by simulating three production levels. Using Monte Carlo simulation techniques, multivariate stochastic cost functions are derived in a time‐dependent recursive production model. With the current technologies and price levels, land‐based juvenile haddock production is viable. The marginal impact, in terms of cost‐savings, to additional research on optimal feeding periods will be minimal. On the other hand, the high opportunity cost of capital used in aquaculture production, due to numerous perceived risk premia, may pose a more immediate constraint for capital formation and industry development.

Loan financing, bankruptcy, and optimal supply

We consider a model of an economy consisting of heterogeneous firms that are faced with uncertainty in future prices when deciding upon production and financing. It is shown that the firms' supply behaviour is significantly affected by their attitude towards a possible bankruptcy in case of loan financing. In particular, both the individual and the aggregate supply curve depend on the price uncertainty, the current real cash flow, and the current price level if at least some firms choosing loan financing are not protected by limited liability but take the bankruptcy risk resulting from the uncertain prices into account.

Tests for Long-Run Relationships in Hardwood Lumber Prices

Abstract Hardwood lumber prices are unique because of the large number of marketable species and variability of prices across species. Previous research showed that long-run fashion decisions regarding species selection may be influenced by price, so the interaction between fashion and species price may act to keep prices (hence, demand) of different hardwood species together in the long run. To test this hypothesis, we examined the joint lumber price behavior of six major hardwood species representing different appearance characteristics in the Appalachian hardwood region. Bivariate and multivariate price cointegration tests within lumber grades of these mainly nonstationary price series, conducted using a consistent vector error-correction rank and lag-order model selection procedure, revealed no stable long-run statistical relationships, rejecting the principal null hypothesis. Current relative price levels therefore cannot be used to infer future relative levels. Supplementary vector autoregressions of mostly differenced series, however, indicate that some interspecies price relationships exist. Such relationships, however, were mostly confined within appearance groups and only rarely across groups.

On the efficiency of monetary policy rules with flexible prices and rational expectations

The classic Sargent–Wallace–Lucas (SWL) rational expectations-flexible price model is usually interpreted as implying “policy ineffectiveness”: systematic monetary rules cannot affect the distribution of real output. A contrary but not widely-appreciated result of Dotsey and King suggests that there exist “prospective feedback” rules (future money depending systematically on current but as yet unobserved information) which improve output distribution by means of improving agents’ ability to perceive relative prices. We show the Dotsey–King proposition in fact to be a colossal understatement: prospective feedback rules applied vigorously enough (and even “contemporaneous feedback” rules based on current interest rates, provided at least one prospective feedback is active) can in the limit drive price-perception errors to zero. This is not to say such a policy would be desirable. Feedback parameter combinations that reduce current price level misperception tend to produce high forecast error variances with respect to future prices, with attendant loss in capital market efficiency. Whatever the desirable frontier among these different social cost-producing variables, feedback parameters will in general be needed in order to get on the frontier as well as to move along it. Monetary policy clearly produces social gain even in a version of this model which contains no elements of price “friction,” inefficient use of available information, or asymmetry in information as between the government and the public.

Economical feasibility of zeolite membranes for industrial scale separations of aromatic hydrocarbons

Naphtha cracker feedstocks contain 10–25 wt% aromatic hydrocarbons, which are not converted into the desired products ethylene and propylene. The conventional processes for the separation of aromatic and aliphatic hydrocarbons are extraction, extractive distillation and azeotropic distillation. These processes are highly complex and demand a high energy consumption. Therefore, alternative separation processes are of interest, such as pervaporation (PV) and vapour permeation (VP) with zeolite membranes. For a feasible process, the purity of both the aromatic and aliphatic products must be 98 wt%. In order to obtain these purities with PV or VP, using a reasonably sized membrane area, the selectivity must be high, at least 40, and preferably above 80, and the flux rate (100 wt% benzene) has to be in the order of 8 kg/m 2.h (presently around 0.3 kg/m 2.h). For a feed stream of 300 t/h, containing 10 wt% aromatics, a membrane area of more than 60,000 m 2 is required with these selectivities and flux rates. The conclusion is that with the current high price level of zeolite membrane modules, around unkeyable??? 2,000/m 2, the investments become uneconomical. Therefore, the membrane costs must be reduced, to about unkeyable??? 200/m 2.

Consensus Analysts' Forecasts and Current Price Level

This paper attempts to shed light on the issue whether investors' earnings expectations completely align with analysts' forecasts. I find that current price level is not significantly correlated with one‐year‐out realized earnings, but, it is significantly correlated with two‐year‐out, three‐year‐out, four‐year‐out and five‐year‐out realized earnings after I control for analysts' forecasts (and current earnings). Current price is found to be useful in improving the accuracy of long‐term analyst consensus forecasts. My findings are consistent with the notion that the market's near term expectation closely follows analyst forecasts while the market's long‐term expectation contains more information than analyst consensus forecasts.

