The effect of devaluation on cattle markets integration in Burkina Faso

The aim of this paper is to highlight an aspect of devaluation that is generally ignored in the literature, namely, its positive impact on domestic trade. We develop a parity bounds model for cattle markets of Burkina Faso with two regimes of prices, autarkic and integrated, consistent with spatial and inter-temporal arbitrage conditions. When markets are autarkic, prices follow a random walk and when markets are integrated, prices are equal up to transaction costs. The integrated regime is more likely when transaction costs are low. In our model, the 1994 franc CFA devaluation reduces transaction costs relatively to cattle prices, thereby promoting markets integration. The model is tested using a switching regression with exogenous selection variables. The results show that the probability of market integration significantly increased after the devaluation.panel data., switching regression model, burkina faso, franc CFA devaluation, cattle, inter-temporal arbitrage, Market integration

Price Transmission in the Cocoa-Chocolate Chain

There is a common perception among consumers that the retail prices respond faster to an increase in the price of raw material than to a decrease. This paper aims at testing the existence of such asymmetric price transmission in the cocoa-chocolate chain on the French market. Two types of asymmetry are suspected: asymmetry in the transmission of positive and negative shocks that may reflect non-competitive behaviour in the chocolate industry and asymmetry in the transmission of small and large shocks that may be due do adjustment costs. These hypotheses are tested using the two-step approach to cointegration of Engle and Granger extended to encompass possible asymmetric adjustment to disequilibrium. Estimates indicate that a three-regime error correction model is the most appropriate. On the one hand, the chocolate price does not adjust to small shocks in the cocoa market. On the other hand, the speed of adjustment is larger for negative deviations than for positive ones. Les consommateurs ont souvent l’impression que les prix de détail répondent plus vite aux augmentations du prix de la matière première qu’aux baisses. Aussi, l’objectif de ce travail est de tester l’existence d’une transmission asymétrique des fluctuations de prix entre la matière première, la fève de cacao, et le produit fini, la tablette de chocolat sur le marché français. Deux formes d’asymétrie, ayant chacune une origine différente, sont recherchées : d’une part, une asymétrie dans la transmission des chocs positifs et négatifs, potentiellement liée à l’exercice d’un pouvoir de marché des industriels, et d’autre part, une asymétrie dans la transmission des grands et des petits chocs de prix liée à la présence de coûts d’ajustement. Les résultats, obtenus à partir d’une modélisation TAR du déséquilibre de prix par rapport à leur valeur de long terme, ne permettent pas de rejeter ces hypothèses. Sur la plus grande partie de la période couverte (1960-2003) le prix de la fève et le prix de la tablette évoluent indépendamment l’un de l’autre. Toutefois, au moment du boom du cacao (fin 70) le prix de la tablette répond rapidement à la hausse des cours de la fève tandis qu’à la fin des années 80, alors que le prix de la fève est retombé à un bas niveau, le prix de la tablette revient lentement vers l’équilibre.  modèle TAR, transmission de prix asymétrique, cacao

Price Transmission in the Cocoa-Chocolate Chain

There is a common perception among consumers that the retail prices respond faster to an increase in the price of raw material than to a decrease. This paper aims at testing the existence of such asymmetric price transmission in the cocoa-chocolate chain on the French market. Two types of asymmetry are suspected: asymmetry in the transmission of positive and negative shocks that may reflect non-competitive behaviour in the chocolate industry and asymmetry in the transmission of small and large shocks that may be due do adjustment costs. These hypotheses are tested using the two-step approach to cointegration of Engle and Granger extended to encompass possible asymmetric adjustment to disequilibrium. Estimates indicate that a three-regime error correction model is the most appropriate. On the one hand, the chocolate price does not adjust to small shocks in the cocoa market. On the other hand, the speed of adjustment is larger for negative deviations than for positive ones.modèle TAR;transmission de prix asymétrique;cacao

Devaluation and Cattle Markets Integration in Burkina Faso

The aim of this paper is to highlight an aspect of devaluation that is generally ignored in the literature, namely, its positive impact on domestic trade. We develop a parity bounds model for cattle markets of Burkina Faso with two regimes of prices, autarkic and integrated, consistent with spatial and inter-temporal arbitrage conditions. When markets are autarkic, prices follow a random walk and when markets are integrated, prices are equal up to transaction costs. The integrated regime is more likely when transaction costs are low. In our model, the 1994 franc CFA devaluation reduces transaction costs relatively to cattle prices, thereby promoting markets integration. The model is tested using a switching regression with exogenous selection variables. The results show that the probability of market integration significantly increased after the devaluation.panel data., switching regression model, burkina faso, franc CFA devaluation, cattle, inter-temporal arbitrage, Market integration

Does Land Tenure Insecurity Drive Deforestation in the Brazilian Amazon?

