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Full-Text Articles in Social and Behavioral Sciences

Prices And Productivity In Agriculture, Lilyan E. Fulginiti Dec 1992

Prices And Productivity In Agriculture, Lilyan E. Fulginiti

GATT Research Papers

Developing countries often tax agriculture heavily, a practice that might affect the productivity as well as the quantity of resources allocated to agriculture. A variable-coefficient cross-country agricultural production function is estimated, with past price expectations among the determinants of the production coefficients. Productivity's responsiveness to the expectations implies that, had these developing economies eliminated price interventions, agricultural productivity would have increased by and average of 25 percent.


Compensation And Political Feasibility: Facilitating Welfare Improving Policies, Richard E. Just, Gordon C. Rausser, David Zilberman Oct 1992

Compensation And Political Feasibility: Facilitating Welfare Improving Policies, Richard E. Just, Gordon C. Rausser, David Zilberman

GATT Research Papers

There is a broad consensus among economists, policymakers, and informed citizens that free-market economics do not preclude many inefficiencies in resource allocation. There are many circumstances where policy interventions have the potential to achieve a "Pareto improvement" in the sense of making some people better off without making others worse off. The challenge to any particular market-oriented society is to design those mechanisms, organizations and institutions that identify the limitations of free-markets and result in those reforms that seek Pareto-improved outcomes.


Price Stabilization Policies And Futures Markets, Harvey E. Lapan, Giancarlo Moschini Sep 1992

Price Stabilization Policies And Futures Markets, Harvey E. Lapan, Giancarlo Moschini

GATT Research Papers

Because of the short-term nature of existing futures contracts, farmers are subject to intertemporal income uncertainty, yet price stabilization may be detrimental because it negates the benefits of (intertemporal) production flexibility. Multiyear futures, if they existed, would be preferred to price stabilization, but they would not provide perfect hedging opportunities because the risk faced by farmers is nonlinear in price. This means that options may be useful hedging devices, and there may be scope for government intervention, even when long-term futures exist. The optimal price policy is not price stabilization, however, but it requires that support price to be positively ...


Production Subsidy And Countervailing Duties In Vertically Related Markets: The Hog-Pork Case Between Canada And The United States, Giancarlo Moschini, Karl D. Meilke Jul 1992

Production Subsidy And Countervailing Duties In Vertically Related Markets: The Hog-Pork Case Between Canada And The United States, Giancarlo Moschini, Karl D. Meilke

GATT Research Papers

This paper analyzes U.S. countervailing import duties aimed at offsetting the effects of a Canadian hog production subsidy. Approximate countervailing duty formulae for two alternative objectives are derived, the permissible range of these duties is illustrated, and empirical evidence is provided. To restore equilibrium at the pre-subsidy level in the U.S. hog market, a countervailing duty on hog imports suffices; this duty should be less than the unit hog production subsidy. To restore equilibrium in both the U.S. hog and pork markets, countervailing duties in both hog and pork imports is required. Such duties should be less ...


Efficiency Of Farm Programs And Their Trade-Distorting Effects, Andrew Schmitz, James Vercammen Jun 1992

Efficiency Of Farm Programs And Their Trade-Distorting Effects, Andrew Schmitz, James Vercammen

GATT Research Papers

Government intervention in product and factor markets generally leads to trade distortions. Conventional measures of government intervention, such as the Producer Subsidy Equivalent and the Nominal Rate of Protection, are often used to compare the effects of alternative policies on trade. This chapter demonstrates that the size of a trade distortion is often not closely linked to the level of producer support or protection but is closely related to a more fundamental variable—the economic efficiency of a government program. The trade-distorting policies can generally be ranked; the least efficient policies are the most trade distorting, and the most efficient ...


