The Calculation of returns to research in distorted markets: Comment

In a recent article, Oehmke reported that a high internal rate of return for investment in research when the interaction between research and price policy costs was disregarded could become very low or even negative when the effects of research on the costs of price policy were considered. In this paper, the social returns from research in the presence of the price policies considered by Oehmke are reexamined using a simple geometric approach. The analysis suggests that an output subsidy in a small importing economy, an output subsidy in a closed economy, and a target price in a large exporting economy will on Oehmke's assumptions - cause only small reductions in the internal rate of return from investment in research. This implies that the apparent underinvestment by governments in agricultural research cannot be explained away by a large upward bias, known to governments, in measured rates of return due to failure to account for interactions between research and the costs of price policy measures.     

Export Restrictions and Smooth Transition Cointegration: Export Quotas for Wheat in Ukraine

We extend previous modelling approaches to identify domestic price effects of export controls. We allow for smooth transition between free‐trade price transmission regimes and those under export restricting regimes, using a smooth transition cointegration (STC) approach, rather than the more common assumption that regime changes are abrupt. Our approach has the advantage that the switch in the price transmission regime may be induced not only by an actual but also by an expected policy change. Results confirm the gradual nature of the transition between the regimes, which reflect trader heterogeneity and wheat storage decisions. We find that the STC approach outperforms alternative model approaches in terms of both regime classification and goodness of fit, when explaining Ukrainian domestic wheat prices under export controls. In particular, application of the Markov‐switching error correction model (MSECM) to the same data generates results which do not reflect any identifiable economic reality (in contrast to Götz et al., 2013 ).     

Drivers of food price in China: A heterogeneous panel SVAR approach

In this paper, we examine the effects of shocks in agricultural output, production material price and production price on China's food price using panel data of 26 provinces for the period 2004 Q1–2015 Q4. Employing a heterogeneous panel structural vector autoregressive (SVAR) model, we identify the causal flows between the endogenous variables via directed acyclic graphs method. The empirical results from impulse response functions and variance decompositions suggest sizeable cross‐province variations. The main driving force of food price is the price inertia shock, rather than the agricultural output or the vertical chain of price transmission shocks. The findings support the view that price expectation is the key shifter of food price. Moreover, the shocks in the vertical chain of price transmission are only weakly linked to food price. Our findings are robust to an alternative panel SVAR model identified via Cholesky decomposition.     

论房价对中国产出和通货膨胀率的影响

研究目的：运用IS — LM模型和总供求模型分析住房价格对产出和通货膨胀率的影响机制,并应用中国的数据进行计量检验。研究方法：理论 — 实证分析。研究结果：（1）住房价格对产出缺口的影响是显著的,影响大小为0.76;（2）住房价格的快速上涨易导致投资主导型的经济出现过热,并加剧经济结构的失衡;（3）住房价格与通货膨胀率互为Granger因,房价的上涨在短期刺激经济增长的同时,最终推动物价水平的上涨。研究结论：住房价格波动对中国宏观经济具有显著影响,已经在货币政策传导机制中发挥作用,宏观经济政策应关注住房价格的波动,并采取适当措施来稳定住房价格,降低房价波动对宏观经济的冲击。     

Farm share of the food dollar: an IO approach for the United States and Canada

This article develops a method for using input–output data to calculate a farm share estimate for all food rather than the typical approach of estimating a price spread for an individual product. The farm share of the food dollar is approximately 14% in the United States and 17% in Canada. The farm share increased somewhat during the commodity price boom but has generally fallen steadily by approximately 20% since 1997. While the farm share of expenditures on food for home consumption is approximately 22% across both countries, it is 4% in the United States and 7% in Canada for meals consumed away from home. The empirical framework can be extended to other countries given the extensive use of System of National Account data making international and temporal comparisons possible across farm and food marketing systems.     

SUPPLY RESPONSE OF UPLAND RICE IN OGUN STATE OF NIGERIA: A PRODUCER PANEL APPROACH

Several reasons have been proposed to explain the unexpectedly low supply elasticities often found for food crops. This study is unusual in using a farmers' panel approach. This enables a distinction to be made between four different measures of response: realised output, planted hectarage, planned hectarage and ‘hypothetical’ hectarage. The results indicate that the own-price elasticities of supply are significantly positive. Planned, planted and realised responses are quite close, but are less than the hypothetical responses. The hypothetical elasticities are smaller for price falls than for price increases and they become lower as the harvesting period passes, suggesting contraction of supply of a crop when its price falls and asymmetric response among small-scale farmers.     

Measuring technical efficiency of dairy farms with imprecise data: a fuzzy data envelopment analysis approach

This article integrates fuzzy set theory in the data envelopment analysis (DEA) framework to compute technical efficiency scores when input and output data are imprecise. The underlying assumption in conventional DEA is that input and output data are measured with precision. However, production agriculture takes place in an uncertain environment, and, in some situations, input and output data may be imprecise. We present an approach of measuring efficiency when data are known to lie within specified intervals and empirically illustrate this approach using a group of 29 dairy producers in Pennsylvania. Compared to the conventional DEA scores that are point estimates, the computed fuzzy efficiency scores are interval bound allowing the decision maker to trace the performance of a decision‐making unit at different possibility levels.     

