UNDERSTANDING MEMBER CHARACTERISTICS AND COOPERATIVE PRICE EFFECTS: THE CASE OF THE ARGENTINEAN DAIRY SECTOR

Since the 1990s, Argentinean dairy‐processing cooperatives have lost considerable amounts of members and market share. We analyse their current role by investigating the characteristics of farmers who continue delivering to them and price differentials between cooperatives and investor‐oriented firms (IOFs). A probit regression model applied to 917 farmers suggests that cooperative farmers are more disadvantaged than farmers delivering to IOFs in terms of education, farm size and productive technology. Moreover, t‐tests applied to data representing 70 per cent of national volume indicate that farmers delivering to cooperatives are between 11 per cent and 29 per cent smaller than those delivering to IOFs, depending on province. A hierarchical multilevel regression model applied to 9,720 transactions among farmers and processors shows that, after controlling for quantity and quality, cooperatives pay lower (3.5%) but more stable prices than IOFs. In a context of rapid structural change, we observe a market in which larger farmers deliver to IOFs and smaller farmers deliver to cooperatives and conclude that, at the expense of paying lower prices, cooperatives may act as buyers of last resort for otherwise disadvantaged farmers.     

Some Effects of Reducing Excess in Infrastructure Charges on the Export Coal Industry*

Excess rail freight and port charges on the Australian export coal industry amount to over 10 per cent of export prices and represent a form of ad valorem tax. Efficiency and distributional effects of removing the excess charges are assessed using a quantitative commodity model and a qualitative general equilibrium assessment. Removal of the excess charge would increase production by 29 per cent by the year 2000, slightly reduce upon prices and generate national efficiency gains of over $150 million a year. The mining industry and the Federal government gain and the State governments lose     

UNDERSTANDING THE WORLD WOOL MARKET: TRADE,PRODUCTIVITY AND GROWERS’ INCOMES*

Applying recent estimates of total factor productivity (TFP) growth on Australian sheep farms, we analyse the long‐run effects of TFP growth on the world wool market using a detailed model of the world wool market that treats raw wool, wool textiles and wool garments as heterogeneous commodities. The model divides the world wool market into nine regions and eight major industrial sectors capturing the extreme nature of the multistage production system through which wool passes. We find that regional sheep producer's welfare responds by between ‐0.9 per cent and 0.7 per cent assuming conservative TFP growth over the period 1995/96–2003/04. Sensitivity analysis shows the welfare effects to be robust with respect to all model parameters, but sensitive to the size of the TFP growth and the degree of TFP spill‐over. Our realistic representation of the multistage nature of the wool production system shows that wool inputs steadily decline in importance in moving from early‐ to late‐stage processing. This production structure indicates that the productivity of sheep farmers has little effect on the prices of and demand for wool garments. In contrast, trade in wool inputs is very responsive to the productivity of sheep farmers.     

Emissions Trading, Wealth Transfers and the Wounded Bull Scenario in Power Generation

Electricity generators accept that emissions trading is fundamental to meeting CO₂ reduction targets. But unless a percentage of permits are allocated, existing generators will face non-trivial wealth transfers. Seldom contemplated in academic works are the adverse economic consequences of an all-auction approach to emissions trading. Using Victoria to illustrate, we find that once CO₂ prices exceed $17.50/t, the marginal coal generator facing large wealth transfers will withhold generating capacity to raise prices and recoup stranded investments, thus becoming a 'wounded bull' in the market place. This has material welfare implications with modelling results indicate an intermediate-run 300 per cent increase in wholesale power prices.     

Local House Price Effects of Internal Migration in Queensland: Australia's Interstate Migration Capital

We examine the causal impact of internal migration on housing prices across 82 Statistical Areas Level 3 regions in Queensland, Australia from 2014–2019. The primary findings are: (i) an annual increase in the inflow of migrants equal to 1 per cent of a region's initial population leads to a 0.6 to 0.7 per cent annual increase in Queensland's house prices across different empirical specifications; (ii) this effect differs between the Greater Brisbane metropolitan area and Rest of State areas; (iii) migration from New South Wales fails to produce a significant influence on house price growth in Queensland.     