World Commodity Prices: The Role Of External Debt And Industrial Country Policies, Gordon C. Rausser, Marjorie B. Rose, Douglas A. Irwin Jun 1992

World Commodity Prices: The Role Of External Debt And Industrial Country Policies, Gordon C. Rausser, Marjorie B. Rose, Douglas A. Irwin

GATT Research Papers

The domestic support of and protectionist policies toward agriculture in major Organization for Economic Cooperation and Development (OECD) countries has been partly responsible for surplus commodity production and sagging international commodity prices in recent years. Between 1980 and 1987, the International Monetary Fund (IMF) food commodities price index fell by one third in the nominal terms and by almost one half in real terms. Although originally undertaken largely for domestic reasons, these policies have lead to trade restrains and export subsidies that have reduces prices and aggravated instability in international commodity markets. Attempts to reform policies in OECD countries via ...


Modeling Phased Reduction Of Distortionary Policies In The U.S. Wheat Market Under Alternative Macroeconomic Environments, B. Stephen Labson, Gordon C. Rausser Jun 1992

Modeling Phased Reduction Of Distortionary Policies In The U.S. Wheat Market Under Alternative Macroeconomic Environments, B. Stephen Labson, Gordon C. Rausser

GATT Research Papers

Throughout much of the developed world, macroeconomic policies afforded a unique period of macroeconomic stability in the two decades following World War II. As a result, concern regarding the macroeconomic linkages with food and agricultural systems largely disappeared. In the early 1970s, with the major changes in monetary policies and central bank behavior, macroeconomic linkages were once again recognized as prime factors complicating the performance of the agricultural and food systems. The roller coaster ride that agriculture experienced over the 1970s and 1980s has been significantly influenced by macroeconomic and international linkages (Rausser et al., 1966). Agriculture's prosperous condition ...


Input And Output Price Distortions Facilitating The Provision Of Public Goods, William E. Foster, Gordon C. Rausser Jun 1992

Input And Output Price Distortions Facilitating The Provision Of Public Goods, William E. Foster, Gordon C. Rausser

GATT Research Papers

Two important issues in the context of the provision of public goods are examined: the preference of price-distorting over nondistorting transfers, and the choice of specific output or input markets to carry the distorting taxes or subsidies. An explanation is given as to why some industries have more price distortion per dollars transferred due to firm heterogeneity rather than industry lobbying power. In the framework presented, a government desires to target transfers to a subset of heterogeneous innovators to circumvent obstruction of producer-harming policies such as public investment in supply-enhancing R&D. We also offer an explanation for the use ...


Price-Distorting Compensation Serving The Consumer And Taxpayer Interest, William E. Foster, Gordon C. Rausser Jun 1992

Price-Distorting Compensation Serving The Consumer And Taxpayer Interest, William E. Foster, Gordon C. Rausser

GATT Research Papers

In this paper we address a bothersome question for public choice analysis: Why do consumers and taxpayers acquiesce to seemingly inefficient wealth transfers to a relatively small number of producers? The most common and briefest answer given by political economists is that any individual consumer/taxpayer suffers too little in the rent-seeking game to bear the cost of opposing the aggressive political influence of producers who enjoy the concentrated benefits. In this paper we examine an alternative answer lying in the potential benefits that accrue to consumers and taxpayers from price distorting wealth transfers to heterogeneous producers.


The Determination Of Technology And Commodity Policy In The U.S. Dairy Industry, Harry De Gorter, David J. Nielson, Gordon C. Rausser Jun 1992

The Determination Of Technology And Commodity Policy In The U.S. Dairy Industry, Harry De Gorter, David J. Nielson, Gordon C. Rausser

GATT Research Papers

United States dairy policy includes both predatory and productive components. The milk price support program is designed to transfer income to dairy farmers while research and extension expenditures are designed to increase social welfare. The purpose of this chapter is to provide an empirical example of the theory developed in the previous chapter. It has long been recognized the government research and extension policies have been significant contributors to technological advance in agriculture (Evenson and Kislev 1976, Evenson, Waggoner, and Ruttan 1979). The advent of technological change on agriculture and its policy implications was first noted by Schultz (1945, 1953 ...