Energy availability and its distribution in the Mediterranean region

The growth of energy consumption in the Mediterranean region has combined in recent decades with a spectacular growth rate of car ownership, leading to the conclusion that these levels of growth are unsustainable on the basis of the current oil price level. One can envisage two scenarios: one of capacity restriction (CR) and the other of energy saving (ES). In the former, the assumption is that the tendencies of the past will continue. In this case, the growth of world demand for energy would be too fast in relation to production capacity. In the ES scenario, the hypothesis is that improvements in the efficient use of energy will lead to an important moderation of the growth rate of energy demand and thus reduce the need for additional production. The creation of the Euro‐Mediterranean area of shared prosperity will play a crucial role in meeting the energy challenge of the future.

Notes on Intertemporal Trade in Goods and Money

Ever since Svensson and Razin (1983) pioneered intertemporal analysis in a cutting edge analysis of a microeconomic conundrum—the LaursenMetzler-Harberger problem of the terms of trade effect on spending—, intertemporal approaches to the current account have flourished. The state of the art is codified in Obstfeld and Rogoff (1995, 1996); the range of applications has widened to analyses involving risk, as in the most recent Obstfeld-Rogoff work or macroeconomic interdependence as in the ambitious paper of Corsetti and Pesenti (1998). The literature is in full swing. But it also suffers the difficulty that it quickly runs into diminishing returns—with many goods, assets and periods the range of outcomes quickly widens and models lose their leverage. The present paper takes the opposite tack of the literature in choosing heuristically to go backward toward the very simplest model and the most basic structure, namely trade in a single good and a common money. This simplification highlights intertemporal trade and focuses on Patinkin-Ricardo style monetary economics in the open economy. Imagine the simple question: there is one time increase in the home money supply, what happens to world real interest rate and the path of prices? More broadly, when does money have an effect on real interest rates and how does a fiscal policy disturbance affect price? As it turns out, in this very simple world of real interest rates, current and future price levels (even with functional forms that are rock

External Costs of Aquaculture Production in West Virginia

Temperate hill-lands of the U.S.A. such as those in West Virginia are areas from which increasing output of farm-raised fish may be possible. However, the downstream economic impacts of current and projected future effluent as a result of aquaculture production have not been extensively studied. Using an externality framework and a combination of primary and secondary data, this study determines pollution prevention costs (PPC), and downstream pollution damage costs resulting from fish farm wastewater effluent measured as willingness to pay (WTP) for restoring water quality. PPC is estimated at $0.11 per kg of trout produced (which would add 6% to private production cost), and WTP is estimated at $0.49 per kg of trout produced (representing 25% of private production cost) at current production and price levels. This study shows that installation of filtration units is a low-cost (less than 6% of total cost) and an effective technology for controlling pollution at the source. Internalizing external costs (adding this 6% to private production costs) is one strategy that could contribute to sustainable growth of the aquaculture industry.

The relative efficiency of inflation indicators: A vector autoregressive study

This study examines the efficiency of several alternative indicators of inflation using a vector autogressive model that includes adjustment to the Federal Reserve's target P ∗, the percentage growth in M2, and the percentage change in unit labor costs. The overall out-of-sample predictive ability of the model is tested, while variance decomposition and impulse analysis are used to measure the relative contribution to inflation of these three variables, and to simulate their inflation dynamics. The study finds that the price level relative to the Federal Reserve 's target P ∗ is the most efficient indicator of inflation, with the growth in unit labor costs also contributing to inflation's forecast error variance. Consistent with the theory, increases in the price level target are found to be inflationary. Increases in unit costs are found to increase the current price level, which over time reverts back to the target level.

Evaluación económica de dos sistemas de producción de carne en ganado apacentando yerba estrella en dos tasas de abonamiento

Se evaluaron dos sistemas de producción de carne basados en toros en pastoreo rotativo en pasturas de yerba Estrella bajo dos niveles de fertilización. Se determinó cuál sistema de producción, intensidad de pastoreo y época de venta era el mas apropiado para obtener los mejores ingresos posibles bajo diferentes niveles de precios. Basado en los hallazgos de R. J. Jones y R. S. Sandland y otros investigadores, se presumió que la relación entre la carga animal y la ganancia en peso se puede representar por una función lineal de la forma y = a- bx sobre una amplia gama de cargas animales. Para determinar los parámetros de la ecuación se evaluaron tres cargas animales dentro de cada sistema y se ajustó la ecuación lineal en varios períodos de tiempo. Se encontró que bajo los niveles de precios vigentes a la conclusión del estudio la mejor alternativa de producción es la de usar el sistema que utiliza bajo abonamiento con una carga animal de aproximadamente 3.8 animales por hectárea y vender los animales después de estar entre 10 a 11 meses en pastoreo. Esta carga animal debe reducirse a 3.6 animales por hectárea si es obligatorio que los animales alcancen un peso final de 454 kg. Una disminución en el diferencial entre el precio de compra inicial y el precio de venta de los animales, o un aumento en el precio de la carne con relación al precio del abono, podrían, sin embargo, justificar la utilización del sistema de fertilización intensiva.

