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1 – 10 of 913Sartaj Rasool Rather and Salah Abosedra
The study investigates the impact of inflation on the variability of relative prices in the context of Lebanon.
Abstract
Purpose
The study investigates the impact of inflation on the variability of relative prices in the context of Lebanon.
Design/methodology/approach
Unlike the traditional method, which relies on the variance of cross-sectional price changes measured at specific points in time to gauge the variability in relative prices, we employ a more appropriate approach. Under this approach, we capture the dispersion in relative prices by estimating how widely (or closely) a set of commodity prices drift apart over a span of time, offering a more comprehensive assessment. Firstly, we employ Johansen’s cointegration test on rolling subsamples to determine the number of statistically significant cointegrating vectors among the prices of 12 major commodity groups. Under this approach, an increase in the number of significant cointegrating vectors indicates a reduction in relative price variability, while a decrease suggests the opposite. Subsequently, we employ ordinary least squares regression to analyze how the fluctuations in inflation affect the variability in relative prices. The sample period ranges from December 2007 to April 2021.
Findings
The empirical results indicate that there exists a certain threshold inflation rate corresponding to which the variability in relative prices is minimized. More importantly, consistent with the theoretical predictions, the results suggest that it is not inflation per se, but the deviation of inflation from the 3% threshold level in either direction that causes higher dispersion in relative prices.
Research limitations/implications
The empirical findings from this study have crucial implications for the operation of monetary and fiscal policy. In particular, these findings suggest that stabilizing long-term inflation around a certain threshold rate will not only help to anchor inflation expectations effectively but will also minimize the welfare costs associated with inflation.
Originality/value
Given the rising inflationary pressure in the recent past and its welfare costs, the study assumes crucial importance in understating how fluctuations in inflation distort the relative price structure and eventually cause resource misallocations and economic inefficiency.
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Sylvanus Gaku and Francis Tsiboe
Several farm safety net strategies are available to farmers as a source of financial protection against losses due to price instability, government policies, weather fluctuations…
Abstract
Purpose
Several farm safety net strategies are available to farmers as a source of financial protection against losses due to price instability, government policies, weather fluctuations and global market changes. Producers can employ these strategies combining crop insurance policies with countercyclical policies for several crops and production areas; however, less is known about the efficiency of these strategies in enhancing profit and reducing its variability. In this study, we examine the efficiency of these strategies at minimizing inter crop year farm profit variability.
Design/methodology/approach
We utilized relative mean of profit and coefficient of variation, to compare counterfactually calculated farm safety net strategies for a sample of 28,615 observations across 2,486 farms and four dryland crops (corn, soybean, sorghum and wheat) in Kansas spanning nine crop years (2014–2022). A no farm safety net strategy is used as the benchmark for every alternative strategy to ascertain whether a policy customization is statistically different from a no farm safety case.
Findings
The general pattern of the results suggests that program combination strategies that have a high-profit enhancement potential necessarily have low profit risk for dryland wheat and sorghum production. On the contrary, such a connection is absent for dryland corn and soybeans production. Low-cost farm safety net strategies that enhance corn and soybeans profits do not necessarily lower profit risks.
Originality/value
This paper is one of the first to use a large sample of actual farm-level observations to evaluate how combinations of safety net programs offered under the Title I (PLC, ARCCO and ARCIC) and XI (FCIP) of the U.S. Farm Bill rank in terms of profit level enhancement and profit risk reduction.
Elton Beqiraj, Giovanni Di Bartolomeo, Marco Di Pietro and Carolina Serpieri
In the fashion of Martin (2012), we develop an innovative application to a standard, well-grounded methodology to investigate resilience in two critical dimensions: recovery and…
Abstract
Purpose
In the fashion of Martin (2012), we develop an innovative application to a standard, well-grounded methodology to investigate resilience in two critical dimensions: recovery and resistance. Our novel approach allows us to investigate the resilience performance to the 2008 financial crisis within countries of this macro-region according to their shock isolation and absorptive capacities.
Design/methodology/approach
By individually estimating six open economy DSGE models within the Central Europe and Baltic macro-region, we identify the business-cycle-volatility drivers for each country. Then, we use the outcome of our six estimates to conduct a principal component analysis to determine structural common characteristics required to explain economic resilience in the CEB macro-region.