Moral Hazard And Gatt Article Xviii(B), Hartley Furtan Jun 1992

Moral Hazard And Gatt Article Xviii(B), Hartley Furtan

GATT Research Papers

Article XVIII(B) of the GATT code allows developing countries to use tariffs to reduce imports when their balance-of-payments problems result in a low foreign currency reserve. While the intent of this GATT provision is sound, it has led to moral hazard problems. This chapter reviews the history and safeguards of Article XVIII(B0 and identifies some of its specific moral hazard problems. A model addressing these problems is then presented, and alternative policies are suggested to reform the Article.


A Framework For Analyzing Specific Agricultural Policy Reform, Richard E. Just, Gordon C. Rausser, David Zilberman Jun 1992

A Framework For Analyzing Specific Agricultural Policy Reform, Richard E. Just, Gordon C. Rausser, David Zilberman

GATT Research Papers

The agricultural sectors of the United States and other developed countries have been subjected to a myriad of policies and regulations that have contributed to unsatisfactory production patterns and resource allocations both within and between countries. Furthermore, such policies have imposed heavy financial burdens on governments that have transferred substantial resources to support the farm sector. The General Agreement on Tariffs and Trade (GATT) strives to improve the efficiency of agricultural trade and production patterns globally. It is proposed that GATT will reduce the set of permissible agricultural policy instruments, thereby eliminating some policy options that have contributed to several ...


Political Market For Agricultural Protection, Lilyan E. Fulginiti Apr 1992

Political Market For Agricultural Protection, Lilyan E. Fulginiti

GATT Research Papers

Why do poor countries tax agriculture more than other sectors, whereas rich countries subsidize farmers? Using the neoclassical economic theory of the political market for Distortionary policies, an explanation is sought by examining changes to factors affecting the supply and demand curves in that political market. The aggregate effect of these changes is a shift in both the demand curves and the supply curve to the right as industrialization proceeds.


A Chronicle Of Canadian Hog Stabilization Programs And U.S. Countervailing Duties On Hogs And Pork, Karl D. Meilke, Giancarlo Moschini Apr 1992

A Chronicle Of Canadian Hog Stabilization Programs And U.S. Countervailing Duties On Hogs And Pork, Karl D. Meilke, Giancarlo Moschini

GATT Research Papers

Canadian hog producers are eligible for a federal/provincial hog stabilization program which, under certain conditions, makes deficiency payments to producers enrolled in the program. Currently, producers pay premiums of approximately one-third of the cost of the program, whereas federal and provincial authorities share the remaining two-thirds of the cost. There are no direct subsidies to pork processors. In 1984, U.S. hog producers alleged that the Canadian stabilization program was an unfair production subsidy resulting in larger Canadian hog and pork exports that caused serious economic hardship for U.S. hog producers. The consequent trade actions against Canadian exports ...


Implications Of A Gatt Agreement For World Commodity Markets, 1993-98: An Analysis Of The Dunkel Text On Agriculture, William H. Meyers, Dermot J. Hayes, Patrick C. Westhoff, Michael D. Helmar, Deborah L. Stephens, K. Eswaramoorthy, Abner W. Womack, Robert E. Young Ii, D. Scott Brown, Gary M. Adams Apr 1992

Implications Of A Gatt Agreement For World Commodity Markets, 1993-98: An Analysis Of The Dunkel Text On Agriculture, William H. Meyers, Dermot J. Hayes, Patrick C. Westhoff, Michael D. Helmar, Deborah L. Stephens, K. Eswaramoorthy, Abner W. Womack, Robert E. Young Ii, D. Scott Brown, Gary M. Adams

GATT Research Papers

The Food and Agricultural Policy Research Institute (FAPRI) received a request in mid-February to analyze the proposed changes to agriculture and agricultural trade made by Arthur Dunkel. These changes essentially fall into three areas. 1) Export Competition. Subsidies are subject to reduction in two ways. Expenditures are to be reduced by 36 percent and quantities exported with the benefit of subsidies are to be reduced by 24 percent from 1986-90 average levels. 2) Internal Support. Using a world reference price based on the 1986-88 average levels, internal supports as measured by an aggregate measure of support (AMS) are to be ...


