Arjunan Subramanian

On the stability of demand for money in a developing economy: some empirical issues

In recent years, a number of developing countries have undergone extensive reforms in the financial sector. The effects of this underlying financial innovation process on the stability of demand for money have seldom been studied in the context of developing countries. Nevertheless, these changes in the financial sector highlight the transition from one regime to the other. This need necessarily follows that such a process has to be accounted for in the long-run demand for money estimation. Here, we use a three-step testing procedure to study the implication of the reform process on the stability of demand for money. To account for the abovementioned changes, we specify the demand for money in an open economy framework using data from India. An estimation procedure accounting for these changes in the specification of demand for money suggests that financial deregulation and innovation did affect the empirical stability of demand for money in India.

Money and Prices: Some Evidence from India

The objective of this paper is to examine the long-run relationship between supply of money and prices. The prices considered are wholesale price and consumer price indices for industrial workers, urban non-manual workers and agricultural labourers. Using the null hypothesis of cointegration, it is shown that the supply of money and consumer price indices for urban non-manual workers and agricultural labourers are cointegrated in the long-run. Both the prices - namely, urban non-manual workers and agricultural labourers - form a stable relationship with money supply in the long-run.

FOOD SECURITY RISK LEVEL ASSESSMENT: A FUZZY LOGIC-BASED APPROACH

A fuzzy logic (FL)-based food security risk level assessment system is designed and is presented in this article. Three inputs—yield, production, and economic growth—are used to predict the level of risk associated with food supply. A number of previous studies have related food supply with risk assessment for particular types of food, but none of the work was specifically concerned with how the wider food chain might be affected. The system we describe here uses the Mamdani method. The resulting system can assess risk level against three grades: severe, acceptable, and good. The method is tested with UK (United Kingdom) cereal data for the period from 1988 to 2008. The approach is discussed on the basis that it could be used as a starting point in developing tools that may either assess current food security risk or predict periods or regions of impending pressure on food supply.

Benefits of Transgenic Plants: A Socioeconomic Perspective

Transgenic crops have been used commercially for over ten years. So far, mostly herbicide-tolerant and insect-resistant Bt crops have been employed. Available impact studies show that these crops are beneficial to farmers and consumers and produce large aggregate welfare gains. Moreover, transgenic crops bring about environmental and health benefits. Bt crops in particular are well suited also for small-scale farmers, contributing to higher yields, more rural employment, and higher household incomes. In many cases, farmers in developing countries even benefit more than farmers in developed countries, because of weaker intellectual property protection and differences in agroecological and socioeconomic conditions. The advantages of future applications could even be much bigger. These results suggest that transgenic crops can contribute significantly to food security, poverty reduction, and sustainable development at the global level.

Socioeconomic Impacts of Bt ( Bacillus thuringiensis ) Cotton

This chapter analyzes the socioeconomic impacts of Bt cotton in an international context. Bt cotton technology has already been adopted by millions of farmers around the world, including many smallholders in developing countries. On average, farmers growing Bt cotton benefit from insecticide savings, increasingly effective yields as a result of reduced crop losses, and profit gains in spite of higher seed prices. Aggregate household incomes rise, for poor and vulnerable farmers as well. Hence, Bt cotton contributes to poverty reduction and rural development. Macroeconomic modeling approaches confirm that there are also sizeable aggregate growth effects and welfare gains. In addition to these socioeconomic impacts, Bt technology is associated with important positive environmental and health externalities.

Robustness of geography as an instrument to assess impact of climate change on agriculture

Purpose The empirical literature on climate change and agriculture does not adequately address the issue of potential endogeneity between climatic variables and agriculture, which makes their estimates unreliable. This paper aims to investigate the relationships between climate change and agriculture and test the potential reverse causality and endogeneity of climatic variables to agriculture. Design/methodology/approach This study introduces a geographical instrument, longitude and latitude, for temperature to assess the impact of climate change on agriculture by estimating regression using IV-two-stage least squares method over annual panel data for 60 countries for the period of 1999-2011. The identification and F-statistic tests are used to choose and exclude the instrument. The inclusion of some control variables is supposed to reduce the omitted variable bias. Findings The study finds a negative relationship between temperature and agriculture. Surprisingly, the magnitude of the coefficient on temperature is mild, at least 20 per cent, as compared to previous studies, which may be because of the use of the instrumental variable (IV), which is also supported by an alternative robust measure when estimated across different regions. Practical implications The study provides strong implications for policymakers to confront climate change, which is an impending danger to agriculture. In designing effective policies and strategies, policymakers should focus not only on crop production but also on other agricultural activities such as livestock production and fisheries, in addition to national and international socio-economic and geopolitical dynamics. Originality/value This paper contributes to the growing literature in at least four aspects. First, empirical settings introduce an innovative geographical instrument, Second, it includes a wider set of control variables in the analysis. Third, it extends previous studies by involving agriculture value addition. Finally, the effects of temperature and precipitation on a single aggregate measure, agriculture value addition, are separately investigated.

The impact of price policy on demand for alcohol in rural India

Whether raising the price of addictive goods can reduce its burden is widely debated in many countries, largely due to lack of appropriate data and robust methods. Three key concerns frequently raised in the literature are: unobserved heterogeneity; omitted variables; identification problem. Addressing these concerns, using robust instrument and employing unique individual-level panel data from Indian Punjab, this paper investigates two related propositions (i) will increase in alcohol price reduce its burden (ii) since greater incomes raise the costs of inebriation, will higher incomes affect consumption of alcohol negatively. Distinct from previous studies, the key variable of interest is the budget share of alcohol that allows studying the burden of alcohol consumption on drinkers and also on other family members. Results presented show that an increase in alcohol price is likely to be regressive, especially on the bottom quartile, with a rise in the budget share of alcohol given budget constraint. This outcome is robust to different econometric specifications. Preliminary explorations suggest that higher per capita income increases the odds of quitting drinking. Results reported have wider implications for the effective design of addiction related health policies.

Reliability of Agricultural Statistics in Developing Countries: Reflections from a Comprehensive Village Survey on Crop Area Statistics in India

Despite the importance of agriculture in developing countries, and the general recognition of the need for strengthening data quality, very few studies examine the quality of available data and the data generation methods in agriculture. In this paper, we use data from an extensive deployment of geospatial technology, administrated concurrently alongside the conventional method in the Indian state of Karnataka, to assess the discrepancy between methods in terms of the magnitude of difference in the crop area, type and number of crops grown. The crop area estimates based on alternative method, utilising the geospatial technology, exceeded that from the estimates based on conventional method. Conventional method is unable to respond quickly to changes in the cropping pattern and therefore, do not record accurately the area under high value cash crops. This has wider implications for commercializing agriculture and delivery of farm credit and insurance services in the developing countries. Some research and policy implications are discussed.