Determinants of off‐farm work and its effects on farm performance: the case of Norwegian grain farmers

Limited attention has been given in the literature to the impact of off‐farm work on farm performance. More knowledge about the determinants of part‐time farming and its effects on farm performance could help policymakers to introduce better targeted rural development policies. The aim in this article is to fill part of the above‐mentioned gaps by analyzing factors that influence the choices of off‐farm work by either the farmer alone or jointly by both the farmer and partner; and simultaneously examining how off‐farm work influences farm performance. These analyses were based on an unbalanced panel data set from Norwegian grain farms during 1991 to 2005. Among the determinants of off‐farm work hours, we found that, in addition to demographic, time trend, and some regional effects, there was a significant negative effect of farm output on farmers' off‐farm work hours. The production function results revealed that off‐farm work had a positive effect on farm output, at first increasing but then decreasing with increase in hours spent in off‐farm work. Furthermore, our analysis revealed no systematic effect of off‐farm work on farm technical efficiency.     

International tenders and futures hedging

This paper examines the optimal bidding and hedging decisions of a risk‐averse firm that takes part in an international tender. The firm faces multiple sources of uncertainty: exchange rate risk, risk of an unsuccessful tender, and business risk. The firm is allowed to trade unbiased currency futures contracts to imperfectly hedge its contingent foreign exchange risk exposure. We show that the firm shorts less (more) of the unbiased futures contracts when its marginal utility function is convex (concave) as compared with the case that the marginal utility function is linear. We further show that the curvature of the marginal utility function plays a decisive role in determining the impact of currency futures hedging on the firm's bidding behavior. Sufficient conditions that ensure the firm bids more or less aggressively than in the case without hedging opportunities are derived. Copyright © 2006 John Wiley & Sons, Ltd.     

A note on the superiority of the OLS hedge ratio

Suppose that spot and futures prices are generated from an error‐correction model. This note demonstrates that, although the OLS model is misspecified, it provides a hedge ratio that usually outperforms the hedge ratio derived from the correct error‐correction model. The opposite result is possible only when the postsample incurs a major structural change from the estimation sample. ©2005 Wiley Periodicals, Inc. Jrl Fut Mark 25:1121–1126, 2005     

Measuring Confucian values among East Asian consumers: a four country study

This study aims to make a conceptual and empirical contribution by developing and operationalizing suitable scales to capture certain Confucian values (face saving, humility, group orientation, hierarchy and reciprocity) that can influence East Asian consumers. Based on the pertinent literature, focus group discussions with extended East Asian families and East Asian scholar interviews, we develop and validate our measures on data from over 400 respondents across four East Asian cities (Tokyo, Hanoi, Beijing and Singapore). Despite some variance, our findings signal that East Asians are highly influenced by such traditional values. Several implications are extracted and future research directions suggested.     

Production risk in multi-output industries: estimates from Norwegian dairy farms

Farmers who produce multiple outputs are portfolio managers in the sense that they use inputs to balance expected economic return and variance of return. This article estimates the structure of the stochastic multioutput production technology in Norwegian dairy farming, allowing for a more flexible specification of the technology than previous studies. We find that an increase in input levels leads primarily to higher output variability, and that inputs also influence the covariance of shocks between outputs. Risk reducing effects of inputs on outputs are primarily present in the covariance functions. Technical change leads to shifts in the profit distribution over the data period, but no welfare improvement for risk averse farmers.     

Forecasting with preliminary data: a comparison of two methods

This study examines two alternate methods, a vector autoregression error correction model and a state space model, to forecast revised United States trade balance figures. Both these methods incorporate preliminary and revised trade data. The results obtained from these methods were compared to the benchmark forecasts generated by revised-data-only models. This Study finds that the state space model performs worse than the benchmark. The vector autoregression model performs better than the benchmark only in the one-step forecast. These results indicate that incorporating preliminary data may not be useful in forecasting the revised data.     

Corporate income tax and futures hedging

Our research is motivated by the Corn Products vs. Arkansas Best Supreme Court decisions that pitched the controversy of the tax treatment of gains and losses from futures hedging. The use of futures contracts as risk management tools depends on the tax code. In this paper we address complications in the current tax code that allow for asymmetric offset: Ordinary losses can be applied against capital gains; however, capital losses cannot by applied against ordinary gains. Also we consider the issue of tax loss carryover. We investigate the optimal hedge ratios under these scenarios analytically where possible, and numerically where necessary. Michael Metz is an independent commodity market consultant.     

Are options redundant? Further evidence from currency futures markets

This paper investigates the impact of the introduction of options on the underlying asset's price formation process, using Geweke feedback measures. We derive the feedback measures from the Deutsche Mark, British Pound, Swiss Franc, Japanese Yen and Canadian Dollar futures and spot prices, before and after the introduction of options for these currency futures. While each currency market maintains some distinct characteristics in the post-option period, a common theme is found: after the option introduction, the instantaneous feedback between spot and futures markets improves drastically. The feedback from the spot to the futures market tends to decrease and remains small. The feedback from the futures market to the spot market tends to decrease as well. These results confirm the dominance of options markets, probably due to their smaller transaction costs. When made available, options assume a leading role for information transmission in currency markets.