Japanese Agriculture Trade Reform, Andrew Schmitz, T. Schmitz Mar 1992

Japanese Agriculture Trade Reform, Andrew Schmitz, T. Schmitz

GATT Research Papers

Japan is the world's largest importer of agricultural products. Even so, agricultural imports in Japan are more restricted than any other OECD country. Many of the instruments used by the Japanese to protect the agricultural sector fall under the general heading of quantitative restrictions; these included quotas and – to a lesser extent – import tariffs and domestic subsidies to farm inputs. As a result of border protection measures, domestic producer prices for Japanese grains in 1986 were an average 420 percent above world prices (Vincent, 1989). The corresponding margin for livestock products averaged 116 percent.


Projected Effects Of Trade Liberalization On U.S. Specialty Crops, Harry De Gorter, R. Hickey, D. Wecksler Mar 1992

Projected Effects Of Trade Liberalization On U.S. Specialty Crops, Harry De Gorter, R. Hickey, D. Wecksler

GATT Research Papers

This study analyzes the effects of liberalization barriers to trade for six U.S. specialty crops: fresh grapes, fresh oranges, fresh grapefruits, peanuts, potatoes and almonds. The total value of Unites States exports of each commodity to the world and to the major four or five importers is given in Table A. The corresponding market share of U.S. export values are also presented. The major trade barriers considered in calculating the effects of trade liberalization for each of these major importers of U.S. specialty crops are summarized in Table B. To provide an overview of recent market developments ...


Ntraorganizational Influence Relations And The Optimality Of Collective Action, Pinhas Zusman, Gordon C. Rausser Mar 1992

Ntraorganizational Influence Relations And The Optimality Of Collective Action, Pinhas Zusman, Gordon C. Rausser

GATT Research Papers

Collective action, although often superior to anarchy, tends to be socially suboptimal even when the proclivity of free riders to defect is fully controlled and an organization for collective action is set up. An effective organization for collective action involving many participants will likely feature a coordinating center and peripheral participants. Even if all the overall group objective is fully internalized by the center, the organizational equilibrium is suboptimal as it reflects the influence of narrowly rational peripheral participants. The efficiency loss is particularly evident on collective action over time, where group choices even within a single generation are likely ...


Trade Wars And Trade Negotiations In Agriculture, Glenn W. Harrison, E. E. Rutstrom Mar 1992

Trade Wars And Trade Negotiations In Agriculture, Glenn W. Harrison, E. E. Rutstrom

GATT Research Papers

We employ a numerical equilibrium model to evaluate the payoffs to agricultural and non-agricultural interests in the EC and the US. A government objective function for each region is calibrated as a weighted sum of the payoffs to the two interest groups with weights corresponding to the benchmark political influence. The objective function is employed by each government to determine the level of agricultural support. The influence weights on agricultural interests that would rationalize the existing protection system with these objective functions are 72% in the EC and 61% in the US. A negotiated outcome which fulfills certain economic efficiency ...


Implications Of Gatt For Eastern Europe And The Baltics, Grazyna M. Michalska, Rafchael E. Goodhue, Arthur A. Small Mar 1992

Implications Of Gatt For Eastern Europe And The Baltics, Grazyna M. Michalska, Rafchael E. Goodhue, Arthur A. Small

GATT Research Papers

The story of agriculture in Eastern Europe during the last quarter century is a story of policy driven by politics, rather than by sound economics. Even in the highly distorted economics of the socialist period, agricultural policy stands out as being singularly colored by ideological imperatives, and singularly vulnerable to interest group pressures. While the revolutions of 1989-91 did mark a sharp move towards liberalization, these moves are now being slowed and even reversed, as countries of the region adopt Western style interventionism on preparation for accession to the European Union.


