THE COSTS AND BENEFITS OF SOIL CONSERVATION: THE FARMERS' VIEWPOINT

Most countries in Central America and the Caribbean depend heavilyon agriculture; efforts to sustain and improve the sector'sproductivity are therefore crucial to the region's economicdevelopment and to the welfare of its people. Land degradationis thought to pose a severe threat to the sustainability ofagricultural production. Yet despite long-standing concern aboutthis threat and dramatic claims of environmental damage, surprisinglylittle empirical analysis has been done on the causes and severityof land degradation problems in the region and on how best totackle them. Meanwhile, many of the conservation programs designedto address the problems have fallen short of expectations. Oftenfarmers have not adopted the recommended conservation practicesor have abandoned them once the project ended. The research presented in this article attempts to bridge theempirical gap, using cost-benefit analysis to investigate thenature and severity of the soil degradation problem and to assessthe cost-effectiveness of proposed solutions. Because soil degradationproblems tend to be site-specific, the analysis is rooted incase studies, and because conservation programs stand or fallon the participation of farmers, the study's main focus is onthe profitability of the measures and the deterrents to theiradoption from the farmers' point of view.      

Oil price shocks and unemployment in Central and Eastern Europe

The aim of this paper is to examine the effect of oil price movements on unemployment in Central and Eastern Europe. We do this by disentangling oil prices movements by their sign and from there we analyse the separate effects of positive and negative movements of oil prices on unemployment rates. We find that, although oil prices and unemployment are not correlated very much in the short run, the effect of oil price shocks on the natural rate of unemployment goes in the same direction, so that increases or decreases in oil prices increase or decrease the natural rate of unemployment.     

The role of the enhanced carry to risk on currency policy: the Mexican Peso

One of the most common measures of carry trade attractiveness is the carry-to-risk ratio. On analysing the speculative activity, this ratio presents two issues: First, emerging market currencies could merit a legitimate risk premium in a carry trade strategy due to the sovereign risks involved. In order to correct the measure, we include the credit risk in the measure using credit default swaps. Second, we gather more information about potential volatility asymmetries including a directional speculation indicator known as the risk reversal. We prove that the enhanced measure for the Mexican peso (MXN) is well represented by an ARIMA model with appropriate features since 2009. Due to the output of the analysis, we deduce that the Bank of Mexico might use this measure or a similar indicator, not only to understand the attractiveness of the carry trade strategy but to curb destabilizing carry trade activities. The case is compelling for the Mexican peso due to its dual role as emerging market currency and full convertible currency. We conclude that this institution may effectively manage the enhanced carry-to-risk measures in order to achieve financial stability and proper exchange credibility, and recognize its potential utility for other central banks.