Does a Nearby Murder Affect Housing Prices and Rents? The Case of Sydney

We measure the impact of murders on prices and rents of homes in Sydney. We find that housing prices fall by 3.9 per cent for homes within 0.2 miles of the murder in the year following the murder, and weaker results in the second year after a murder. We do not find any effects of murders on rents. Higher media coverage and being located closer to the murder (within 0.1 mile) have no additional effect on prices. Taken together, our findings suggest that proximity to a murder affects nearby property prices, particularly in the first year after the incident.     

On the upsurge of U.S. food prices revisited

The objective of this study is to empirically examine the effects of changes in exchange rate, commodity price and energy price on five U.S. food prices — cereal/bakery, meats, dairy, fruits/vegetables and beverages. The Johansen cointegration analysis and a vector error-correction (VEC) model are applied to monthly data for the 2001–2010 period. Results show the existence of stable long-run relationships among the selected variables. We also find that energy and commodity prices have influenced U.S. food prices mainly through changes in prices of cereal/bakery, meats and dairy. Finally, exchange rate is found to have been a significant factor influencing U.S. food prices. The Energy Independence and Security Act of 2007 is one of main driving forces for the recent food price inflation, which has affected negatively consumers, especially low income households, in the United States.     

Reserves,Sovereign Wealth Funds and the Resilience of Global Imbalances

Reserves and sovereign wealth funds (SWFs) assets should be jointly considered for the assessment of global imbalances, hence their denomination as sovereign external assets (SEAs): both are public capital outflows from developing to developed countries, both hinder adjustment in current account surplus and deficit countries and, therefore, both contribute to sustain global imbalances. They represented 135 per cent and 50 per cent of net and gross US financing needs, respectively, in 2007. Reserves contribute 80 per cent and SWFs 20 per cent. They will go on providing resilience to the global imbalances, and the relative importance of SWFs is set to increase if commodity prices stay high.     

Australian Capital City Real House Prices, 1979–1993

Real house prices have increased by 35 per cent in Australian capital cities during the last 15 years, with Brisbane, Canberra, and Sydney experiencing rises of 48 to 61 per cent and Adelaide, Melbourne and Perth having increases of 20 per cent or less. This article estimates a single model for the six cities to explain the divergent real price behaviour over time and space. It is concluded that the fundamental forces driving real house prices are the growth rate in real wage income (primarily due to employment growth) and the growth in population caused by net overseas migration.     

Deliveries on Commodity Futures Contracts

Deliveries on futures contracts are widely thought to be relatively insignificant in amount; indeed sizeable deliveries are taken to indicate problems in a futures market. In fact, deliveries on five of the largest, physical delivery, futures markets in the US average approximately 10 per cent of the maximum open interest in each delivery month. Analysis also demonstrated the value of the timing and location options often provided by contract specifications. One implication is that measures of market performance like hedging effectiveness are sensitive to the imbedded options' effects on prices     

The Macroeconomic Outlook

A slow recovery is expected from the current recession. Since reaching a trough in the September quarter of 1990, real gross domestic product (GDP) has followed a flat path which is likely to continue through to the September quarter of 1991. A slow recovery may then commence in the December quarter of 1991. This is consistent with real GDP growth of -0.9 per cent in 1990-91 followed by 2.4 per cent in 1991-92 and around 3 per cent per annum to the mid- 1990s compared with 'normal' growth of 2.5 per cent per annum.
This recovery is likely to see the unemployment rate at over 10 per cent for most of 1991-92, before moving to around 8 per cent by the mid-1990s.
Inflation may fall sharply from a peak of 8.0 per cent in 1989-90 to a trough of 3 to 4 per cent in 199 1–92, due to the recession and movements in oil prices. With a slow recovery, inflation may increase to 4 to 5 per cent per annum in the medium term.
The current account deficit has fallen from 5.9 per cent of GDP in 1989-90 to a likely level of 4.1 per cent in 1990-91, but part of this gain is cyclical rather than structural. Thus the deficit is expected to increase to around 5 per cent during recovery and remain flat to the mid- 1990s, implying steady increases in the ratio of foreign debt to GDP.
Looser monetary policy would erode part of the forecast sustained reduction in inflation. Looser fiscal policy would lead to a higher current account deficit.     

