Consumer and Market Responses to Mad Cow Disease

We examine how consumers and financial markets in the United States reacted to two health warnings about mad cow disease: the first discovery of an infected cow in December 2003 and an Oprah Winfrey show that aired seven years earlier on the potentially harmful effects of mad cow disease. We find a pronounced and significant reduction in beef sales following the first discovery of an infected cow in a product-level scanner data set of a national grocery chain. Cattle futures show a pattern of abnormal price drops comparable to the scanner data. Contracts with longer maturity show smaller drops, suggesting that the market anticipated the impact to be transitory. Cattle futures show abnormal price drops after the Oprah Winfrey show that are more than 50% of the drop following the 2003 discovery of an infected cow.     

Recent weather fluctuations and agricultural yields: implications for climate change

We summarize recent statistical analyses that link agricultural yields to weather fluctuations. Similar to other sectors, high temperatures play a crucial role in predicting outcomes. Climate change is predicted to significantly increase high temperatures and thereby reduce yields. How good are such models at predicting future outcomes? We show that a statistical model estimated using historic US data on corn and soybean yields from 1950 to 2011 is very capable of predicting aggregate US yields for the years 2012–2015, where 2012 was much hotter than normal and is expected to become the new normal under climate change. We conclude by discussing recent studies on the implication of predicted yield declines with a special focus on adaptation and commodity prices.     

Gesundheitsprämie oder Bürgerversicherung? Ein Kompromissvorschlag

Im Streit über die Finanzierungsreform des Gesundheitswesens haben sich die politischen Parteien in unterschiedliche Positionen verkeilt. W?hrend SPD und Grüne das Bürgergeld bevorzugen, vertritt die CDU/CSU die Gesundheitspr?mie. Welche Argumente haben zur Polarisierung der politischen Diskussion geführt? Wie k?nnte ein Kompromiss zwischen diesen beiden Konzepten gestaltet werden?     

Real-World Economics Today:The New Complexity,Co-ordination and Policy

More realistic economics has to start out from the most basic socio-economic phenomena and processes, i.e. dilemma-prone interdependencies and strong uncertainty among agents that have become ubiquitous phenomena in the world today. In the reality of the “new” economy these are represented by functional and spatial fragmentation of value-added chains, global de-regulation and disembedding of the most powerful economic agents, on one hand, and increasing complexity and high integration of goods and services and net-based tele-IC-technologies on the other hand. All these rather new phenomena entail ubiquitous actual or potential co-ordination failure, either in the form of conventional “market failure”, with a complete mutual blockage of action, or of “wrong” co-ordination, or technological “lock-in”. Both forms are indicative of an insufficient capacity of the co-ordinated action required. In contrast, capability of sustainable innovative action in a broad sense requires new forms of co-ordination beyond “market” and “hierarchy”. Economics thus has to be defined more than ever as a science of effective co-ordination and the generation of innovative and sustainable collective action capacity. The global corporate economy has developed individualist arrangements to cope with that new co-ordination problem, such as local clusters and hub&spoke networks, which all have severe shortcomings. Against this background, the paper develops a setting with ubiquitous direct interdependencies, net-externalities, “strategic” strong uncertainty and ubiquitous (latent) social-dilemma problems. It discusses the possibility of an ideal decentralized and spontaneous co-ordination through emergent institutionalized collective action, specifically of “well-governed” network co-operation. In conclusion, it is argued that only a hybrid system of networks together with a new public policy role, supporting collective learning and emergent institutional co-ordination, i.e. an “interactive” and “institutional” policy approach, is capable of solving the co-ordination problems of the “new” economy.     

Efficient Specialization in Ricardian Production

Abstract. It is well known that the analysis of efficient specialization in Ricardian production with many countries and many commodities cannot be broken down to the simple case of two countries and two commodities. By drawing on some recent results of convex geometry and the theory of cephoids, this paper characterizes efficient specialization in the general case.