POLICY REFORM, MARKET STABILITY, AND FOOD SECURITY; PROCEEDINGS OF A CONFERENCE OF THE INTERNATIONAL AGRICULTURAL TRADE RESEARCH CONSORTIUM

Contact for this paper: Laura Bipes, Department of Applied Economics, University of Minnesota, 1994 Buford Avenue, 232 ClaOff, St. Paul, MN 55108. This volume contains the main papers that were presented at an IATRC symposium which focused on Policy Reform, Market Stability, and Food Security. It was held June 26-27, 1998 in Alexandria, Virginia and was co-sponsored by the Center for International Food and Agricultural Policy, Department of Applied Economics, University of Minnesota. Papers included are: Asian Economic Crisis and the Long-Term Global Food Situation, by Mark Rosegrant and Claudia Ringler; The New Policy Environment for Food Aid: The Challenge of Sub-Saharan Africa, by Cheryl Christensen; Poverty and Undernutrition in South Asia, by T.N. Srinivasan; The Macro Dimensions of Food Security: Economic Growth, Equitable Distribution, and Food Price Stability, by Peter Timmer; World Food Markets and Food Security: Uncertain Connections, by Robert Paarlberg; International Price Instability in Cereals Markets and a Market Based Scheme for Developing Country Cereal Imports, by Alexander Sarris; On Reform, Food Prices, and Poverty in India, by Martin Ravallion; The Contribution of Food Aid to Stable Food Consumption, by Christopher Barrett; A Role of Capital Markets in Natural Disasters: A Piece of the Food Security Puzzle, by Jerry SkeesAgricultural and Food Policy, Food Security and Poverty, International Relations/Trade,

Incompleteness in Insurance: An Analysis of the Multiplicative Case

Risk and Uncertainty,

General Equilibrium Analysis of Supply and Factor Returns in U.S. Agriculture, 1949-91

General equilibrium - open economy trade theory and time series data on the US agricultural sector are used to provide insights into the structure of agricultural supply, factor returns and linkages to the rest of the economy. Output expansion and changes in factor rental rates depend on relative factor intensities. Theoretically consistent price elasticities of supply and factor rental rates are also obtained. The effect of the rest of the economy, particularly the increase in price of services, is found to have relatively large negative impacts on agriculture. The static effects on growth of supply and factor rental rates tend to be dominated by rate effects which are shown to have strong positive effects on returns to family labor. J.E.L. classification numbers: 013, 030, QllInternational Relations/Trade,

A PROGRAMMING APPROACH TO URBAN TRANSIT PLANNING

Public Economics,

The Effect of Sequencing Trade and Water Market Reform on Interest Groups in Irrigated Agriculture: An Intertemporal Economy-Wide Analysis of the Moroccan Case

Many of the import competing sectors in Moroccan agriculture are protected while water in irrigated agriculture is priced below its marginal value product. Establishing a water market in this pre-trade reform environment can be welfare decreasing. Further, as the shadow price of water is sensitive to the crops protected by trade policy, farmers growing crops protected pre-trade reform can be made worse off post reform. The resulting decline in rents to sector resources is a source of interest group conflict that can slow the overall reform process. Using an intertemporal general equilibrium model, the paper analyzes the economy-wide effects of the linkages between trade reform and the reform of water markets in irrigated agriculture. We find a strong investment and growth response to the trade reform, and a reallocation of resources to the production of fruit and vegetable crops, for which Morocco has a strong comparative advantage. Trade reform is found to actually create an opportunity to introduce water pricing reforms. Creating a water user-rights market post trade reform not only compensates partially for the decline in rents to protected crops, but also raises the efficiency of water allocation and hence benefits the economy as a whole.Water Markets, Trade Reform. Dynamic General Equilibrium, O41, International Relations/Trade, Resource /Energy Economics and Policy, F13, Q15, Q25,

Natural Resource Abundance and Economic Growth in a Two Country World

We investigate the dynamics of nonrenewable resource abundance on economic growth and welfare in a two-country world. One country is endowed with a nonrenewable-resource, otherwise, countries are identical, except possibly for their initial endowments of capital. Unlike previous studies analyzing small open economies, we show that once interactions between resource-rich and resource-less economies are considered the effect of the nonrenewable resource on the resource rich economy's performance can be positive. We derive the necessary condition for the nonrenewable resource to have a positive (negative) effect on the growth rate of the resource-rich economy. The endowment of the nonrenewable resource has a positive effect on the growth rate of the resource-rich country provided the elasticity of the initial price of the resource with regard to the initial stock of the resource is greater than minus one. An analytical solution to the model confirms that this elasticity is greater than minus one, and numerical simulations with a very large range of parameter values confirm the same.International Development, Resource /Energy Economics and Policy,

GOVERNMENT MARKET INTERVENTION: AN ECONOMETRIC STUDY OF TANZANIAN FOOD GRAIN MARKETS

The paper is organized into six major sections. Background and trends in agricultural production and trade are presented in Section II. The extent of government intervention in food grain production and trade is described in Section III. This provides a foundation for Section IV where the behavioral equations for defining government intervention in food grain markets are specified. These equations, along with the retail demand and farm level supply equations, yield six equations in six endogenous variables for each of the food grain crops, maize, wheat and rice. It is shown in Section V that the model provides a good fit to the data. In the concluding sections, simulations are performed to obtain insights into the effect on and motivation for government intervention in food grain markets.Agricultural and Food Policy,

OPTIMAL COST-BENEFIT ANALYSIS OF URBAN TRANSPORTATION SYSTEMS: ITS USE IN POLICY IMPLEMENTATION

Public Economics,

Environment, Welfare and Gains from Trade: A North-South Model in General Equilibrium

The effects of environment on trade and welfare are analyzed in a modified Heckscher-Ohlin framework using a quasi-homothetic preferences to account for differences in countries' expenditure shares on health. Three types of pollution, local-disembodied, global-disembodied and embodied, result as a by-product of inputs used in production. For each case, the Walrasian, Pareto optimal and the Regulators' problem are analyzed. The optimal tax is shown to improve each country's welfare if the country is small in the world market. Otherwise, changes in the terms of trade may cause one country to be made better off at the expense of the other. Interdependence for the global-disembodied case is explored using a one-shot Nash game. For the embodied pollution, taxing the polluting input only can cause a decline in welfare when the polluting input is intensively used. Instead, a tax on the polluting input in combination with a subsidy to the non-polluting input is optimal. In general, the results suggest compensatory payments may be required to encourage abatement policies. Contrary to other approaches, an abatement policy does not necessarily decrease a country's comparative advantage, i.e., reduce exports of the polluting sector.International Relations/Trade,

Natural Resource Abundance and Economic Growth in a Two Country World

We investigate the Ramsey-like dynamics of nonrenewable resource abundance on economic growth and welfare in a two country world. One country is endowed with a non-renewable- resource Otherwise, countries are identical. The one country result of Rodríguez and Sachs (1999) that the initial stock of the resource influences negatively the GDP growth of the resource-rich country, is shown to not hold in general. The endowment of the nonrenewable resource can have an initial positive effect on the growth rate of the resource-rich country provided the elasticity of the initial price of the resource with regard to the initial stock of the resource is greater than minus one. The ratio of the consumption levels of the two countries are shown to be constant over time, and determined by the ratio of initial wealth. An analytical solution of the model allows us to indicate how accumulable and depletable assets affect per country welfare and income growth. For this case we demonstrate that a technological change -that is nonrenewable resource saving- can benefit the resource-rich country’s relative welfare.Growth, Development, Non-renewable Resources, International Trade