Analysing Production Technology and Risk in Organic and Conventional Dutch Arable Farming using Panel Data

This paper compares the production technology and production risk of organic and conventional arable farms in the Netherlands. Just–Pope production functions that explicitly account for output variability are estimated using panel data of Dutch organic and conventional farms. Prior investigation of the data indicates that within variation of output is significantly higher for organic farms, indicating that organic farms face more output variation than conventional farms. The estimation results indicate that in both types of farms, unobserved farm‐specific factors like management skills and soil quality are important in explaining output variability and production risk. The results further indicate that land has the highest elasticity of production for both farm types. Labour and other variable inputs have significant production elasticities in the case of conventional farms and other variable inputs in the case of organic farms. Manure and fertilisers are risk‐increasing inputs on organic farms and risk‐reducing inputs on conventional farms. Other variable inputs and labour are risk increasing on both farm types; capital and land are risk‐reducing inputs.     

Cointegration,structural breaks and monetary fundamentals of the Dollar/Yen Exchange

This paper reexamines the empirical performance of monetary exchange rate models for the dollar/yen exchange rate. We focus on the character of a potential long-run relationship between exchange rates and fundamentals. Using monthly data from 1976:01 to 2007:12 this paper applies a novel time-varying coefficient approach which allows a distinction between breaks in the cointegration vector and instabilities in the adjustment coefficients. We are able to show that most of the observed breakpoints can be traced back to major policy changes or specific economic developments. Our findings also show that macroeconomic fundamentals do matter for the U.S. dollar/Japanese yen exchange rate, but in different ways over different periods of time.     

Book Review

Tourist experiences are often profound and help to shape the social world of actors. Memories of travels become part of lived experiences to share with others. Experiences of travels or holidays achieve iconic status in everyday lives, and are communicated through the stories of life into lived identities. Accounts of touristic experiences in naturalistic everyday interaction have a story-like quality to them which become mythologised, fabled and flamboyantly and richly narrated to friends and relatives back home. However it is often extremely difficult to collect naturally occurring data of these storied experiences. Interviews in contrast appear to have a more structured and less naturalistic quality. This paper argues that using less structured interview situations, and a very close, fine-detailed analysis of interview data that draws upon socio-linguistic approaches, it is possible to reveal the underlying narrative structure of accounts for and of touristic experience. The paper argues that the natural attitude of the tourist is a ‘narrativistic’ attitude, that an account of touristic experience requires the development of a story, to define, describe and provide reasoned accounts for touristic events. Thus stories are crucial to the development of touristic accounts, and understandings of touristic experience must take account of these narrative structures in order to fully understand what tourists do when they talk about their experiences: they talk about their identities and their worlds. This paper explores how such narratives are constructed and what ‘things’ (other than the events themselves) they communicate.     

Institutional Design as a Commitment Device in Credit Markets with Asymmetric Information: Experimental Evidence

The aim of this experiment is to test the role of institutional design in credit markets as a commitment device against renegotiation: when there is asymmetric information does a lower degree of centralization enhance efficiency? Does decentralization alleviate the adverse selection problem in credit markets? We run a large‐scale computerized experiment involving 12 different data sets and 3 different uncertainty scenarios on a sample of 120 subjects. The results obtained confirm the superiority of a decentralized institutional framework: the number of poor projects undertaken in a decentralized market was significantly smaller than the number of poor projects undertaken in centralized markets in all the scenarios. This experimental evidence shows that the institutional design is crucial in seeking financial discipline and therefore can shed some light on the debate on ‘Anglo‐Saxon’ versus ‘German–Japanese’ credit practices. (J.E.L.: C90, D82, G21, L10).     

ALLOCATION UNDER INCREASING AND DECREASING RETURNS

Abstract.  Efficient Allocation of labour among a set of machines (say) operating under initially increasing and then decreasing returns is studied first for identical machines and then for the case when machines can be ranked by their productivity. Essentially it is a question of the number of machines to be operated. At critical input levels this number jumps and the intensity of machine use is reduced discontinuously.     

Is the crisis problem growing more severe?

The crisis problem is one of the dominant macroeconomic features of our age. Its prominence suggests questions like the following: Are crises growing more frequent? Are they becoming more disruptive? Are economies taking longer to recover? These are fundamentally historical questions, which can be answered only by comparing the present with the past. To this end, this paper develops and analyses a data base spanning 120 years of financial history. We find that crisis frequency since 1973 has been double that of the Bretton Woods and classical gold standard periods and is rivalled only by the crisis-ridden 1920s and 1930s. History thus confirms that there is something different and disturbing about our age. However, there is little evidence that crises have grown longer or output losses have become larger. Crises may have grown more frequent, in other words, but they have not obviously grown more severe. Our explanation for the growing frequency and chronic costs of crises focuses on the combination of capital mobility and the financial safety net, including the implicit insurance against exchange risk provided by an ex ante credible policy of pegging the exchange rate, which encourages banks and corporations to accumulate excessive foreign currency exposures. We also provide policy recommendations for restoring stability and growth.
— Michael Bordo, Barry Eichengreen, Daniela Klingebiel and Maria Soledad Martinez-Peria     

The sensitivity of poverty rates to macro-level changes in the European Union

The authors use the European Union-wide tax–benefit model,EUROMOD, to establish baseline rates of relative poverty in1998 for each of the Member States and then explore their sensitivityto (a) an increase in unemployment, (b) real income growth and(c) an increase in earnings inequality. They find that povertyrates are sensitive to such ‘macro-level’ changesbut that the size—and in some cases the direction—ofthe effect varies across countries. If such indicators are tobe used in judging the effectiveness of social policies, itis important that differences in responsiveness are fully understood.     

On exports and economic growth: the case of Italy

The export-led growth hypothesis for the Italian economy (1960-98) is tested through a VAR model with four macroeconomic variables: an index of the GDP of the rest of the world; the Italian real exchange rate; Italian real exports; and the Italian real GDP. Our results provide clear empirical support for the hypothesis. They also suggest that the Kaldorian approach is very useful in analysing short-run as well as long-run growth and fluctuations of an open economy such as Italy.     

Short-term under/overreaction, anticipation or uncertainty avoidance? Evidence from India

We examine the short-term price behaviour of three, size-conditioned Indian stock market indices, in response to informational shocks. A standard mean-adjusted returns model as well as the GJR-GARCH specification point towards underreaction to negative events in the medium and small capitalization indices. Also, the pre-event coefficients are generally negative and statistically significant, regardless of the sign of the shock, thus ruling out information leaks. We uncover a stable abnormal volatility pattern which increases monotonically a few days before the shock before suddenly decreasing in magnitude on the event day and beyond. We suggest uncertainty avoidance as a potential explanation of these features. The results are fairly robust across alternative event selection procedures, time, and size-conditioned shocks.     

On the Role of Imports in Enhancing Manufacturing Exports

Making use of a large panel data set on Italian manufacturing firms, we provide evidence on the effect of imports on the firm's export performance. We distinguish imports of intermediates according to their origin, and we find that inputs sourced from low labour cost countries promote the firm's export activity. Imports from high‐income countries do not significantly contribute to the export orientation of firms, especially when both persistence in export and the possible endogeneity of the import measures are accounted for via system generalised method of moments (GMM) estimation of a linear probability model. Our evidence suggests that the impact of imports on the firms’ export activity works through the cost‐saving channel rather than the technology channel.