Findings
In terms of resilience, Central European economies exhibit quite similar paths in terms of recovery, meaning they have similar economic structures. By contrast, Baltic countries behave differently, being outliers in opposite extreme positions. The contrary occurs for resistance: Baltic countries share a similar ranking, whereas Central European economies exhibit substantial differences.
Research limitations/implications
It is important to acknowledge that a limitation of the analysis is that we explicitly consider each country as a stand-alone open economy which are subject to stochastic disturbances. Precisely, we do not model trade or other interactions across countries within the CEB region and with the rest of the world. Consequently, spillover effects in the aftermath of the shock are not accounted for.
Originality/value
We estimate the relative vulnerability or sensitivity of economies within the macro-region to disturbances and disruptions (resistance) and the speed and extent of recovery from such a disruption or recession (recovery). First, we built two different kinds of measures of resilience by aggregating the estimated parameters through non-centered and centered principal component analysis. Then, we use our model to investigate the relation between financial shock and the economic resilience across the region. The approach can be applied to several case studies, parsimoniously.
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Prateek Kumar Tripathi, Chandra Kant Singh, Rakesh Singh and Arun Kumar Deshmukh
In a volatile agricultural postharvest market, producers require more personalized information about market dynamics for informed decisions on the marketed surplus. However, this…
Abstract
Purpose
In a volatile agricultural postharvest market, producers require more personalized information about market dynamics for informed decisions on the marketed surplus. However, this adaptive strategy fails to benefit them if the selection of a computational price predictive model to disseminate information on the market outlook is not efficient, and the associated risk of perishability, and storage cost factor are not assumed against the seemingly favourable market behaviour. Consequently, the decision of whether to store or sell at the time of crop harvest is a perennial dilemma to solve. With the intent of addressing this challenge for agricultural producers, the study is focused on designing an agricultural decision support system (ADSS) to suggest a favourable marketing strategy to crop producers.
Design/methodology/approach
The present study is guided by an eclectic theoretical perspective from supply chain literature that included agency theory, transaction cost theory, organizational information processing theory and opportunity cost theory in revenue risk management. The paper models a structured iterative algorithmic framework that leverages the forecasting capacity of different time series and machine learning models, considering the effect of influencing factors on agricultural price movement for better forecasting predictability against market variability or dynamics. It also attempts to formulate an integrated risk management framework for effective sales planning decisions that factors in the associated costs of storage, rental and physical loss until the surplus is held for expected returns.
Findings
Empirical demonstration of the model was simulated on the dynamic markets of tomatoes, onions and potatoes in a north Indian region. The study results endorse that farmer-centric post-harvest information intelligence assists crop producers in the strategic sales planning of their produce, and also vigorously promotes that the effectiveness of decision making is contingent upon the selection of the best predictive model for every future market event.
Practical implications
As a policy implication, the proposed ADSS addresses the pressing need for a robust marketing support system for the socio-economic welfare of farming communities grappling with distress sales, and low remunerative returns.
Originality/value
Based on the extant literature studied, there is no such study that pays personalized attention to agricultural producers, enabling them to make a profitable sales decision against the volatile post-harvest market scenario. The present research is an attempt to fill that gap with the scope of addressing crop producer's ubiquitous dilemma of whether to sell or store at the time of harvesting. Besides, an eclectic and iterative style of predictive modelling has also a limited implication in the agricultural supply chain based on the literature; however, it is found to be a more efficient practice to function in a dynamic market outlook.
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Francis Tsiboe, Jesse B. Tack, Keith Coble, Ardian Harri and Joseph Cooper
The increased availability and adoption of precision agriculture technologies has left researchers to grapple with how to best utilize the associated high-frequency large-volume…
Abstract
Purpose
The increased availability and adoption of precision agriculture technologies has left researchers to grapple with how to best utilize the associated high-frequency large-volume of data. Since the wealth of information from precision equipment can easily be aggregated in real-time, this poses an interesting question of how aggregates of high-frequency data may complement, or substitute for, publicly released periodic reports from government agencies.
