Alexander H. Sarris

Endogenous Price Policies and International Wheat Prices

International prices are modeled as Cournot equilibrium interactions of national excess demand functions, which, in turn, are solutions of domestic welfare optimization problems. It is shown that interaction of national policies can lead to excess depression and instability of both international and domestic prices. The model is estimated for wheat and is used to show that, under free trade, average world prices would be much higher while price instability would be much lower. Furthermore, the European Economic Community policies alone contribute about 80% to these distortions.

European Community Enlargement and World Trade in Fruits and Vegetables

World trade models for the product classes fresh fruits, dried fruits, processed fruits, fresh vegetables, and processed vegetables are estimated and used to project the impact on export prices and trade patterns likely to arise after the European Economic Community enlargement with Greece, Portugal, and Spain. The results indicate that current world trends in import demands and export supplies if continued, and in the absence of enlargement, will cause marked declines of export prices for four of the above product categories (except dried fruits). The enlargement will not significantly modify these price projections, but it will divert a significant part of European Community imports of these products to the three new member countries.

The demand for commodity insurance by developing country agricultural producers - theory and an application to cocoa in Ghana

The author considers the benefit to agricultural producers of commodity price insurance that provides in every year-but in advance of the resolution of production and price uncertainty-a minimum price for a fixed or variable portion of production. Under the assumption that producers do not change their long term production and income diversification pattern, the author suggests a theoretical framework that leads to explicit formulas of the benefit in providing this type of insurance. He shows that this benefit depends not only on the actuarially fair insurance premium, but also on household-specific factors that depend on the attitudes to risk, the consumption smoothing parameters, and the household-specific exposures to income risks. The author applies the theoretical framework for Ghana, using the Ghana Living Standards Survey data to specify various classes of cocoa-producing households and monthly price data for both domestic and international prices, to formulate appropriate models for ascertaining price risks faced by producers. The author gives empirical estimates of the actuarially fair premium, and shows that they are smaller than market-based put option prices from organized exchanges. The overall benefit in providing minimum price insurance to households, however, turns out to be substantially higher than the actuarially fair premiums and the market-based put option prices. This is due to both the magnitude of the uncertainties facing the households, as well as their risk and consumption smoothing behavior.

Has world cereal market instability increased

Abstract This paper argues that world cereal prices are good indicators of the state of world cereal markets. It tests whether real prices for wheat, rice and maize exhibit deterministic or stochastic trends, concluding that the underlying trends are most likely deterministic. After appropriate deterministic detrending, the paper tests for increased variance of the residuals of real cereal prices, finding that there does not appear to be evidence for increased year-to-year price instability. Tests for increased intra-year price variability also reject the hypothesis of increased variability. Discussion of recent changes in the pattern of world cereal production and trade suggests that these conclusions are not contrary to observed trends.

The Performance of Bulgarian Illegal Immigrants in the Greek Labour Market

Abstract This article presents the results of a survey of 100 illegal Bulgarian immigrants living in the Athens area of Greece. The results indicate that Bulgarian illegal immigrants tend to take lower level jobs in the Greek labour market, some of which, however, are jobs for which Greeks compete. Entry into Greece is made legally via visas obtained in Bulgaria. Immigrants tend to be treated well and make friends with locals. Their wage levels are considerably below those of comparable Greeks and they are not insured. Illegal immigrants seem to be tolerated by the authorities, as well as by locals. They tend to send considerable remittances to their home country, but are not particularly reliant on fellow immigrant networks for their labour market movements.

Gauging the Welfare Effects of Shocks in Rural Tanzania

Studies of risk and its consequences tend to focus on one risk factor, such as a drought or an economic crisis. Yet 2003 household surveys in rural Kilimanjaro and Ruvuma, two cash-crop-growing regions in Tanzania that experienced a precipitous coffee price decline around the turn of the millennium, identified health and drought shocks as well as commodity price declines as major risk factors, suggesting the need for a comprehensive approach to analyzing household vulnerability. In fact, most coffee growers, except the smaller ones in Kilimanjaro, weathered the coffee price declines rather well, at least to the point of not being worse off than non-coffee growers. Conversely, improving health conditions and reducing the effect of droughts emerge as critical to reduce vulnerability. One-third of the rural households in Kilimanjaro experienced a drought or health shocks, resulting in an estimated 8 percent welfare loss on average, after using savings and aid. Rainfall is more reliable in Ruvuma, and drought there did not affect welfare. Surprisingly, neither did health shocks, plausibly because of lower medical expenditures given limited health care provisions.

Market Integration and Uncertainty: The Impact of Domestic and International Commodity Price Variability on Rural Household Income and Welfare in Ghana and Peru

Abstract We estimate rural household income uncertainties and welfare changes due to commodity price and production variability in Ghana and Peru under different scenarios for international and domestic market shocks. Uncertainties significantly affect the variability of household income, especially for households that are specialised in the production of few commodities. Wider exposure to international markets would increase the income variability for producers of commodities that are subjected to stabilisation policies in Ghana but would reduce the variability that rural households in Peru face. In terms of welfare, rural households in both countries are expected to gain if fully exposed to international markets.

Consumption and poverty in Tanzania in 1976 and 1991: A comparison using survey data

Abstract The paper tests the hypothesis that given the significant decline of the Tanzanian economy in the early 1980s and the mediocre performance in the post-1986 adjustment period, household real incomes should be lower and the level of poverty should be higher in the early 1990s compared to the precrisis boom period of the mid-1970s. The analysis is done by comparing real household expenditures from two national surveys, in 1976 and 1991. The results suggest that real per capita expenditures in both rural and urban areas are higher in 1991 compared to 1976. Furthermore, the level of poverty in both rural and urban areas is lower in 1991. The results, which refute the stated hypothesis, are tested under alternative assumptions and are found robust.

The Evolution of States, Markets, and Civil Institutions in Rural Africa

SINCE independence most sub-Saharan African countries have retrogressed from an early period of rising expectations and optimism to growing difficulties in the 1970s and early i98os, followed by a painful era of stabilization and structural adjustment measures. A large part of the blame for so many unfavourable developments, notably stagnating growth and untenable domestic and external account imbalances, can be attributed to the nature of the African state. Despite the fact that the role of the state in African economies has undergone a series of dramatic changes, certain themes about governmental interventions are applicable to a large number of countries, namely: I. The contradiction between the indigenous rural institutions that had evolved in response to underlying socio-economic conditions, and those inherited and promoted by post-independence regimes. It is our hypothesis that the attempt to forcibly change these institutions has been one of the root causes of African crises. 2. The fact that whereas political power and the nature of the state emanated from the accumulation of private wealth in many regions of the world, in post-independence Africa it is the state that has been the principal mechanism of creating and maintaining political power as well as wealth. It is our hypothesis that the predatory role of the state reached and surpassed its limits in extracting surplus from the economy. 3. The extent to which western development aid has been partly responsible for the maintenance of inefficient state institutions and the ensuing economic crises. It is our hypothesis that the emergence of new institutions is being slowed down in many instances by the current

Food Security in Africa

Drawing on insights from theoretical applications, empirically based approaches and case study experience, this book contributes to the improved design and use of trade and related policy interventions in staple food markets.