Price and subsidy policy on soil conservation: application to smallholder tea growers

The role of commodity prices and subsidies on the adoption of soil conservation has been widely debated yet is poorly understood. One reason for this is the complex nature of the relationship between soil loss and yield damage. This paper examines the effects of price and subsidy policy on adoption of soil conservation measures in tea lands in Sri Lanka. The soil conservation technologies considered are lateral drains, stone terraces and Sloping Agricultural Land Technique (SALT). The study uses a non-linear yield damage function to estimate tea yield loss due to soil erosion. The yield function is then used in conjunction with a simple analytical model to examine the effects of changes in price and subsidies
on the incentives to adopt various soil conservation technologies. When there is a yield increment with soil conservation, increases in both prices and subsidies are found to make soil conservation economically attractive.

Resale price maintenance - in need of further reform

The Competition Policy Reform Act extended the resale price maintenance provisions of the Trade Practices Act 1974 to include services and provide for authorisation where the conduct can be shown to benefit the public such that it should be allowed. This article explores the scope of these changes and their shortcomings. It also seeks to provide some guidance as to their likely application and makes recommendations for further reform.

Generic drugs: international trends and policy developments in Australia

Public and private third-party payers in many countries encourage or mandate the use of generic drugs. This article examines the development of generics policy in Australia, against the background of a description of international trends in this area, and related experiences of reference pricing programs. The Australian generics market remains underdeveloped due to a historical legacy of small Pharmaceutical Benefits Scheme price differentials between originator brands and generics. It is argued that policy measures open to the Australian government can be conceived as clustering around two different approaches: incremental changes within the existing regulatory framework, or a shift towards a high volume/low price role of generics which would speed up the delivery of substantial cost savings, and could provide enhanced scope for the financing of new, patented drugs.

Granger causality among house price and macroeconomic variables in Victoria

This study analyses the dynamic causality of four macroeconomic variables on house prices. The four macroeconomic variables have interrelationships with house prices in certain lagged terms, but these relationships are not always the same as the notions put forward in prior research. The relationships are detected to be unstable in the three observation periods. The instability of these relationships would cause difficulty in predicting house prices in the market, especially for policy makers and market participants.

Longitudinal study of Consumer Price Index (CPI) trends in core and non-core foods in Australia

Objective: This study examined trends in the price of healthy and less-healthy foods from 1989 to 2007 using the Australian Consumer Price Index (CPI).

Methods: CPI food expenditure classes were classified as 'core' or 'non-core'. Trends in the CPI were analysed to examine the rise in prices of core compared with non-core foods.

Results: On average, the CPI for core foods has risen at a slightly higher, though not statistically significant, rate than non-core foods. Furthermore, selected groupings reveal interesting patterns. 'Bread' has risen in price significantly more than 'cakes and biscuits', and 'milk' has risen in price significantly more than 'soft drinks, waters and juices'.

Conclusions and implications: This investigation of food price trends reveals notable differences between core and non-core foods. This should be investigated further to determine the extent to which this contributes to the higher prevalence of diet-related diseases in low socio-economic groups.

The trading dynamics of close-substitute futures markets : evidence of margin policy spillover effects

Volatility spillover is well documented among closely related securities. I investigate the relationship between margin policy and trading dynamics of the Nikkei 225 index futures markets of Osaka Securities Exchange (OSE) and Singapore Exchange (SGX). I find that OSE’s margin policy influences trading dynamics across both markets, although it is the less liquid SGX market that performs price discovery. This suggests that policy markers of close substitute markets should coordinate, or at least communicate policy intentions due to policy spillover. SGX’s market design facilitates price discovery, suggesting that a microstructure framework capable of overcoming the liquidity entry barrier is of interest to any futures exchange contemplating contract proliferation.