PRICE-SUPPORT EFFECTS ON EC PRODUCERS

This paper presents a new approach to assessing the impact of price-support policies on producer behaviour. This approach takes explicit account of the impact of such policies on a producer's uncertain production environment and includes a numerical procedure for calculating ex ante price variability from ex post producer price data. The method is applied to European Community agricultural industries in which intervention purchasing schemes operate. The results show the extent to which price support-policies distort the signals producers receive from world markets.     

Crop price comovements during extreme market downturns

This study develops and estimates mixture models of crop price comovements using copula functions, which allow for departures from normality during extreme market circumstances. The models also account for unique time‐series patterns inherent in crop price data. The results point to two main conclusions. First, mixture models appear to provide an easy‐to‐estimate approach for capturing real‐life crop price movements. Second, mixture models find that, during extreme market downswings, correlations in price movements strengthen by several orders of magnitude. These results suggest that structured securities assembled from different crops tend to lose diversified protection during extreme market downswings, the exact times when such protection is needed most.     

Productivity in Indonesian agriculture: Impacts of domestic and international research

Total factor productivity growth contributed 38% of Indonesia's agricultural output growth from the mid-1970s to the mid-2000s. This study uses time series data analysed with an error correction mechanism to examine the contribution that Indonesian publicly funded agricultural research made to this outcome, allowing for other possible determinants of productivity growth, including international agricultural research, extension, government price policy and weather. The results imply a 27% real annual rate of return from a marginal increase in Indonesian agricultural research expenditure. Indonesia's public agricultural research explains virtually all of its agricultural total factor productivity growth between 1975 and 2006.     

SUPPLY RESPONSE IN THE AUSTRALIAN EXTENSIVE LIVESTOCK AND CROPPING INDUSTRIES: A STUDY OF INTENTIONS AND EXPECTATIONS*

Most of the supply elasticity estimates reported for Australian agriculture are derived from equations estimated using time series data and incorporating ad hoc assumptions about price expectations. The authors' aim is to compare previously obtained supply elasticity estimates with those derived using theoretically more acceptable survey data on both producers' intentions and price expectations. Surveys were conducted in three regions in N.S.W., namely, the Southern Tablelands, the South-West Slopes and a portion of the Western Division centred on Cobar. The results of the research show that there are no major differences between the supply elasticities derived using the traditional time series approach and those obtained using the survey data. This finding is reassuring, given the cost of collecting survey data.     

Testing vertical price transmission for Vietnam's Robusta coffee

Vietnam has undergone market reforms over the last three decades; and as a consequence, the coffee sector has become increasingly market‐driven. The success of the government's liberalisation policies in terms of market efficiency is investigated by examining the transmission of both positive and negative price changes for Robusta coffee between export and farmgate prices. We used a threshold vector error correction model and high‐frequency daily data. The primary result here is that of a symmetric price transmission between export and farm‐level prices. This result holds when tested with weekly price data, derived from the daily data. Farmgate prices respond faster to decreases than increases in export prices when the long‐run deviation exceeds a certain threshold. These price changes are transmitted within several days. This research also confirms the importance of transaction costs, and other price frictions mostly ignored in prior analyses for coffee.     

基于GWR的住宅地价相对修正方法研究——以深圳市为例

研究目的:提出一种适用于地产市场活跃地区的住宅地价相对修正方法,解决传统市场比较法过分依赖估价师经验的问题。研究方法:运用GWR模型,量化影响因素对住宅地价作用的空间分异规律,确定影响因素单位变化对应的地价修正百分比;运用空间单元相似度评价方法,自下而上生成住宅地价修正分区。研究结果:从GWR模型原理出发,建立了基于客观数据的修正公式;构建了从回归模型构建到修正分区建立,再到地价修正的完整技术路线;研究提出的修正方法经真实数据检验取得了较好的效果。研究结论:本文构建的住宅地价相对修正方法在估价工作中具有实操可行性;地价修正精度与GWR模型构建精度正相关;该方法更加适用于具备高密度地价样本点的地产市场活跃地区。     

A MODEL OF THE COMMON AGRICULTURAL POLICY

Several efforts have been made since 1980 to estimate the costs and benefits of the European Community's Common Agricultural Policy (CAP). This paper summarises the approach and method adopted in developing one such effort, which aims to provide results at country, commodity and interest group level both for the CAP as a whole, and for changes in it. Economic analysis of the effects of price changes in the CAP is carried out with the use of direct and crossprice elasticities of supply and demand for sixteen major commodities, using base levels of production, consumption, and gross trade flows in each member state, along with rest-of-world data. A number of CAP instruments, such as subsidies, levies, quotas and ‘green’ exchange rates, are built into the calculations and can be varied, along with support prices, to produce new situations in domestic markets and in world price levels. Both financial (budgetary) and welfare (economic surplus) effects of such exogenous price changes can be calculated. Certain policy changes, such as a move to ‘free’ markets, involve endogenous calculation of equilibrium prices. Trend projections subject to a priori constraints are used to produce results for years beyond the extent of data currently available. The types of model run commonly carried out are discussed, along with several strategic judgments that became necessary in carrying out the research. Finally, questions concerning the future development and use of the model are addressed.     