True Friends And Enemies Of Reforming The Common Agricultural Policy, Glenn W. Harrison, E. E. Rutstrom Mar 1992

True Friends And Enemies Of Reforming The Common Agricultural Policy, Glenn W. Harrison, E. E. Rutstrom

GATT Research Papers

We employ an empirical general equilibrium model of the CAP to determine which factors and countries would be expected to be opposed to or support reform of the CAP. The objective is to determine who the "friends" and "enemies" of the CAP are. The analysis studies the extent to which lobbying activity by these interested parties could be expected to encourage or discourage internal EC reform of the CAP. Several alternative polices to reform the CAP are evaluated in this manner, so as to determine if one or other set of policies has greater chance of being accepted. Specifically, we ...


Political Economy Of Alliances: Structure And Performance, Gordon C. Rausser, Leo K. Simon Mar 1992

Political Economy Of Alliances: Structure And Performance, Gordon C. Rausser, Leo K. Simon

GATT Research Papers

In collective decision making, political alliances naturally arise and are critical to the negotiation processes that lead to the actual implementation of decisions. In the present context, an "alliance" refers simply to a group of political actors who share common, but not identical, interests against some adversary. In this paper we focus on the relationship among three constructs: the structure of an alliance, the context in which negotiations take place, and the performance of the alliance. The term "alliance structure" refers to the configuration of alliance members' preferences as well as to their bargaining attributes. The "context" of negotiation refers ...


Political Economy Of Agricultural Commodity Market Intervention, Pinhas Zusman Mar 1992

Political Economy Of Agricultural Commodity Market Intervention, Pinhas Zusman

GATT Research Papers

Commodity markets are characterized by trade in standardized, undifferentiated commodities and numerous traders. Consequently, such markets are highly competitive and trade is carried out in concentrated, low transaction cost exchanges. In this sense, commodity markets are the closest approximations to ideal neoclassical competitive markets. As commodity markets area also free of externalities, the resulting market equilibria are economically efficient. Nevertheless, owing to imperfect foresight and random shocks, the dynamic performance of commodity markets, may be suboptimal. Also, commodity markets' actual performance as exchange institutions may at times fall short of the theoretical ideal. Hence, some room ordinarily exists for efficiency ...


Political-Econometrics: The Quantitative Investigation Of A Political Economy, Pinhas Zusman Jan 1992

Political-Econometrics: The Quantitative Investigation Of A Political Economy, Pinhas Zusman

GATT Research Papers

In an earlier work [Zusman and Rausser (1990a)], we expounded a descriptive integrated theory of a political-economy. As is generally the case, the motivations for developing the theory were: (a) to provide a general explanation of the working of a political-economy and (b) to provide a mechanism for predicting the values assumed by the endogenous economic variables and the policy instruments for given environments. The two objectives are, in fact, related in several ways. Evidently, explication and prediction alike must derive from a valid theory. As an introduction to the rest of this paper, we now consider the theory validation ...


Alternative Subsidy Reduction Paths: Commodity, Fiscal, And Monetary Policy Linkages, Pier-Giorgo Ardeni, Gordon C. Rausser Jan 1992

Alternative Subsidy Reduction Paths: Commodity, Fiscal, And Monetary Policy Linkages, Pier-Giorgo Ardeni, Gordon C. Rausser

GATT Research Papers

In the case of the U.S. agricultural policy, this paper shows how governmental intervention can be formally incorporated in a conditional-vector-error-correcting model. From the resulting theoretical framework and empirical analysis, formal hypotheses are tested regarding both forward and backward linkages among money, exchange rates, and agricultural and nonagricultural markets. Consistent with the current Uruguay Round of the GATT negotiations, a number of policy simulations are conducted with the constructed empirical model. Phased reductions in the degree of subsidization in the U.S. agricultural sector are shown, through these policy simulations, to alter the feedback effects from money to prices ...