Time Consistency of Fiscal and Monetary Policy: A Comment

IN AN IMPORTANT recent contribution, Persson, Persson, and Svensson (1987) (hereafter PPS) suggest that through careful restructuring of its nominal and real debt obligations, a government may be able to induce future governments to follow the monetary and fiscal policies that it regards as optimal today. The PPS argument builds on Lucas and Stokey's (1983) demonstration that in a special nonmonetary setting, the time inconsistency of optimal fiscal policy can be avoided through managing the term structure of real government obligations to the public. The basic idea of the PPS scheme for monetary economies is disarmingly intuitive: in addition to continually restructuring nominal and real debt obligations a la Lucas-Stokey, each government must ensure that the next government inherits a stream of nominal claims on the public whose present discounted value equals the stock of money. This equality, PPS argue, removes the incentive for surprise inflation or deflation, because such surprises would not affect the real net worth of the government. This note shows that the PPS prescription for avoiding time inconsistency, appealing as it is, is not generally sufficient. Even under the debt restructuring they recommend, optimal policy is likely to be time inconsistent. The main reason why their scheme fails is that the restrictions it imposes on government asset stocks satisfy first-order but not second-order conditions for an optimum. Because of the complex interactions between the current price level and future interest rates, a government can raise its objective function by moving several variables at once away from the levels planned by the previous government, even though price-level changes alone would not affect government net worth. We develop our argument using the model, notation, and equation numbers of PPS, to which the reader is referred for details. The maximization problem associated with

New maize technology in Zaire: An application of risk analysis

The risk associated with new maize technology and the impact of mandatory cotton production on traditional farmers in the Kasai Oriental Region of Zaire were evaluated using stochastic dominance analysis. Net returns for four levels of maize technology for the primary and secondary rainy seasons were evaluated in combination with three staple food crops for four cropping systems with and without mandatory cotton cultivation. The results indicate that cropping systems including new maize technology are first-order stochastic dominant in both seasons, over cropping systems using local maize. Also, the increase in expected net returns for new maize technology appears to compensate farmers for its increased variability; and mandatory cotton production is not risk efficient at current price and yield levels.

Monetary Anticipations and the Demand for Money in the U. S.: Further Results

A flourishing debate has arisen in the literature concerning both the interpretation of the original Carr-Darby [1] (C-D) shock-absorber approach to the for and the choice of an appropriate estimation technique for empirical tests of the hypothesis. The C-D hypothesis holds that unanticipated shocks to the supply are partially accommodated by a temporary increase in short-run real balances, whilst anticipated monetary movements are reflected in the current price level and so are neutral with respect to the level of real holdings. C-D test this proposition by generating monetary anticipations series (by fitting univariate ARIMA processes) which are then substituted into fairly standard, partial adjustment equations. Using this two-step technique they find empirical support for the hypothesis for a number of countries. Mackinnon and Milbourne [13] (M-M) argue that the C-D method may be subject to a simultaneity bias which can be corrected by an appropriate reparameterisation. They then produce empirical evidence, using their reparameterisation, which appears to overturn the C-D results, at least for U.S. data. In a rejoinder to M-M, Carr, Darby and Thornton [2] (C-D-T), argue that standard monetary economics and, indeed, the logic of the C-D hypothesis suggests that the stock should be taken as exogenous at the aggregate level and that the aggregate money demand equation is in fact a price equation. If this is the case then the variable appears on the left hand side of the aggregate money demand equation merely to impose price level homogeneity and, in particular, the augmented or shock absorber equation can be consistently estimated by ordinary least squares (OLS) (assuming the exogeneity of other regressors). We argue below that the hypothesis does not make sense unless is taken as exogenous.

Prospects for Change in the Systems of Price Formation, Finance and Credit in the USSR

The Chairman of the Interdepartmental Council on Problems of Price Formation of the Academy of Sciences of the USSR and Goskomtsen discusses prospects for change in the pricing and credit policies of the USSR. Distortions in current price levels, the need and objectives for the restructuring of the system and links between the price and financial reforms are explained. Strategies for change are to include price formation from marginal prices and modification of wholesale prices to encourage high technology. Specific proposals are advanced, in particular those pertaining to stabilization of prices, circulation of money and reorganization of the bank credit system. Journal of Economic Literature, Classification Numbers: 027, 052, 124, 227.

Inflation, Stagflation, Relative Prices, and Imperfect Information.

This book surveys the imperfect-information approach to inflation and its real effects. Two types of informational limitation are considered. One involves situations in which individuals have asymmetric information about the current general price level and consequently confuse relative and aggregate changes in prices. The other considers situations in which individuals cannot distinguish permanent from transitory changes as soon as they occur, creating a temporary but persistent confusion between such changes. The author presents the arguments within the context of the recent re-evaluations by economists of previously established views concerning inflation and its interaction with real phenomena.

Purchasing power parity: A quantitative reassessment of the 1920s experience

The purpose of this paper is to test the hypothesis of purchasing power parity. The basic methodology is to start by estimating a general distributed lag equation relating the excchangr rate to its own past and to current and past relative price levels. Successively more restricted version are then proposed and tested against the general model. Two interesting facts come out of this. One is that the Proportionality restrictin is not supported by the data and the other is that all the models estimated by Frenkel (1978) are rejected in favor of less restricted models.