Managing Food Price Instability in Asia: A Macro Food Security Perspective*

The present paper describes the benefits and costs, in qualitative terms, of managing food price instability in Asia in the context of promoting economic growth and poverty reduction to improve food security. The experience of Asian governments in actual practice with price stabilization is discussed in the context of managing an efficient transition to market‐mediated food security. Recent experience in Indonesia, where a sharp increase in rice prices (caused by a ban on rice imports) pushed 4 million people into poverty, provides continued motivation for the analytical story in this paper.     

AN EVALUATION OF ALTERNATIVE APPROACHES TO MARKET SHARE ANALYSIS WITH APPLICATION TO THE KUWAITI POULTRY MARKET

Changes in exporter market shares in the Kuwaiti poultry import market over the period 1971–81 are analysed by three modelling procedures. Two traditional approaches, a first-order constant transition probability Markov model and a set of market share equations, are found to be of only limited use. As an alternative, a multinominal logit model of market share behaviour is estimated. The empirical results indicate that, in addition to relative price changes, domestic policy inducements for Brazilian and European Community exports are important in determining market share changes. A comparison of the explanatory abilities of the models suggests that the multinominal logit model is as least as good as traditional modelling alternatives with respect to econometric criteria. It is concluded that the multinominal logit model offers considerable promise as a tool for market share research.     

EXPLAINING THE DISTRIBUTION OF QUOTA RENTS FROM US CHEESE IMPORTS

A theoretical model is outlined to illustrate how rents are generated from import quotas. The model is used to estimate rents from US cheese import quotas; rents are substantial. Relative rent capture by importers and exporters is explained by estimating an industrial organisation-type model. Unequal market power is important in explaining the distribution of rents between importers and exporters. Exporters tend to maintain price-cost margins and let importers capture a larger share as rent size increases.     

The utilization of individual capabilities in group approaches to strategic decision-making

Previous research has found that groups using dialectical inquiry (DI) or devil's advocacy (DA) make better strategic decisions than groups using a consensus (C) approach. This paper explains those findings by using new data to show that the DI and DA approaches make better use of the capabilities of individual group members. Specifically, the DI and DA groups yielded significantly higher quality recommendations and assumptions than the average of the individuals in the respective groups, whereas the C groups did not. Moreover, the recommendations and assumptions of the DI groups and the recommendations of the DA groups significantly exceeded those of the best individual in the respective groups. There were no significant differences for the C groups.     

THE EFFECT OF A SINKING FUND ON THE REOFFERING YIELDS OF NEW PUBLIC UTILITY BONDS

In this study, empirical tests are conducted to determine the impact of a sinking fund on reoffering yields of a sample of new public utility bonds sold between January 1977 and March 1982. The findings of the regression analysis are consistent with the hypotheses that the value of the sinking fund varies with the default risk of the issuer and with market expectations of future interest rate movements, and that the sinking fund improves the liquidity of a bond issue.     

Testing a DSGE Model of the EU Using Indirect Inference

We use the method of indirect inference, using the bootstrap, to test the Smets and Wouters model of the EU against a VAR auxiliary equation describing their data. We find that their model generates excessive variance compared with the data. But their model fits the dynamic facts quite well if the errors have the properties assumed by SW but scaled down. We compare a New Classical version of the model which also performs reasonably if error properties are chosen using New Classical priors (notably excluding shocks to preferences). Both versions have (different) difficulties fitting the data if the actual error properties are used. A model combining rigid and flexible-wage/price sectors, with a weight of around 5% on the rigid sector, does best in fitting the data.