On the Origins of the Fleming-Mundell Model

Forty years ago, Marcus Fleming and Robert Mundell developed independent models of macroeconomic policy in open economies. Why do we link the two, and why do we call the result the Mundell-Fleming, rather than Fleming-Mundell model? Copyright 2003, International Monetary Fund

Commodity Prices as a Leading Indicator of Inflation

This paper studies the value of broad commodity price indexes as predictors of consumer price inflation in the G-7 industrial countries. After an introduction, the paper discusses the theoretical relationship between commodity and consumer prices and the conditions under which, in general, one would expect commodity prices to be a leading indicator of inflation. It then presents tests of the relationships between conventional broad indexes of commodity prices and consumer prices, and uses the data on individual commodities to generate the optimum weights in a commodity price index for forecasting G-7 inflation. We find that commodity and consumer prices are not co-integrated; the hypothesis that there is a reliable long-run relationship between the level of commodity prices and the level of consumer prices may be rejected. There is a tendency for changes in commodity prices to lead those in consumer prices, at least when the data are denominated in a broad index of major-country currencies. However, although the inclusion of commodity prices significantly improves the in-sample fit of regressions of an aggregate (multi-country) consumer price index, the results may not be sufficiently stable to improve post-sample forecasts. Estimated alternative commodity price indexes, in which the weights are chosen so as to minimize the residual variance in aggregate inflation regressions, track the behavior of the aggregate CPI reasonably well in-sample. However, the estimated indexes work only moderately well in post-sample predictions, and they do not appear to offer significant advantages over the conventional export weighted index. Perhaps the most important result is that turning points in commodity-price inflation frequently precede turning points in consumer-price inflation for the large industrial countries as a group.

Food Security in Developing Countries

This paper provides a systematic definition of food security, focusing on its different dimensions; examines the nature and magnitude of the different dimensions of food insecurity in developing countries; discusses the difficult tradeoffs that policy makers face in trying to address food security’s multiple dimensions simultaneously; and explores promising new approaches to address food insecurity. The geographic focus is on Sub-Saharan Africa and South Asia, where the majority of the world’s food insecure people live.food security, hunger, poverty, food policy, economic development, Agricultural and Food Policy, Food Security and Poverty, International Development, O13, O19, Q18,

USAID Contributes to Building National Capacity to Strengthen Food Security: An Example from Mali

Food Security and Poverty, Downloads May 2008-July 2009: 13,

Commodity Prices and Inflation: Evidence From Seven Large Industrial Countries

This paper examines the relationships between movements in primary commodity prices and changes in inflation in the large industrial countries. It begins by developing a two-country model in order to examine the theoretical effects of monetary, fiscal, and supply-side disturbances on commodity and manufactures prices and on exchange rates. It is shown that if monetary shocks dominate, then commodity prices should lead general price movements, and the level of commodity prices should be correlated with the general inflation rate. Non-monetary shocks generally weaken these relationships, but such disturbances may cancel out for broad indexes covering a wide range of commodities. Country-specific commodity price indexes are developed for the major industrial countries. The weights assigned to different commodities vary substantially across countries. Nonetheless, when the indexes are expressed in a common currency, they tend to be highly correlated over time, except when sharp movements occur in certain commodity prices. The major source of contrast across countries in the behavior of the indexes derives from exchange rate movements. Several empirical tests broadly support the conclusions of the theoretical model, with relatively few differences across countries. Three main tendencies may be cited. First, low inflation in industrial countries has tended to be associated with low levels of commodity prices, and conversely; commodity-price levels are cointegrated with consumer-price inflation rates. Second, there has been some tendency for movements in commodity prices to precede changes in general inflation rates by a few months, although it is not clear whether this tendency is strong enough to be a reliable aid in forecasting the rate of inflation. Third, there s a strong and fairly reliable tendency for turning points in general inflation rates. Commodity prices thus appear to contribute to predictions of turning points in inflation, predictions of inflation rates but more strongly to predictions of turning points in inflation.

Mali’s Food Security Challenges: An Overview

Mali has a high incidence of malnutrition. The fourth Demographic and Health survey reports that in 2006 the incidence of wasting, stunting and underweight children under 5 years of age was 13.8%, 37.9% and 24.5% respectively in rural areas, and 12%, 24% and 25% respectively in urban areas. While malnutrition is found in all regions of Mali, the regions of Timbuktu and Sikasso have higher than average levels for all three indicators, while the region of Kidal has high levels of wasting. For a detailed analysis of food security indicators see Ward (2010).Agricultural and Food Policy, Food Consumption/Nutrition/Food Safety, Food Security and Poverty,

Achieving Food Security in Mali: Key Issues and Investment Needs

A key role for USAID and its partners is to identify how their resources can best contribute to increasing the capacity of the private and public sectors in Mali to scale up their investments, and increase the impact of those investments, in relation to the food security dimensions of availability, access, utilization and stability. To fulfill this role will involve identifying opportunities presented in the Malian agricultural sector investment plan (PNISA) to address critical needs in each of these dimensions, the types of investment that will best address the needs, and the set of resources and skills that will enable Malian organizations and entrepreneurs to implement those investments successfully and at scale. Even with increased resources, however, it is critically important that the USAID mission make strategic choices about where to focus resources. The scale and depth of rural poverty, and the complex nature of malnutrition, means that resources must be focused to have measureable impacts. The question is for whom, where and how should those resources be focused in the context of Mali’s CAADP compact and investment plan? To stimulate discussion of these questions we first highlight some key challenges and the nature of choices about resource allocation priorities, and then highlight the central role of information to achieve food and nutrition security objectives. We conclude with thoughts on two specific issues: graduating from fertilizer subsidies to free up resources for other investments, and the implications of smallholder heterogeneity for development strategies.Agricultural and Food Policy, Agricultural Finance, Food Consumption/Nutrition/Food Safety, Food Security and Poverty, International Development,

A Strategic Approach to Agricultural Research Program Planning in Sub-Saharan Africa

Research and Development/Tech Change/Emerging Technologies, Downloads May 2008-July 2009: 13,

A Strategic Approach to Agricultural Research Program Planning in Sub-Saharan Africa

Recent studies have shown that agricultural research can have high payoffs in Africa, but impact depends on how well technology fits with evolving needs and capacity in the agricultural sector and the rest of the economy. Structural adjustment policies (e.g., market liberalization, currency devaluation) and political change are transforming user demands for new technology and the economic environment in which technology must perform. The challenge is how to design agricultural research as a strategic input to promote broad-based economic growth, structural transformation, and food security in the increasingly market-driven, but fragile, economies of Africa.Food Security, Food Policy, Agricultural Research, Research and Development/Tech Change/Emerging Technologies, Downloads May 2008-July 2009: 44, Q18,