Does monetary policy matter in a less developed economy? Evidence from Bangladesh

This paper explores the role of monetary policy in the context of a less developed economy. Monetary transmission mechanisms in less developed economies can be quite different from an industrialized economy, as unlike industrialized countries, these economies are characterized by the small size of organized financial markets, limited substitutability between money and other assets and weak fiscal and monetary institutions. We utilize the Structural VAR approach to analyze the monetary transmission process and impacts of monetary policy on different macro variables in Bangladesh. Monetary policy shocks are identified using non-recursive contemporaneous restrictions, which are based on the Central Bank's reaction function and the structure of the economy. We found strong evidence for the interest rate channel of monetary policy in Bangladesh. Our findings indicate that monetary policy shocks are important sources of fluctuations in the rate of interest, output and prices. Expansionary monetary policies are found to be harmful for achieving price stability in Bangladesh, as they not only increase the prices permanently, but also make the price level more volatile. We also found the evidence of a long lasting effect of monetary policy on output, which suggests that contractionary policy measures may create sustained recession in Bangladesh.

Determinants of Central bank independence and governance : problems and policy implications

Central bank independence and governance (CBIG) is a term subject to conflicting definitions and so its related studies are difficult to compare. This paper therefore focuses on developing of a more useable definition, and an index model identifying the determinants of independence and governance and their possible policy implications. It also examines various independence measurement tools such as ranking and index. The index model resulting centres on key central bank independence and corporate governance issues, such as, legal aspects, political aspects, price stability objective aspects, exchange rate policy aspects, monetary policy and deficit financing aspects and finally, transparency and accountability aspects.

Foreign aid, wage inequality and welfare for a small open economy with tourism

While the welfare effect of foreign aid has been extensively analyzed, the impact on the distribution of income has received less attention. At the same time, there has been recent work on tourism where it is complementary to aid in improving welfare.By combining these two strands, this paper concentrates on wage inequality in developing countries.We find that an increase in aid in the form of tied aid can lower the relative price of nontraded goods. The rent extracted from tourists declines, reducing welfare of domestic residents. In addition, the fall in the nontradable price can widen the wage inequality between skilled and unskilled workers.Thus, increased foreign aid may have detrimental effects on national welfare and the distribution of income. Rising wage inequality is confirmed by numerical simulations.

A-Reit price responses to cash rate changes

With the rapid increasing number and assets of A-REITs, there has been an urgent need to study the relationship between the changes of cash rates and the A-REITs returns. This study investigates whether there were relationships between Australian-Real Estate Investment Trusts stock returns and policy interest rate changes in the past decade by using event study with a multivariate regression model. The findings indicate that cash rate changes have no significantly positive or negative influence on the equity A-REIT stock prices. A series of successive cash rate changes do not take a continuous and dramatic effect on the equity A-REIT stock prices in each economic cycle. Moreover, the A-REITs with relatively smaller assets show more significant fluctuation to the changes of cash rates, and the A-REITs owning more than $ 10 billion in capital assets have relatively steady stock prices. Overall, the findings from this research lead to a call for comprehensive research into various areas in order to ascertain the determinants of A-REIT price changes.

Integrating agriculture and food policy to achieve sustainable peri-urban fruit and vegetable production in Victoria, Australia

Efforts to increase fruit and vegetable consump­tion are a significant aspect of national approaches to preventive health. However, policy frameworks for increasing fruit and vegetable consumption rarely take an integrated food-systems approach that includes a focus on production. In this policy analysis and commentary we examine fruit and vegetable production in peri-urban areas of Melbourne in Victoria, Australia, and highlight the significance of emerging environmental and eco­nomic pressures on fruit and vegetable production. This examination will be of interest to other locations around the world also experiencing pressure on their peri-urban agriculture. These pressures suggest that the availability and afforda­bility of fruit and vegetable supplies cannot be taken for granted, and that future initiatives to increase fruit and vegetable consumption should include a focus on sustainable production. Threats to production that include environmental pressures, together with the loss and cost of peri-urban agri­cultural land and a cost-price squeeze due to rising input costs and low farm-gate prices, act in combi­nation to threaten the viability of the Victorian fruit and vegetable industries. We pro­pose that policy initiatives to increase fruit and vegetable consumption should include measures to address the pressures facing production, and that the most effective policy responses are likely to be integrated approaches that aim to increase fruit and vegetable availability and affordability through innovative solutions to problems of production and distribu­tion. Some brief examples of potential integrated policy solutions are identified to illu­strate the possibilities and stimulate discussion.