The role of temperature for seasonal market integration: a case study of poultry in Iran*

Understanding market integration has greatly benefited from analysing and comparing variations in price transmissions. An important source of variation in agricultural markets is seasonal changes in production, consumption and transaction costs. A key factor driving seasonality in agricultural price is temperature, as supply and demand changes are triggered by seasonal temperature differences. In this paper, we study the seasonal variations in vertical price transmission focusing on the asymmetric price adjustment to analyse changes in the market interactions between the stages of the value chain. Our data reveal significant transitory effects of temperature on the price transmission process. Results of a panel threshold model suggest that the farm–wholesale price adjustments to deviations from the market equilibrium are more symmetric at higher temperatures. However, we do not find an effect of temperature on the wholesale–retail price relationship. Our findings can be rationalised with wholesalers making use of their market power to extend their margins in the upstream chain. Wholesaler market power is lower during warm periods, and price adjustment is more symmetric. Concerning the Iranian poultry value chain, our findings imply that temperature-related differences in market interactions should be considered in formulating policy interventions.     

The inflation game

We study a game where households buy consumption goods to preempt inflation. This game features a unique equilibrium with high (low) inflation, whenever money supply is high (low). For intermediate levels of money supply, there exist multiple stable equilibria where inflation is either high or low. Equilibria with moderate inflation, however, do not exist, and can thus not be targeted by central banks. That is, depending on agents' equilibrium play, money supply is always either too high or too low for moderate inflation. Finally, we find that inflation rates of durable goods, such as houses, cars, luxury watches, or furniture, are useful leading indicators for changes in overall inflation.     

EU Agricultural Policy Reform: Evaluating the EU’s New Methodology for Direct Payments

The Common Agricultural Policy has changed significantly over time. Major changes are now introduced every seven years, with the last fundamental change agreed upon in 2013 for the period 2014-2020. Policymakers also agreed to a mid-term review in order to evaluate the performance of numerous new regulations. The Commission has elaborated a methodology for the evaluation and has already published some documents with initial results for past periods. This article reviews whether the methodology and database used by the Commission are in line with the highest standards for policy evaluation.     

Weltgetreidemarkt: Anhaltender Boom oder kurzfristige Spekulationsblase?

Zusammenfassung   Die Weltagrarm?rkte waren im letzten Jahr von stark steigenden Preisen gepr?gt. Wird diese Entwicklung durch fundamentale Faktoren gestützt oder handelt es sich um eine kurzfristige Erscheinung? Welche Rolle spielen dabei das Bev?lkerungswachstum und die Steigerung der Pro-Kopf-Einkommen? Was geht auf die Nachfrage nach biogenen Kraftstoffen zurück? Diese Fragen werden beispielhaft anhand des Weizenmarktes behandelt. Prof. Dr. Bernhard Brümmer, 39, ist Inhaber des Lehrstuhls für Landwirtschaftliche Marktlehre am Department für Agrar?konomie und Rurale Entwicklung der Universit?t G?ttingen; Prof. Dr. Dr. h.c. Ulrich Koester, 70, ist Emeritus des Lehrstuhls für Landwirtschaftliche Marktlehre an der Universit?t Kiel; Prof. Dr. Jens-Peter Loy, 44, lehrt in der Abteilung Marktlehre des Instituts für Agrar?konomie an der Universit?t Kiel und ist Inhaber des Lehrstuhls für Marktlehre an der CAU Kiel.     

The impact of fiscal policies on agricultural household decisions

This paper provides a comparative static analysis of farm household's production, consumption, and labor market decisions under alternative tax policies. We explore the implications of non-separable household decisions caused by widespread non-participation in labor, land, financial and/or food markets, as is typical of low income economies. The analytical results indicate that when labor market imperfections occur, most tax-induced responses are ambiguous, mainly due to shadow price effects. This is particularly the case for the labor market and production responses to most tax tools under study, while a decreasing demand for consumption goods appears to be the result in several cases. Furthermore, tax-induced allocation effects may differ between the non-separable and the separable model versions, indicating the potential impact of labor market constraints on farm household responses to tax policies. In particular, standard taxes as well as a land tax may imply production adjustments in the case of non-separability.     

Price transmission and local market power: empirical evidence from the Austrian gasoline market

We analyse the impact of local market power on price margins and different dimensions of price adjustment dynamics (speed and asymmetry of price transmission) using data for a large number of individual gasoline stations in Austria. Specific attention is paid to threshold effects in price adjustment. Our results clearly suggest that the speed of price transmission between the Brent crude oil index and retail diesel prices is higher in a more competitive environment. While evidence on the relationship between local market power and asymmetries in the speed of price adjustment is mixed, our findings regarding asymmetries in price thresholds are clear: in regions where competition from neighbouring rivals is weak and/or consumers’ price elasticity of demand is low (stations located on the highway), positive thresholds significantly exceed negative ones, which corresponds to the ‘rockets and feathers phenomenon’. As expected, we observe that prices are lower in more competitive local markets.     

The Optimal Structure for Public Debt

We study risk‐sharing through public debt in a two‐generations‐overlapping model. If bonds and wage‐indexed social security service a given initial obligation, there exists a set of Pareto‐efficient debt structures. This set is characterized by conflicting interests of current and yet unborn cohorts over the factor‐price risk allocation. If both size and composition of the debt are choice variables, these conflicting interests can be reconciled. Changes in the debt's composition reallocate factor‐price risks, while changes in its size reallocate resources. This separation of risk‐sharing and crowding‐out narrows the set of efficient debt structures until only one remains.     

The financial system matters: future perspectives and scenarios for a sustainable future

D. Meadows considered in his report ‘limits of growth’ the financial system as a neutral accounting system and came to a pessimistic view. But the money-system itself creates several side effects and distorts our economic system right from the beginning. The money-system is not neutral. New scenario modelings considering the financial system can come to a positive perspective. Three from six systematically developed scenarios include paths to different kinds of sustainability. From a systemic view, the combination of conventional and complementary solutions can provide a substantial contribution towards a sustainable future.