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Category: Economics

Published March 13, 2012

Do Food Prices Track Oil Prices?

Not necessarily, argues Kay McDonald on the basis of a recent OECD report:

While it is partly true in the industrial agricultural system that “food equals oil,” there are many other factors which affect food prices, including the definition of “food” used in making the comparison. Below, I’ve listed some of them.

  • The dollar’s value compared to currencies of other food exporting and importing nations.
  • Supply and demand.
  • Amount of food used for biofuel production.
  • Available infrastructure in transport and storage of food.
  • The price of natural gas.
  • Economic health of each nation.
  • The amount of global meat consumption.
  • Weather.
  • Population growth.
  • The percent of food wasted.
  • Transport prices (not always the same as oil prices, as, for example, currently we have excess bulk shipping capacity which has lowered shipping rates).
  • Government Ag policies and price support programs.
  • Trade agreements.
  • Geopolitics.

In her post, Kay also discusses how the OECD report finds no support for the claim that food price volatility has increased  significantly over the last few years when compared to the last 50 years.

More generally, if you have any interest in food policy, Kay’s blog, Big Picture Agriculture, is a must-follow.

Published March 8, 2012

Spring Break Classic Posts: Thoughts on the Debate Surrounding Randomized Controlled Trials

(It’s Spring Break here this week, so I am taking the week off from blogging to work to revise a few articles and begin working on new research projects. As a result, I am re-posting old posts that some new readers might have missed but which were very popular the first time I posted them. The following was initially posted on May 25, 2011.)

Last weekend, Nicholas Kristof published a column in the New York Times in which he praised the use of randomized controlled trials (RCTs) in development policy. In a fit of econ envy, Kristof even went so far as to confess that if he had to do it all over again, he would major in economics in college instead of political science.

As a result of Kristof’s column, however, the use of RCTs in development policy has come under a considerable amount of scrutiny in the development blogosphere.

Continue readingSpring Break Classic Posts: Thoughts on the Debate Surrounding Randomized Controlled Trials
Published March 7, 2012

Spring Break Classic Posts: Pretending to Be Poor

(It’s Spring Break here this week, so I am taking the week off from blogging to work to revise a few articles and begin working on new research projects. As a result, I am re-posting old posts that some new readers might have missed but which were very popular the first time I posted them. The following was initially posted on September 8, 2011.)

This is the title of a new paper in Economic Development and Cultural Change by Jean-Marie Baland, Catherine Guirkinger, and Charlotte Mali. Because EDCC does not publish abstracts, here is the abstract of a previous version:

“From field observations of credit cooperatives in Cameroon, we find that a substantial number of members take loans that are fully collateralized by savings they held in the same institutions. 20% of the loans observed fall into this category. The price paid in terms of net interest payments is not negligible as it represents 13% of the amount borrowed. As traditional arguments such as credit rating or time inconsistent preferences cannot explain such behavior in our specific setting, we propose a new rationale based on in-depth interviews with members of the cooperatives. Those interviews indicate that some members systematically use credit as a way to pretend that they are too poor to have available savings. By doing so, they can successfully oppose request for financial help from friends and relatives. We develop a signaling model to analyze the conditions under which this behavior is an equilibrium outcome.”

Continue readingSpring Break Classic Posts: Pretending to Be Poor