THE DECISIONS OF THE SHADOW MONETARY POLICY COMMITTEE AND MONETARY POLICY COMMITTEE SINCE 2002

We analyse the decisions of the Monetary Policy Committee (MPC) and the recommendations of the Shadow Monetary Policy Committee (SMPC) over the period 2002–2011. We find that the SMPC policy recommendations have to a large extent agreed with the policy actions of the MPC on interest rates. We offer some suggestions as to how the recommendations of the SMPC could be enhanced.     

Efficient,Pareto-improving processes

We give two optimization programs for determining whether Pareto improving local changes are possible. When they are, the programs compute them. Any procedure generating efficient and Pareto improving changes can be replicated by these programs. The two programs are dual to each other. We apply the programs to Pareto improving exchange processes and to Pareto-improving tax-tariff reforms.     

OPTIMAL MULTI‐AGENT PERFORMANCE MEASURES FOR TEAM CONTRACTS

We present a continuous‐time contracting model under moral hazard with many agents. The principal contracts many agents as a team, and they jointly produce correlated outcomes. We show the optimal contract for each agent is linear in outcomes of all other agents as well as his/her own. The structure of the optimal contract strikingly reveals that the optimal aggregate performance measure in general can be orthogonally decomposed into two statistics: one is a sufficient statistic, and the other a nonsufficient statistic. As a consequence, the optimal aggregate performance measure in general is not a sufficient statistic, unless the principal is risk neutral. We further discuss agents' optimal effort choices using a “quadratic‐cost” example, which also strikingly suggests that team contracts sometimes provide lower‐powered effort incentives than individually separate contracts do.     

The Optimal Timing of Evaluation of Genebank Accessions and the Effects of Biotechnology

The lack of ex ante evaluation of germplasm in genebanks has been the single most prevalent and long-standing complaint of plant breeders about the management of genebanks. Advances in biotechnology offer the possibility of faster, cheaper and more efficient evaluation methodologies. Will these new technologies favor ex post evaluation, as some expect, or will it lead to more ex ante evaluation? Will it also lead to earlier development of varieties with disease resistance traits in anticipation of actual infestations? Will the prospect of further advances in biotechnology favor delay of evaluation and development? This paper addresses these questions in the case of evaluation of germplasm for resistance to a disease.     

Weekend effect in airfare pricing

Internet traffic during weekends is lighter than at weekdays, allowing airlines to adopt a distinctive pricing policy during the weekend. By analyzing the daily airfares for 1000 US domestic routes, this study tests whether a weekend effect exists in the level and dispersion of airfares. It finds a strong weekend effect for airfare dispersion, but not for price level. This suggests that different arrival timing of online consumers during the weekdays motivate airlines to adopt a distinctive pricing mechanism during weekends, by offering occasional discounts while maintaining the same fare level on average.     

Does the Exchange Rate Matter to Agricultural Bilateral Trade between Canada and the U.S.?

This study examines the effects of the Canada–U.S. exchange rate on bilateral trade of agricultural goods between the two countries and on U.S. farm income. Special attention is given to agricultural trade between the two countries under the Canada–U.S. Free Trade Agreement (CUSTA). This study utilizes two time series models: the vector error correction model (VECM) and the vector moving average model (VMA) with quarterly time series data from 1983 to 2000. It is found that the exchange rate has a significant impact on U.S. agricultural trade with Canada, but the impact on U.S. agricultural price and income is insignificant. The exchange rate between the two currencies is found to be weakly exogenous in the U.S. agricultural sector, which answers a fundamental question about the role of the exchange rate in Canada–U.S. bilateral trade for agricultural products. In addition, the results point to a significant, though minimal, effect on bilateral trade due to CUSTA.     

Alternative U.S. and EU Sugar Trade Liberalization Policies and Their Implications

This study analyzes the impacts of alternative trade liberalization policies in the United States and the European Union (EU) on the U.S. sugar industry. A global sugar policy simulation model was used for this analysis. The study results indicate that the U.S. sugar industry may be able to survive if both the United States and the EU liberalize their sugar trade. However, if only the United States eliminates its sugar programs, all U.S. sugar-producing regions would be threatened.     

Determinants of World Wheat Trade Flows and Policy Analysis

The conventional gravity model is revised for a single commodity and applied to wheat markets to determine factors affecting trade flows of wheat. This study demonstrates the gravity model can be parameterized more effectively by using time series and cross-section data rather than cross-section data alone. The study reveals that all independent variables, including production capacities, income, import and export unit value indexes, and trade policies used in wheat trade play an important role in determining trade flows of wheat. Long-term agreements achieve highest performance toward enhancing international wheat trade. Credit sales also contribute to increased wheat movements. The U.S. Export Enhancement Program and the EC Export Refund program are less effective in stimulating the world wheat trade. On the import side, protectionist policies of supporting domestic prices greatly impair wheat trade. Le modèle gravitationnel classique, adapté ici à un produit particulier, est utilisé pour cerner les facteurs influant sur les courants d'échanges internationaux du blé. L'étude démontre que le modèle de gravité peut être paramètrisé plus efficacement si on utilise à la fois les séries chronologiques et les données transversales, plutôt que ces dernières seulement. L'étude révèle que toutes les variables indépendantes, y compris les moyens de production, le revenu, les indices de valeur unitaire des importations et des exportations et les politiques d'échanges extérieurs ont une action déterminante sur les courants d'échanges internationaux du blé. Les accords à long terme sont les facteurs qui contribuent le plus à stimuler les échanges internationaux. Les ventes à crédit ont également un effet stimulant. Le programme américain de subvention aux exportations et le programme de restitution a l'exportation de la CE sont moins efficaces à cet égard. Côté importation, les politiques protectionnistes de soutien des prix intérieurs sont une grave entrave au commerce du blé.     

Canadian Exports of Livestock and Meat to the United States

Canadian exports of beef and live cattle to the United States have increased significantly since the late 1980s. Hog and pork exports have increased since the mid-1990s. Major factors affecting exports of beef, pork, cattle and hogs from Canada to the United States include the exchange rate, increased Canadian production, Canada-U.S. price differentials and trade liberalization under the Canada-United States Free Trade Agreement of 1989. Increased Canadian exports have resulted in small but significant reductions in U.S. domestic prices of beef, pork and hogs.