Design/methodology/approach
This study utilized advances in event study and yield projection methodologies to test whether simulated weekly harvest-time yields potentially drive futures price that are significantly different from the status quo. The study employs a two-step methodology to ascertain how corn futures price reactions and price levels would have evolved if market participants had access to weekly forecasted yields. The marginal effects of new information on futures price returns are first established by exploiting the variation between news in publicly available information and price returns. Given this relationship, the study then estimates the counterfactual evolution of corn futures price attributable to new information associated with simulated weekly forecasted yields.
Findings
The results show that the market for corn exhibits only semi-strong form efficiency, as the “news” provided by the monthly Crop Production and World Agricultural Supply and Demand Estimates reports is incorporated into prices in at most two days after the release. As expected, an increase in corn yields relative to what was publicly known elicits a futures price decrease. The counterfactual analysis suggests that if weekly harvest-time yields were available to market participants, the daily corn futures price will potentially be relatively volatile during the harvest period, but the final price at the end of the harvest season will be lower.
Originality/value
The study uses simulation to show the potential evolution of corn futures price if market participants had access to weekly harvest-time yields. In doing so, the study provides insights centered around the ongoing debate regarding the economic value of USDA reports in the presence of growing information availability within the private sector.
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Mohini Gupta and Sakshi Varshney
The aim the study is to explore the impact of real exchange rate volatility and other macroeconomic variable such as price of import, industrial production and real exchange rate…
Abstract
Purpose
The aim the study is to explore the impact of real exchange rate volatility and other macroeconomic variable such as price of import, industrial production and real exchange rate on 45 import commodities, considering global financial crisis period on India's import from the US. The empirical analysis at disaggregate level of import indicates the existence of both short-run and long-run effect in one-third importing commodities. The results show both positive and negative effect and causality among variables.
Design/methodology/approach
The study uses E-GARCH model to gage the real exchange rate volatility, an autoregressive distributive lag (ARDL) bound test technique to discover the adequate short- and long-run relationships and Toda-Yamamoto causality method to analyze the causality among variables. The study uses the time period from 2002:M09 to 2019:M06.
Findings
The empirical analysis at disaggregate level of import indicates the existence of both short-run and long-run effect in one-third importing commodities. The results show both positive and negative effects and causality among variables.
Practical implications
The finding of the study suggests that macroeconomic variables have significant role and could be important to undertake the small and medium scale industries in policymaking. Government may need to make decision for micro, small and medium enterprises (MSMEs) as their performance can bring change in the trade to compete globally by increasing and controlling the price of the import and defending the domestic competitiveness.
Originality/value
The study uses additional variable namely price of import and includes the global financial crisis period to measure dampening effect on each commodity by using robust econometric technique in context of emerging nation like India.
The purpose of this paper is to explore the empirical relationship between the share of immigrants and the price elasticity of import demand.
Abstract
Purpose
The purpose of this paper is to explore the empirical relationship between the share of immigrants and the price elasticity of import demand.
Design/methodology/approach
We estimate the import demand function including the interaction term of the share of immigrants and relative import price, using panel data of 76 countries/areas.
Findings
The coefficient of the interaction term is significantly positive, that is, a higher share of immigrants weakens the negative effect of the relative import price on import demand. Our findings reveal the negative relationship between the share of immigrants and the price elasticity of import demand.
Practical implications
The share of immigrants is increasing in the present era of globalization, and it is possible that the role of exchange rate as the price adjustment mechanism in international trade become lower in the future.
Originality/value
This research considers different price elasticities for import goods by immigrants and natives.
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Jason Loughrey and Herath Vidyaratne
The purpose of this paper is to analyse the association between farm/farmer characteristics and unsubsidized farm insurance premium expenditure in Ireland. The distribution of…
Abstract
Purpose
The purpose of this paper is to analyse the association between farm/farmer characteristics and unsubsidized farm insurance premium expenditure in Ireland. The distribution of farm insurance expenditures is wide, and it is important to understand the extent to which individual factors influence demand for different levels of insurance premium.
Design/methodology/approach
The quantile regression approach and farm accountancy data from the Teagasc National Farm Survey are used to model the association between farm/farmer characteristics and farm insurance demand in Ireland.