Germany's New Insider Law: The Empirical Evidence after the First Year

Abstract. This paper investigates insider trading activities in German stocks during the first year following implementation of the new Insider Law on 1 July 2002. It can be observed that insiders act as contrarian investors. They buy stocks after prices have fallen and sell stocks after prices have risen. In general, insider trades are very profitable. A typical stock purchased by an insider yields an abnormal return of almost 3 per cent during the 25 days following the transaction. In contrast, a typical stock that has been sold by insiders achieves an abnormal return of nearly −3 per cent over the same time period. Outsiders who copy the transactions of insiders can achieve nearly the same abnormal returns. Abnormal returns remain substantial even after transaction costs. The results suggest that prices of stocks in which insiders trade do not seem to be semi-strong efficient.     

Do changes in the fundamentals have symmetric or asymmetric effects on house prices? Evidence from 52 states of the United States of America

Time-series studies that have tried to establish the long-run relationship between house prices and economic fundamentals have been criticized due to low power of their cointegration tests. On the other hand, those who have used panel data and panel tests to increase the power have found mixed results. Both groups have assumed that changes in the fundamentals have symmetric effects on house prices. In this article, we use nonlinear ARDL approach to cointegration and error-correction modelling and quarterly data from each of the states in the US to show that changes in the fundamentals have asymmetric effects on house prices, in the short run as well as in the long run. Cointegration between house prices and fundamentals is established in 30 states and in District of Columbia.     

Population Ageing and House Prices in Australia

This article assesses the effect of population ageing on housing consumption and house prices. Using two approaches, this article finds that the ageing of the population may cause average real house prices to be between 3 and 27 per cent lower than they otherwise would be over the period 2008–2050. The first approach is an econometric estimation of house prices for Australia over the period 1980–2008. The second approach is a simulation of a life cycle‐optimising model with representative overlapping generations.     

Measuring the Effects of Exchange Rate Changes on Investment in Australian Manufacturing Industry*

This paper examines the relationship between exchange rates and investment in Australian manufacturing between 1988 and 2001. The effects of exchange rates on investment are found to vary positively with the export share of sales and negatively with the share of imported inputs into production, with lower price‐over‐cost mark‐ups increasing the response. For Australian manufacturing, a 10 per cent real appreciation of the Australian dollar leads to an average 8.0 per cent decrease in total investment through the export share channel, and an average 3.8 per cent increase through the imported input share channel, with most of the response occurring through investment in equipment, plant and machinery.     

The Macroeconomic Outlook

A slow recovery, commencing in the December quarter of 1997, is expected from the current recession. Overall, gross domestic product (GDP) may increase by 2.8 per cent in the year to the June quarter of 1992, and continue to increase at a similar rate thereafter.
This subdued recovery is likely to see the unemployment rate at over 70 per cent to the end of 1992, before moving down slowly to around 8.5 per cent by the mid-1990s.
Consumer price index (CPI) inflation may fall sharply from a peak of 8.0 per cent in 1989-90 to a trough of under 3 per cent in 1997-92, due to the recession and movements in oil prices. With a slow recovery, inflation may then increase to 5 per cent per annum in the medium term.
The current account deficit has fallen from 6.0 per cent of GDP in 1989-90 to 4.7 per cent in 1990-91, despite a fall in the terms of trade of 5 per cent. However, this has been due to the cyclical downturn. With a slow recovery in demand, and rising real labour costs hampering expansion in export and import-competing industries, the current account deficit may once again reach 6 per cent of GDP by the mid-1990s, implying steady increases in the foreign debt-to-GDP ratio.
This forecast assumes monetary policy targets an inflation rate of 5 per cent per annum. Any further easings in monetary policy may undermine the credibility of the inflation objective with the result that the trade weighted index (TWI) exchange rate may drop sharply from 59.     

