Who Receives Farm Government Payments?

If we do not systematically attempt to collect data and assess distributional impacts, we shall always be surprised by the many unintended consequences of our public decisions. (Bonnen 1969, p. 447) Direct government payments to farmers have tripled in the last half of the 1980s. Market price support programs (for example, the Western Grain Transportation Act, among others) and supply management regulation continue to be topics of debate among policy analysts. Certainly the debate has become intensified by the discussions surrounding the Canada-U.S. Trade Agreement and the Uruguay Round of talks under the General Agreement on Tariffs and Trade. When all census farms are distributed across gross sales classes, the “selected” programs included in this study tend to be more concentrated among the mid-sized farms than are aggregate gross sales. However, if one considers Prairie grain farms distributed across farm size classes measured in terms of grain acres, gross sales, net farm income (specifically, NCFIWF) and the net “benefits” of “selected” government programs are similarly concentrated. For example, Prairie farms with 320 to 599 acres of grain report 24% to 26% of each of these four items.²⁶ The “selected” programs included in this study tend to pay about the same size of payout per farm household, regardless of the size of household income. We obtain this result because farm size in terms of gross farm sales tends to be the same, regardless of the size of household total net income. Across the spectrum of farm financial stability classes, the net “benefit” of the “selected” programs in this study tend to be distributed similarly to gross farm sales. The results depend on exactly how one implements the classification but more than two thirds of gross sales and more than two thirds of net “benefits” of “selected” programs accrue to farms with a higher level of financial stability. Across the spectrum of rates of return on equity as an indicator of farm efficiency, about one third of gross sales and one third of net “benefits” of “ selected” programs accrue to farms with a rate of return on equity of 10% or more. The potential impact of deregulation of supply management depends on one‘ s assumption. Three scenarios are presented here and, in each case, both “winners” and “losers” are identified. Between 4% and 37% of households on farms with quota would move from above to below the Statistics Canada low-income cutoff (LICO), depending on the scenario under consideration. However, in each seen-ario, there are cases of households moving from below to above LICO as a result of our calculated impact of deregulating supply management. This paper takes its lead from Bonnen's observation about “unintended consequences.” We do not offer an “evaluation” of any government program. Our sole objective is to illustrate “distributional impacts” so that all individuals in the policy debate may speak from an informed perspective. This paper represents an initial step in developing an “informed perspective.” As the first note to this paper indicates, an important ancillary objective is to illustrate the potential of Statistics Canada databases to provide tabulations to answer specific Questions posed by researchers and policy analysts.     

Range-based multivariate volatility model with double smooth transition in conditional correlation

This paper proposes a multivariate model named Double Smooth Transition Conditional Correlation Conditional Autoregressive Range (DSTCC-CARR for short). Determined by two transition variables, the correlations smoothly transit from one state to another. Together with the DSTCC-GARCH model, the model is employed to investigate the interdependence between Hong Kong's and international stock markets. It is proved by the empirical analysis that the DSTCC-CARR model is more credible and efficient than the DSTCC-GARCH model. Linkages among Hong Kong's and other world's markets captured by these two models are testified to be consistent with history, and have meaningful interpretations.     

INDONESIA'S TEXTILES AND APPAREL: THE CHALLENGES AHEAD

International rules governing textiles and apparel trade are undergoing transformation. The Multi-Fibre Arrangement (MFA) is being phased out, and as of January 2005 textiles and apparel trade will be conducted under World Trade Organization (WTO) rules. For Indonesia, this presents challenges and opportunities. The global trading system is increasingly seeing the introduction of preferential trade agreements (PTAs) that liberalise trade among members but discriminate against nonmembers. Major markets are negotiating new PTAs that divert trade away from low-cost non-member producers such as Indonesia. China's entry into the WTO allows producers there to take advantage of liberalised quotas and the integration of textile and apparel products into the tariff-based trade system as of 2002. With rising domestic production costs, increased local government interventions and poor tax administration, Indonesian producers face a 'double squeeze'. This paper outlines the key challenges confronting the sector and makes recommendations for sustaining exports in coming years.     

Group Formation in Risk-Sharing Arrangements

We study informal insurance within communities, explicitly recognizing the possibility that subgroups of individuals may destabilize insurance arrangements among the larger group. We therefore consider self-enforcing risk-sharing agreements that are robust not only to single-person deviations but also to potential deviations by subgroups. However, such deviations must be credible, in the sense that the subgroup must pass exactly the same test that we apply to the entire group; it must itself employ some self-enforcing risk-sharing agreement. We observe that the stability of subgroups is inimical to the stability of the group as a whole. Two surprising consequences of this analysis are that stable groups have (uniformly) bounded size, a result in sharp contrast to the individual-deviation problem, and that the degree of risk-sharing in a community is generally non-monotonic in the level of uncertainty or need for insurance in the community.     

A cross-country comparison of the demand for labour in Europe

A Cross-Country Comparison of the Demand for Labour in Europe.-This paper investigates structural differences in the demand for labour in France, Germany, and the UK. It finds substantial differences in the sensitivity of the demand for labour to international product demand and factor prices in all three countries. In particular, it reacts to domestic factor prices in Germany but international cost competitiveness in France and the UK; it depends upon European-wide product demand in France and Germany and a wider measure of product demand in the UK. The authors attribute these differences to product market conditions and institutional factors rather than to differences in the production technology.