The purpose of this paper is to highlight the detrimental impact of land tenure insecurity on deforestation in the Brazilian Amazon. It is related to recent controversies about the detrimental impact of land laws on deforestation, which seem to legitimize land encroachments. The latter is mainly the result of land tenure insecurity which is a key characteristic of this region and results from a long history of interactions between rural social unrest and land reforms or land laws. A simple model is developed where strategic interactions between farmers lead to excessive deforestation. One of the empirical implications of the model is a positive relationship between land tenure insecurity and the extent of deforestation. The latter is tested on data from a panel of Brazilian Amazon municipalities. The negative effect of land tenure insecurity proxied by the number of squatters on deforestation is not rejected when estimations are controlled for the possible endogeneity of squatters. One of the main policy implications is that ex post legalizations of settlements must be accompanied by the enforcement of environmental obligations.deforestation, land tenure insecurity, squatters, Panel Data Analysis, Brazil

LAND REFORM AND DEFORESTATION IN THE BRAZILIAN AMAZONIA

No processo de reforma agrária brasileiro é comum a redistribuição de terra ocorrer por meio de invasões das grandes proprieades pelos sem terra. Esse mecanismo introduz insegurança no direito de propriedade fundiária e, na Regîão Amazônica, tem como consequência o excesso de desflorestamento. Esse trabalho utiliza um jogo não-cooperativo para mostrar que as interações estratégicas entre proprietários e posseiros em um contexto instittucional onde as florestas naturais são consideradas como recursos de livre acesso implicam o excesso de desflorestamento. A principal implicação analítica do modelo é que a taxa de desflorestamento de determinada área tende a aumentar com o número de posseiros na área. Essa implicação é confirmada quando testada em um painel de dados censitários municipais da Amazônia brasileira no período 1970-96 e esse resultado se mantem mesmo quando se controla o problema da endogeneidade do número de posseiros na especificação de uma equação de desflorestamento. Da perspectiva ambiental, portanto, o resultado permite questionar os mecanismos utilizados pelas políticas de reforma agrária no Brasil.----------------------------------------In Brazil, the land reform involves redistribution of land plots from large landowners to squatters. It generates property rights insecurity which alters land uses and fosters forest depletion. In this paper, a non cooperative game model is developed where natural forests are considered as an open access resource and the strategic interactions between landowners and squatters lead to an over deforestation. The main theoretical implication is a positive impact of squatters on deforestation. It is successfully tested on a panel data set covering the municipalities of the Legal Amazonia controlling for the endogeneity of squatters in a deforestation equation. The result questions the modalities of the Brazilian state-led land reformreforma agrária, desflorestamento, insegurança dos direitos de propriedade, econometria de painel, Land reform, Deforestation, land tenure insecurity, panel estimation, Land Economics/Use,

Does Land Tenure Insecurity Drive Deforestation in the Brazilian Amazon?

The purpose of this paper is to highlight the detrimental impact of land tenure insecurity on deforestation in the Brazilian Amazon. It is related to recent controversies about the detrimental impact of land laws on deforestation, which seem to legitimize land encroachments. The latter is mainly the result of land tenure insecurity which is a key characteristic of this region and results from a long history of interactions between rural social unrest and land reforms or land laws. A simple model is developed where strategic interactions between farmers lead to excessive deforestation. One of the empirical implications of the model is a positive relationship between land tenure insecurity and the extent of deforestation. The latter is tested on data from a panel of Brazilian Amazon municipalities. The negative effect of land tenure insecurity proxied by the number of squatters on deforestation is not rejected when estimations are controlled for the possible endogeneity of squatters. One of the main policy implications is that ex post legalizations of settlements must be accompanied by the enforcement of environmental obligations.deforestation;land tenure insecurity;squatters;Panel Data Analysis;Brazil

Property rights and deforestation in the Brazilian Amazon

This paper focuses on the impact of property rights insecurity on deforestation in the Brazilian Legal Amazon. Deforestation is considered as a risk management strategy: property rights insecurity reduces the present value of forests and fosters forest conversion into agricultural and pasture lands. Moreover, deforestation is the consequence of strategic interactions between landowners and squatters. Landowners clear the forest preventively in order to assert the productive use of land and to reduce the expropriation risk. Squatters invade land plots, clear the forest and may afterwards gain official recognition with formal property titles. A particular attention is paid to the measure of land property rights insecurity in the Brazilian context. It is assumed that property rights insecurity has a multidimensional character taken into account by the number of homicides related to land conflicts and expropriation procedures. Principal component analysis allows synthesising such information. An econometric model of deforestation is estimated on a panel dataset on the 1988-2000 period and the nine states of the Brazilian Legal Amazon. The hypothesis that insecure land property rights contribute to higher rates of deforestation is not rejected when the simultaneity bias between insecure property rights and deforestation is addressed. This result questions the modality of the Brazilian land reform that considers forested areas as unproductive and thus open for expropriation procedures.deforestation;insecure property rights;Brazilian Legal Amazon

Preserving vertical co-ordination in the West African cotton sector

In this paper, we defend the idea that in the African context, non-market co-operation between farmers and ginning companies outperforms market transactions. In the absence of a reliable legal mechanism, market liberalization threatens the sustainability of contractual agreements between farmers and cotton companies. We present alternatives to the full market competition option and to the public monopoly organization that allow the production contract to be preserved. Special attention is paid to the case of Burkina Faso where efficiency gains have been obtained thanks to the strengthening of farmers' organizations and their financial participation in the cotton company.yardstick competition, zoning –, markets failure –, Contract farming –, West Africa –, Cotton –

The Economic Consequences of Export Instability in Developing Countries: A Survey

In this note we provide a brief survey of the literature about the effects of exports instability in developing countries, mainly focused on commodity dependent economies. Whatever the nature of instability, exports instability generate major disturbances in those economies. Exports instability is often considered as a major source of macroeconomic instability that is welfare costly. Exports instability is also risk generating for individual economic agents who take it into account in their economic decisions but cannot get rid of it in the absence of appropriate credit and insurance devices. We thus examine the macroeconomic consequences of export instability, first in the short term, using the Dutch Disease framework, and second its effects on growth. We then examine the effects of instability from a microeconomic point of view.