Explaining House Prices in Australia: 1970–2003*

This paper aims to explain changes in real house prices in Australia from 1970 to 2003. We develop and estimate a long-run equilibrium model that shows the real long-run economic determinants of house prices and a short-run asymmetric error correction model to represent house price changes in the short run. We find that, in the long run, real house prices are determined significantly and positively by real disposable income and the consumer price index. They are also determined significantly and negatively by the unemployment rate, real mortgage rates, equity prices and the housing stock. Employing our short-run asymmetric error correction model, we find that there are significant lags in adjustment to equilibrium. When real house prices are rising at more than 2 per cent per annum, the housing market adjusts to equilibrium in approximately four quarters. When real house prices are static or falling, the adjustment process takes six quarters.     

Impacts of monetary and macroeconomic factors on food prices in eastern and southern Africa

Eastern and southern Africa has been experiencing relatively large increases in real food prices since the early 1980s. Real food prices in some African countries grew as much as 11% per year during the 1980-1996 period. The huge volatility in food prices coincided with the implementation of structural adjustment programmes in several African countries. This study examines the impacts of monetary and macroeconomic factors on real food prices in eastern and southern Africa. Using the technique of cointegration and error correction modelling to test the long-run relationship between real food prices and the factors that influence their behaviour in selected African countries. Demand elasticities for food are estimated for selected countries. The empirical results show that changes in domestic food production, coupled with income, trade, exchange rate and monetary policies have significant impacts on real food prices, with wide implications for food availability and food security in the region.     

SEQUESTERING CARBON ON AGRICULTURAL LAND: SOCIAL COST AND IMPACTS ON TIMBER MARKETS

Planting trees to sequester carbon has broad political appeal. However, effects of a major tree planting program on the agricultural sector and on timber markets are unclear. This paper examines social costs of sequestering carbon in tree plantations on U.S. agricultural land and investigates harvesting's effects on timber prices and on private timber producers' welfare. The analysis links a model of the U.S. agricultural sector that includes the land base in major production areas with a model of the U.S. softwood economy. Using current data on planting, maintenance, and harvesting costs for tree plantations and carbon sequestration rates, the models estimate the price and welfare effects of alternative carbon sequestration goals. Results indicate a range of outcomes. Consumers pay higher prices for food as farmers divert land from crops to trees. However, wood products consumers gain from falling timber prices if the trees enter commercial markets. Agricultural producers and landowners gain from higher commodity prices, but private forest owners lose. Large tree planting programs imply that policymakers must compensate private commercial tree planting to prevent farmers from displacing present tree plantations.     

The causal dynamics between renewable energy,real GDP,emissions and oil prices: evidence from OECD countries

This study extends the empirical literature on the determinants of renewable energy consumption in the case of 25 OECD countries for the period 1980–2011. Preliminary analysis suggests the presence of cross-sectional dependence within the panel data. As a result, second-generation panel unit root tests of Smith et al. (2004) and Pesaran (2007) are undertaken to find the respective variables that are integrated of order one. Panel cointegration and error correction modelling reveal that a long-run relationship exists between renewable energy consumption per capita, real GDP per capita, carbon dioxide emissions per capita and real oil prices. The long-run elasticity estimates are positive and statistically significant for real GDP per capita, carbon dioxide emissions per capita and real oil prices. The panel error correction model shows that a feedback relationship exists among the variables.