Governance Control Mechanisms in Portuguese Agricultural Credit Cooperatives

Over the last decade Portuguese Agricultural Credit Cooperatives (ACCs) have increasingly face survival challenges related to their difficulty in gathering equity. The main source of ACCs equity is the net benefit; thus, understanding how ACCs governance can work on correcting bad economic performance is of crucial importance to overcome this constraint. The main objective of this paper is to describe the governance control mechanisms in the ACCs. Five governance mechanisms are identified: board and chairman change (internal mechanisms), central ACC intervention by an agent or by management board replacement and merger. Empirical analysis proved that the internal governance mechanisms activity is not related to the ACC performance. Additionally: (a) ACCs with a central ACC agent and merged ACCs hold a weaker credit management and a heavy administrative costs structure and profitability problems; and (b) ACCs with a management board replacement by the central ACC hold a weaker credit management and present solvency problems.cooperatives, credit, governance, multinomial logit, Agricultural Finance, D23, L29 ,

Globalization and wine business: Port wine

In the past two decades the world has seen acceleration in the process of globalisation, affecting virtually all industries and consumers. The wine sector is no exception, witnessing increased exports and imports, decreasing consumption per capita in the producing countries, and a wave of direct foreign investment and mergers and acquisitions in the industry. Among European wine producers the Port wine can be seen as a representative case of globalisation and as a benchmark, because almost 90% of its production is exported. With this in mind, the main objective of this paper is to analyse the structure and behaviour of the Port wine chain in terms of industrial organisation and trade. To achieve this objective a survey about the role of organisations in national growth and descriptions of the European wine industry and of the Port wine chain was conducted. Moreover, we identify and characterise the dynamics of production, price and trade of the Port wine after World War II. Despite the Port wine activity having been subjected to cycles there has been a trend toward a continued increase in production and exports, stabilisation of real market prices and a slight increase in the real prices paid to grape growers, leading to positive economic effects for Port wine firms and grape growers. The pro-active behaviour of Port wine chain agents contributed to this result, namely exporters who were able to adopt market strategies to respond to the challenges of globalisation.International Relations/Trade,

Equilibrium Unemployment

A search-theoretic model of equilibrium unemployment is constructed and shown to be consistent with the key regularities of the labor market and business cycle. The two distinguishing features of the model are: (i) the decision to accept or reject jobs is modeled explicitly, and (ii) markets are incomplete. The model is well suited to address a number of interesting policy questions. Two such applications are provided: the impact of unemployment insurance, and the welfare costs of business cycles.Search; Incomplete Markets; Business Cycles; Unemployment Insurance; Welfare Costs of Business Cycles.

Investment Prices and Exchange Rates: Some Basic Facts

This paper documents four basic facts about investment goods and investment prices. First, investment has a very significant nontradable component in the form of construction services. Second, distributions services (wholesaling, retailing, and transportation) are much less important for investment than for consumption. Third, the import content of investment is much larger than that of consumption. Finally, in the aftermath of three large devaluations, the rate of exchange rate pass-through is, perhaps not surprisingly, highest for imported equipment and lowest for construction services.

Performance of traditional cooperatives: the Portuguese Douro wine cooperatives

Globalization is challenging the very core of cooperative governance and ownership decision, especially in Southern European countries, like Portugal, where a large number of producers are organized in traditional and Mediterranean-style agricultural cooperatives. This paper analyses the effects of governance and control variables related with size over two alternative indicators of performance: revenues transferred to members/patrons and capital structure. The results suggest that these cooperatives have difficulties being sustainable in the more competitive global wine markets, if they follow, essentially, a practice of maximum patronage refund, reducing their capacity to improve leverage and to finance more profitable, but risky, long run investments.Agribusiness, Agricultural and Food Policy, Crop Production/Industries, Q13, D22, L25,

Distribution Costs and Real Exchange Rate Dynamics During Exchange-Rate-Based-Stabilizations

This paper studies the role played by the distribution sector in shaping the behavior of the real exchange rate during exchange-rate-based-stabilizations. We use data for the U.S. and Argentina to document the importance of distribution margins in retail prices and disaggregated price data to study price dynamics in the aftermath of Argentina's 1991 Convertibility plan. Distribution services require local labor and land so they drive a natural wedge between retail prices in different countries. We study in detail the impact of introducing a distribution sector in an otherwise standard model of exchange-rate-based-stabilizations. We show that this simple extension improves dramatically the ability of the model to rationalize observed real exchange rate dynamics.

Manager Power, Member Behavior and Capital Structure: Portuguese Douro Wine Cooperatives

Leverage is one of the most important financial factors to the survival and viability of agricultural cooperatives (e.g., wine cooperatives) during a period of intense competition. Leverage is influenced both by the behavior of managers and cooperative members. An empirical study for the Douro Demarcated Region Wine Cooperatives (DDRWC) supports the hypothesis that managers have a positive influence in the determination of the equity/total assets ratio and that individualistic behavior of cooperative members has a negative influence in the value of this ratio. This paper suggests that there may be value in reconsidering cooperatives in the context of a so-called Mediterranean model.Agribusiness, Agricultural cooperatives, governance, behavior and leverage,

Equilibrium Unemployment

A search-theoretic model of equilibrium unemployment is constructed and shown to be consistent with the key regularities of the labor market and business cycle. The two distinguishing features of the model are: (i) the decision to accept or reject jobs is modeled explicitly, and (ii) markets are incomplete. The model is well suited to address a number of interesting policy questions. Two such applications are provided: the impact of unemployment insurance, and the welfare costs of business cycles

Distribution Costs and Real Exchange Rate Dynamics During Exchange-Rate-Based Stabilizations

This paper studies the role played by the distribution sector in shaping the behavior of the real exchange rate during exchange-rate-based stabilizations. We use data for the U.S. and Argentina to document the importance of distribution margins in retail prices and disaggregated price data to study price dynamics in the aftermath of Argentina's 1991 Convertibility plan. Distribution services require local labor and land so they drive a natural wedge between retail prices in different countries. We study in detail the impact of introducing a distribution sector in an otherwise standard model of exchange-rate-based stabilizations. We show that this simple extension improves dramatically the ability of the model to rationalize observed real exchange rate dynamics.Real Exchange Rate, Distribution, Inflation, Stabilization, Fixed Exchange Rates