CRITICAL DEVELOPMENT ISSUES IN RURAL ECONOMIES

Community/Rural/Urban Development,

ON THE EXISTENCE OF STABLE EQUILIBRIA IN AGRICULTURE

Problems of instability and disequilibrium in U.S. agriculture are synthesized within a single conceptual framework. Agricultural and non-agricultural sector offer curves are used to illustrate why it may not be feasible to achieve and maintain equilibrium and price stability in U.S. agriculture. Empirical evidence on resource disequilibrium and instability in the ratio of prices paid and received by farmers is presented.Instability, Disequilibrium, Offer curves, U.S. agriculture, Policy, Demand and Price Analysis,

County Amenities and Net Migration

U.S. county-level net migration data and a general spatial model are used to examine the effects of various amenities on migration decisions. Results suggest that higher county cancer risks and the presence of superfund sites in a county, or a higher ranking on the Environmental Protection Agency's hazard ranking system, reduce the relative attractiveness of a county to prospective migrants, while natural amenities on balance attract migrants, ceteris paribus. The results also reveal spatial dependence among contiguous counties in terms of net migration behavior.Environmental Economics and Policy,

Wal-Mart and Rural Poverty

Wal-Mart® has created tremendous economic benefits for consumers by providing more choices at lower prices. The benefits are felt especially in communities that had only local retail monopolies prior to the arrival of the store. Yet no mretailer evokes stronger negative emotions than this chain. Recent media attention has focused on questionable labor practices and low wages combined with lack of benefits paid by the corporation, while academic studies have examined effects of the stores on retail wages, employment levels and numbers of establishments. Missing from the literature is an analysis of whether the "Wal-Mart effect" is large enough to measurably influence community-wide family poverty rates over time. This is the first study to carefully and comprehensively examine whether a relationship exists between existing and new locations of Wal-Mart stores and county-wide faily poverty rates.Marketing,

MODELING ECONOMIC GROWTH WITH UNPREDICTABLE SHOCKS: A STATE-LEVEL APPLICATION FOR 1960-90

A Barro-type economic growth model is estimated for the 50 states in the U.S. using data for three decades beginning in 1960. Frontier estimation techniques are used to test for the presence of state-specific shocks to economic growth that are independent of the usual, normally-distributed random errors. We find that large, positive shocks to growth occur during the period 1960-90. Our results indicate that the error term structure assumed each other OLS may not be appropriate for modeling economic growth.Economic growth, Frontier estimation, Shocks, U.S. states, Community/Rural/Urban Development,

Asymmetric Price Transmission in the Israeli Citrus Export Sector in the Aftermath of Liberalization

The Israeli citrus export sector was liberalized in 1991 with the aim to increase citrus growers' income and to improve overall efficiency of the international citrus marketing channel. However, the former government export monopoly's activities were mainly taken over by four large companies accounting for over 90% of total Israeli citrus market exports. In addition, citrus exporters maintained the monopoly's consignment system, substantially limiting transparency on how the grower price is determined. This lead the government to intervene in the newly liberalized market by implementing a minimum price agreement in the 1994/95 season to protect citrus growers against exporters' abuse of market power. In this paper we analyze whether market power was exerted by exporting companies over citrus growers in the form of asymmetric price transmission. Our study is unique in that it investigates vertical price transmission across international borders, i.e. in the context of Israeli grapefruit exports to France. We explicitly account for possible changes in exporters' pricing behaviour in the post-liberalization period. We apply an error correction model (ECM) to disaggregated firm-level Israeli grower price and French import price data. An ECM is estimated individually for each of the major exporting companies within a seemingly unrelated regression (SUR) framework. We find asymmetric price transmission in the first years after liberalisation, but symmetry in the second half of the 1990s. Our results indicate that growers' losses due to asymmetry amounted to as much as 2.5% of their total revenues. Our results suggest that liberalization improved the efficiency of the Israeli citrus international marketing channel, but that this took time and was probably accelerated by government intervention.Demand and Price Analysis,

ASYMMETRIC PRICE TRANSMISSION IN THE ISRAELI CITRUS EXPORT SECTOR IN THE AFTERMATH OF LIBERALIZATION

The Israeli citrus export sector was liberalized in 1991 with the aim to increase citrus growers income and to improve overall efficiency of the international citrus marketing channel. However, the former government export monopolys activities were mainly taken over by four large companies accounting for over 90% of total Israeli citrus market exports. In addition, citrus exporters maintained the monopolys consignment system, substantially limiting transparency on how the grower price is determined. This lead the government to intervene in the newly liberalized market by implementing a minimum price agreement in the 1994/95 season to protect citrus growers against exporters abuse of market power. In this paper we analyze whether market power was exerted by exporting companies over citrus growers in the form of asymmetric price transmission. Our study is unique in that it investigates vertical price transmission across international borders, i.e. in the context of Israeli grapefruit exports to France. We explicitly account for possible changes in exporters pricing behaviour in the post-liberalization period. We apply an error correction model (ECM) to disaggregated firm-level Israeli grower price and French import price data. An ECM is estimated individually for each of the major exporting companies within a seemingly unrelated regression (SUR) framework. We find asymmetric price transmission in the first years after liberalisation, but symmetry in the second half of the 1990s. Our results indicate that growers losses due to asymmetry amounted to as much as 2.5% of their total revenues. Our results suggest that liberalization improved the efficiency of the Israeli citrus international marketing channel, but that this took time and was probably accelerated by government intervention.Crop Production/Industries, International Relations/Trade,

Considering threshold effects in the long-run equilibrium in a vector error correction model: An application to the German apple market

We propose a three-step procedure to estimate a regime-dependent vector error correction model (VECM). In this model, not only the short-run adjustment process towards equilibrium is non-linear, as in threshold VECM and Markov switching VECM frameworks, but the long-run equilibrium relationship itself can also display threshold-type non-linearity. The proposed approach is unique in explicitly testing the null hypothesis of linear cointegration against the alternative of threshold cointegration based on the Gonzalo AND PITARAKIS (2006) test. The model is applied to apple price data on wholesale markets in Hamburg and Munich, using the share of domestic apples in total wholesale trade as the threshold variable. We identify four price transmission regimes characterized by different equilibrium relationships and short-run adjustment processes. This proposed approach is particularly suitable for capturing irregular seasonal threshold effects in price transmission typical for fresh fruits and vegetables.threshold cointegration, spatial price transmission, vector error correction model, Marketing,

SOCIAL CAPITAL AND ECONOMIC GROWTH: A COUNTY-LEVEL ANALYSIS

The effect of social capital on economic growth is examined using linear regression analysis and U.S. county-level data. Results reveal that social capital has a statistically significant, independent positive effect on the rate of per-capita income growth.economic growth, social capital, U.S. counties, Institutional and Behavioral Economics, International Development,

REGIONAL ECONOMIC GROWTH AND INCOME DISTRIBUTION: COUNTY-LEVEL EVIDENCE FROM THE U.S. SOUTH

Changes in income distribution are estimated for the U.S. South over the 1970 and 1980 decades using Gini coefficients for county-level, real family income. To explicitly investigate causal relationships between economic growth and inequality, a two-stage least squares model was estimated. In the 1970s, more rapid increases in inequality were associated with a reduced income growth rate, ceteris paribus, while in the 1980s, the opposite was true. Faster rates of income growth were associated with more rapid increases in inequality during the 1980s, but rates of income growth had no effect on changes in inequality during the 1970s.Causality, Economic growth, Inequality, U.S. South, Community/Rural/Urban Development,