J. D. Jobson, Bob Korkie, Statistical Inference in Two-Parameter Portfolio Theory with Multiple Regression Software, The Journal of Financial and Quantitative Analysis, Vol. 18, No. 2 (Jun., 1983), pp. 189-197

The available evidence indicates that, in aggregate, the growth in world food production over the past two decades has more than kept pace with the growth in population. This paper analyzes recent trends in world food production and consumption and outlines the Bank's approach to projections of food production and consumption providing results to the year 1995. It is shown that levels of consumption of various food items have improved in developing countries and are expected to continue to improve. Moreover, the results indicate favorable prospects for food production in developing countries. The paper comments throughout on areas where further work is required to refine the projection method and qualifies the generally optimistic outlook by identifying the types of actions that will be needed to accelerate food consumption and production in developing countries. Pricing policies in agriculture are seen as being particularly critical to the optimal development of the agricultural system in developing countries. International agricultural trade and food security is a matter of considerable concern to a large share of the world's population. Contradictory views on the subject exist. This paper is organized in three parts: i) a summary of world food trade and the trends that have recently emerged; ii) a discussion of world food security and the costs and benefits of a global food security scheme; and iii) an examination of specific countries' policies toward agriculture and food trade to demonstrate how government intervention can either contribute to or inhibit agricultural trade and food security. The paper concludes that when governments intervene in the legitimate functioning of markets, the ultimate outcome is to reduce national and global welfare since they seldom foresee all the ramifications of their actions.

A long tradition in the development literature has been to associate the aggregate savings rate with the dependency ratio, the ratio of dependent children to adults. In this paper I formalize the relationship by developing a life-cycle model in which offspring are assets from the viewpoint of their parents. The model is used to help explain the increase in nineteenth-century U.S. savings rates. I find that between 1830 and 1900 about one-quarter of the 6-percentage-point rise in the savings rate can be attributed to a decline in the dependency rate.

Oliver D. Hart, Grayham E. Mizon; 50th Anniversary of the Review of Economic Studies, The Review of Economic Studies, Volume 50, Issue 4, 1 October 1983, P

The Review of Economic Studies has instituted a new series of lectures to be given annually by a "younger" British economist at the Association of University Teachers of Economics Meetings. The choice of lecturer is determined by a panel whose members are currently Professors Hahn, Mirrlees and Nobay. This paper is a revised version of the first lecture in the series. It was presented at the AUTE Meeting held at the University of Surrey in April 1982, and was refereed in the usual way.—MAK.

R ISK transfer and price discovery are two of the major contributions of futures markets to the organization of economic activity (Working (1962), Evans (1978, p. 80), and Silber (1981)). Risk transfer refers to hedgers using futures contracts to shift price risk to others. Price discovery refers to the use of futures prices for pricing cash market transactions (Working (1948), Wiese (1978, p. 87), and Lake (1978, p. 161)). The significance of both contributions depends upon a close relationship between the prices of futures contracts and cash commodities. This paper examines the characteristics of price movements in cash (or spot) markets and futures markets for storable commodities. Section II presents an analytical model of simultaneous price dynamics which suggests that, over short intervals of time, the correlation of price changes is a function of the elasticity of arbitrage between the physical commodity and its counterpart futures contract. Greater elasticity fosters more highly correlated price changes, and thereby facilitates the risk transfer function. The elasticity of supply of arbitrage services is constrained by, among other things, storage and transaction costs. Thus, futures contracts will not, in general, provide perfect risk transfer facilities over short time horizons. The essence of the price discovery function of futures markets hinges on whether new information is reflected first in changed futures prices or in changed cash prices (Hoffman (1932, pp. 258259)). The model in section II provides a framework for analyzing whether one market is dominant in terms of information flows and price discovery. In section III we develop a model based on section II which is appropriate for estimating the lead-lag relationship between cash prices and futures prices. Section IV presents empirical estimates of the parameters of the model for seven different storable commodities: wheat, corn, oats, frozen orange juice concentrates, copper, gold, and silver. The cost of arbitrage between cash and futures differs across these commodities. For this reason we are not surprised to find inter-commodity differences in the correlation of short-run price changes and in the substitutability of futures contracts for cash market positions. With respect to the price discovery function of futures markets, we find that while futures markets dominate cash markets, cash prices do not merely echo futures prices; there are reverse information flows from cash markets to futures markets as well.