A FORECAST OF MILK SUPPLY IN ENGLAND AND WALES

This paper reports the problems encountered in applying Markov Chain analysis to the Permanent sample of milk producers in England and Wales, and presents predictions obtained for producer numbers and milk output, by regions, for the years 1970/71 and 1975/76. As a consequence of the “pool of entrants” problem, dificulties arise both in estimating the required transition probabilities and in forecasting producer numbers. Solutions to these, and to other problems concerned with obtaining prediction of milk output, from those of producer numbers, are proposed. It is forecast that producer numbers will decline by 18 per cent and 33 per cent by 1970/71 and 1975/76 respectively, with the largest proportional decline occurring among smaller producers. Two forecasts are made of milk supply and these are compared with estimates made by the Milk Morltetiiic Board.     

Exploring the Role of the Real Exchange Rate in Australian Monetary Policy

An important issue in small open-economies is whether policymakers should respond to exchange rate movements when they formulate monetary policy. Micro-founded models tend to suggest that there is little to be gained from responding to exchange rate movements, and the literature has largely concluded that such a response is unnecessary, or even undesirable. This paper examines this issue using an estimated model of the Australian economy. In contrast to microfounded models, according to this model policymakers should allow for movements in the real exchange rate and the terms-of-trade when they set interest rates. Further, taking real exchange rate movements into account appears even more important with price level targeting than with inflation targeting.     

A note on price cap regulation and competition

This paper examines the properties of a price-cap regulatory regime similar in design to a plan recently proposed by AGT Ltd. in hearings on Alternative Forms of Regulation before the Canadian Radio-television and Telecommunications Commission. The price-cap plan incorporates a number of novel features which include (i) quantity weights that evolve through time rather than remaining fixed; (ii) adjustments for productivity that incorporate yardstick competition; and (iii) allowing the weights to reflect the firm's market power or absence thereof in the presence of competition. Hence, should competitive circumstances permit, the regulatory regime allows for its own sunset.     

Contract Design for Problem Asset Disposition

As a result of declining real estate values and the receivership of numerous financial institutions, government regulators like the Resolution Trust Corporation (RTC) and Federal Deposit Insurance Corporation (FDIC) have large inventories of distressed assets. This paper develops a model of the principal/agent issues associated with management and disposition of problem assets. In the model, optimal contracts balance risk sharing with incentives for effort. We argue that the RTC will minimize the ultimate cost of the thrift crisis by placing managerial control of distressed assets in the private sector, while retaining full or partial ownership of the assets for risk-sharing purposes. Recoveries are maximized, however, only when an asset manager is incented to expend a first-best level of effort by indexing asset management and disposition contracts to market movements.     

Statement no.98 the new depositor preference legislation

Statement no.98 the new depositor preference legislationSeptember 20, 1993