Implications Of A Gatt Agreement For World Commodity Markets, 1992-2000, Food And Agricultural Policy Research Institute Jan 1992

Implications Of A Gatt Agreement For World Commodity Markets, 1992-2000, Food And Agricultural Policy Research Institute

GATT Research Papers

A dynamic multicountry, multicommodity model is used to evaluate the impact of a moderate General Agreement on Tariffs and Trade (GATT) agreement. The terms of this agreement are as follows. 1) Export subsidy quantities (using annual and price wedges) are reduced by 50 percent from the 1986-88 average by 1996. 2) Import restrictions are tariffed and reduced by 33 percent form the 1986-88 average by 1996 (tariffs are measured by using an annual price wedge approach). 3) Internal supports, as measured by the aggregate measure of support (AMS), are reduced by 33 percent from the 1986-88 average by 1996 (fixed ...


Endogenous Policy Theory: The Political Structure And Policy Formation, Pinhas Zusman, Gordon C. Rausser Jan 1992

Endogenous Policy Theory: The Political Structure And Policy Formation, Pinhas Zusman, Gordon C. Rausser

GATT Research Papers

Models of economic systems involving government intervention by definition include some policy variables, or policy instruments, through which the policy in implemented. In general, economists have tended to view these variables as exogenously given. While convenient in dealing with some analytical problems, this attitude is not always adequate, as it abstracts from the realities of political-economic life. Evidently, economic policy is not independent of the economic structure, and policy variables are codetermined with endogenous economic variables within an integrated political-economic structure.


Uncertainty, Price Stabilization, And Welfare, Eun Kwan Choi, Stanley R. Johnson Jan 1992

Uncertainty, Price Stabilization, And Welfare, Eun Kwan Choi, Stanley R. Johnson

GATT Research Papers

This paper investigates whether a small country facing foreign price instability benefits from active stabilization of the domestic price of the importable. For example, the European Community can be treated as a small open economy facing price instability of agricultural products originating in the United States. A tariff is out of the question because it is not optimal for a small open economy. However, the European Community may stabilize the domestic price of the importable. It is shown that, if the random tariff revenue ex post, domestic price stabilization increases income instability and nonintervention is optimal. If an ex ante ...


Economic Experimental Results On Multilateral Bargaining, Glenn W. Harrison, Gordon C. Rausser, Leo K. Simon Jan 1992

Economic Experimental Results On Multilateral Bargaining, Glenn W. Harrison, Gordon C. Rausser, Leo K. Simon

GATT Research Papers

In a companion series of papers, we have described a new bargaining institution and the design of laboratory experiments to assess its performance (see Rausser and Simon [1991] and Harrison and Simon [1991]). In this paper we describe and evaluate the first series of pilot experiments. In section 2 we briefly describe the general Multilateral Bargaining institution once again, so as to make the present discussion self-contained. In Section 3 we run through in some detail the numerical solution to one parameterized version of that model, to familiarize the reader with the structure and workings of the model. In Section ...


Burden Sharing And Public Good Provision: A Numerical Sensitivity Analysis, Gordon C. Rausser, Leo K. Simon Jan 1992

Burden Sharing And Public Good Provision: A Numerical Sensitivity Analysis, Gordon C. Rausser, Leo K. Simon

GATT Research Papers

This paper reports on our numerical analysis of the model developed in Rausser-Simon 1991a and 1991b. We will assume that the reader is thoroughly familiar with the latter paper and refer frequently to the terminology introduced there. Two conclusions were readily apparent from the paper. First, many of the more interesting comparative statics questions we want to ask about the model are unlikely to have simple and determinate answers. In particular, it is especially difficult to determine the impact on alliance performance of certain kinds of changes in the spatial configuration and distribution of power within the alliance. The reason ...