Findings
Asset values (livestock, buildings and machinery) are positively associated with total insurance expenditure. Both forestry area and crop area are significantly associated with farm insurance expenditure with a stronger influence on the middle and upper part of the distribution. The interaction between farm income and farmer age is positively associated with insurance expenditure pointing to the importance of farm income protection.
Research limitations/implications
The research is mainly concerned with insuring against substantive risks, which are capable of threatening the asset base and continuation of the farm business. Future research can integrate questions in relation to farm safety and farmer health with research on the economic survival of the farm business.
Practical implications
Farmers in Ireland adopt unsubsidized farm insurance as a risk management tool. This situation is relevant to other EU member states including Belgium, Denmark, Germany and Sweden. The findings can be used to inform stakeholders and policymakers about the relative impact of different factors on insurance expenditure.
Originality/value
Previous research has typically focused on the linear relationship between farm/farmer characteristics and insurance demand without accounting for variability across the size distribution. This research is based on the quantile regression approach where the association between farm/farmer characteristics and farm insurance expenditure can be assessed at different points of the distribution.
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James Bentley and Zhangxin (Frank) Liu
The purpose of this study is to examine the impact of a recent innovation in the uranium market, the Global X Uranium Exchange-Traded Fund (URA), on the trading characteristics of…
Abstract
Purpose
The purpose of this study is to examine the impact of a recent innovation in the uranium market, the Global X Uranium Exchange-Traded Fund (URA), on the trading characteristics of constituent and non-constituent stocks.
Design/methodology/approach
The authors analyse bid-ask spread measures, relative effective spreads and adverse selection costs to assess changes in information asymmetry among uranium stocks. The authors also study abnormal returns to assess the impact of URA on the market.
Findings
Over a three-month period, following the introduction of URA, the authors find uranium stocks display decreased bid-ask spread measures, driven by reductions in information asymmetry. Relative effective spreads decrease by 36% after the introduction of URA, and adverse selection costs decline by 24% over the same period. Uranium stocks experience a significant positive abnormal return of 5.0% the day after the introduction of URA with subsequent price reversals. These suggest that the introduction of URA prompted uninformed traders to rebalance portfolios and migrate to the less information-sensitive Exchange-Traded Fund (ETF), causing temporary deviations in trading characteristics.
Originality/value
The authors demonstrate that the introduction of new financial securities to the market can have a significant impact on the trading characteristics of related equities. As URA is the only ETF in the uranium sector, the authors thereby avoid the influence of multiple ETFs that may have impacted previous studies.
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Pedro Bento, Sílvio Mariano, Pedro Carvalho, Maria do Rosário Calado and José Pombo
This study is a targeted review of some of the major changes in European regulation that guided energy policy decisions in the Iberian Peninsula and how they may have aggravated…
Abstract
Purpose
This study is a targeted review of some of the major changes in European regulation that guided energy policy decisions in the Iberian Peninsula and how they may have aggravated the problem of lack of flexibility. This study aims to assess some of the proposed short-term solutions to address this issue considering the underlying root causes and suggests a different course of action, that in turn, could help alleviate future market strains.
Design/methodology/approach
The evolution of the most important (macro) energy and price-related variables in both Portugal and Spain is assessed using market and grid operator data. In addition, the authors present critical viewpoints on some of the most recent EU and national regulation changes (official document analysis).
Findings
The Iberian energy policy and regulatory agenda has successfully promoted a rapid adoption of renewables (main goal), although with insufficient diversification of generation technologies. The compulsory closings of thermal plants and an increased tax (mainly carbon) added pressure toward more environmentally friendly thermal power plants. However, inevitably, this curbed the bidding price competitiveness of these producers in an already challenging market framework. Moving forward, decisions must be based on “a bigger picture” that does not neglect system flexibility and security of supply and understands the specificities of the Iberian market and its generation portfolio.
Originality/value
This work provides an original account of unprecedented spikes in energy prices in 2021, specifically in the Iberian electricity market. This acute situation worries consumers, industry and governments. Underlining the instability of the market prices, for the first time, this study discusses how some of the most important regulatory changes, and their perception and absorption by involved parties, contributed to the current environment. In addition, this study stresses that if flexibility is overlooked, the overall purpose of having an affordable and reliable system is at risk.
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