Issues relating to Agricultural Pricing Policies and their Analysis in Developing Countries

Agricultural pricing policies in developing countries are often the result of complex interactions between producer, consumer and merchant groups and their relative effectiveness in influencing government decision making. Even within governments, various ministries often have opposing views. In this environment one of the contributions a policy analyst can make is to attempt to quantify the effects of different policy options. This permits a more informed discussion which hopefully leads to better decision-making and an improved incentive environment. Many analyses of agricultural pricing policies have used the standard partial equilibrium analysis where no linkages between commodity markets were considered. In this paper we have considered cross-price effects. Also, we have discussed issues relating to other adjustments/refinements of the standard method so that a practitioner not familiar with the various methods can form an opinion of what the options are and what adjustments may be appropriate for a particular case in question. The adjustments relate to overvaluation of currencies, input price distortions, differences in the degree of distortions between producers and consumers, and variability of border prices. The inclusion of cross-price elasticities was important for assessing production, consumption and trade effects for Argentina, but for the other countries it resulted in only somewhat improved accuracy. The adjustment for exchange rates had a large impact in Egypt and was important for other countries as well. This underlines the importance of exchange rates as key variables for agricultural pricing policies in general. The numbers show that the traditional taxation policies of agricultural products in the sample of developing countries is somewhat less widespread than in the past. These policies, however, continue to favor consumers over producers, with significant losses for some of the latter. The large size of welfare losses, especially compared to efficiency losses, highlights the importance of correcting distorted prices that adversely affect the poorest sections of society. Also, the usual government objective of taxing producers to raise revenues is frequently defeated by the large subsidies provided to consumers. For the partitioner, for whom time is often of the essence, the assessment of welfare effects using the partial equilibrium method may provide reasonably good ‘first cut’ estimates of the order of magnitude of the impact of distortions. But often, these 'base case estimates' can and should be adjusted for a number of possible factors. The analyst needs to determine how important accurate estimates of key variables are to the policy makers; he or she then needs to compare the costs involved in generating or gathering the data and doing the calculations with the benefits of a broader and more accurate analysis of the distortionary effects of the particular case in question.     

Developing countries in the environmental crisis

It is not only the economic gap between “North” and “South” which has dramatically widened: the same is true of the ecological gap. However, because the Earth is one ecological unit, the progressively worsening environmental crisis in the developing countries is of significance for the whole world.     

Vorwort

Ohne Zusammenfassung     

Die falschen Angriffe auf das Ehegattensplitting

These articles debate the pros and cons of the full income-splitting tax procedure. Ernst Niemeier defends this taxation scheme, because in his opinion it is not aimed at furthering families or children but making sure that a couple does not have to pay more taxes than two singles. He argues that there are constitutional reasons to treat equal incomes equally, which he refers to as “horizontal justice”. Furthermore, he rejects evidence of a negative labour supply effect on the second earner. A team of authors at the DIW find his argumentation not at all convincing. First, they say, determining tax justice or ability to pay is ultimately a political question and cannot be determined by scientists or the courts. Thus, a constitutional determination of marriage taxation on the existing full income-splitting procedure is excessive. Second, the empirical evidence of negative labour supply effects of full income splitting for the second earner can simply not be denied. Niemeier argues why such supply effects cannot exist.     

On the duality principle in option pricing: semimartingale setting

The purpose of this paper is to describe the appropriate mathematical framework for the study of the duality principle in option pricing. We consider models where prices evolve as general exponential semimartingales and provide a complete characterization of the dual process under the dual measure. Particular cases of these models are the ones driven by Brownian motions and by Lévy processes, which have been considered in several papers. Generally speaking, the duality principle states that the calculation of the price of a call option for a model with price process S=e ^H (with respect to the measure P) is equivalent to the calculation of the price of a put option for a suitable dual model S′=e ^H′ (with respect to the dual measure P′). More sophisticated duality results are derived for a broad spectrum of exotic options. The second named author acknowledges the financial support from the Deutsche Forschungsgemeinschaft (DFG, Eb 66/9-2). This research was carried out while the third named author was supported by the Alexander von Humboldt foundation.     

Impacts of Patent Expiry on Daily Cost of Pharmaceutical Treatments in Eight OECD Countries, 2004–2010

Variability in regulatory frameworks, industrial policy, physician/pharmacy autonomy, brand/generic distinctions, and the practice of medicine contribute to ambiguous interpretations of cross-country pharmaceutical cost comparisons. Here, we report cross-country comparisons that: (i) focus on ten therapeutic classes experiencing patent expiration and loss of exclusivity 2004–2010 in eight industrialized countries; (ii) convert revenues and unit sales to cost per day of treatment and number patient days treated using the World Health Organization’s Defined Daily Dosage metrics; (iii) compare patterns in costs per day of treatment with price index measures based on average price per day of treatment for each molecule computed over all molecule versions; (iv) utilizing econometric methods, model and quantify various factors affecting variations in daily treatment price indexes such as national regulatory and reimbursement policy changes, physician/pharmacy autonomy, and other factors; and (v) simulate changes in expenditures by country and therapeutic class had counterfactual policies been implemented.     

A cross-currency Lévy market model

The Lévy Libor or market model which was introduced in Eberlein and Özkan (The Lévy Libor model. Financ. Stochast., 2005, 9, 327–348) is extended to a multi-currency setting. As an application we derive closed form pricing formulas for cross-currency derivatives. Foreign caps and floors and cross-currency swaps are studied in detail. Numerically efficient pricing algorithms based on bilateral Laplace transforms are derived. A calibration example is given for a two-currency setting (EUR, USD).