EXPORT SUPPLY RESPONSE OF THE AUSTRALIAN CITRUS INDUSTRY*

A model of export supply response of the Australian citrus industry is developed and estimated using cointegration and error correction techniques and quarterly data for the period 1983 to 1993. The estimates suggest that, even in the long run, the supply of citrus exports is inelastic with respect to relative price. The results also show that the adjustment of export supply to changes in relative price is not instantaneous, the domestic production capacity has a significant positive impact on export supply, and export supply in the June quarter in each year is significantly lower than in other quarters.     

Marketing,cooperatives and price heterogeneity: evidence from the CIS dairy sector

Drawing on survey data, this article identifies the determinants of variations in farm gate milk prices for three CIS countries (Armenia, Moldova, and Ukraine). We apply a multi‐level modeling approach, specifically a bootstrapped mixed‐effects linear regression model. The analysis suggests three main strategies to improve the price received by farmers for their output: consolidation, competition for output, and stable supply chain relationships. In Armenia and Ukraine selling through a marketing cooperative has a significant, positive, albeit modest, effect on farm gate milk prices. In all three countries studied, the size of dairy operations, trust, and contracting also affect positively the prices received by farmers.     

SUPPLY CONTROL WITH LIMITED INFORMATION: AN ECONOMETRIC STUDY OF TOBACCO PRODUCTION IN GREECE

In the absence of explicit data that would facilitate a direct measure of the variable degree of control over exportable tobacco in Greece, a statistical measure was devised for it corresponding to the probability that control did adversely affect production in a particular year. This was measured by simulating the supply equations from the free market period over the control period and relating the discrepancies to the standard errors of the simulated values. The period 1948–1980 was re-analysed using this control variable jointly with lagged prices as supplementary ‘independent’ variables. The best estimate of the long-run price elasticity is considered to be near 3 but falls below 2 with a normal degree of control. The normal long-run effect of control on production was near 30%. Other effects of considerable importance were the level of the rural population, weather and trend. The analysis required the use of several sophisticated econometric techniques including Schmidt's formula for the error of a cumulative projection.     

Testing the induced innovation hypothesis: an error correction model of South African agriculture

This paper applies cointegration techniques to a model of induced innovation based on the two-stage constant elasticity of substitution (CES) production function. This approach results in direct tests of the inducement hypothesis, which are applied to data for South African commercial agriculture for the period 1947–1991. South African data is used because the policy changes have been substantial enough that the factor and price ratios have turning-points, rather than being monotonie. The time series properties of the variables are checked, cointegration is established, and an error correction model (ECM) constructed, allowing factor substitution to be separated from technological change. Finally, the ECM formulation is subjected to causality tests, which show that both the factor price ratios and R&D and extension expenditures are Granger-prior to the factor-saving biases of technological change. Thus, each stage of the analysis corroborates the inducement hypothesis. However, straightforward price-inducement is only part of the explanation of changes in factor ratios. Policy-induced innovation, in response to tax concessions and subsidised credit, is also present.     

Pre-Harvest Price Expectations for Corn: The Information Content of USDA Reports and New Crop Futures

This article examines the puzzle of why futures prices continue to react to USDA crop reports despite the fact that reports appear to be no longer "newsworthy," that is, provide no better production estimates than private forecasts. The information value of reports is measured in terms of their influence on rational agents' harvest-time corn price expectations, which are uncovered using a Hamilton-type modeling approach. Results show that reports are still "newsworthy," as they would contribute to agents' price expectations if released a day early. Thus futures price reactions, which closely reflect price expectations, are rational and consistent with efficient markets hypothesis.     

Agricultural price transmission across space and commodities during price bubbles

This article investigates agricultural price transmission during price bubbles. The empirical approach concerns the horizontal transmission of cereal prices both across different market places and across different commodities. The trade policy intervention put forward to mitigate the impact of price exuberance is considered. The analysis is performed using Italian and international weekly spot (cash) price data over years 2006–2010, a period of generalized turbulence of agricultural markets. Firstly, the properties of price time series are explored; then, interdependence across prices is specified and estimated by adopting appropriate cointegration techniques. Results suggest that the bubble had only a slight impact on the price spread and the temporary trade‐policy measure, when effective, has limited this impact.