Economic Research Institute Study Papers

Potential Economic Impacts of Wilderness Designation

Donald L. Snyder et al. — Mon, 10 Dec 2012 11:58:00 PST

In January 1992, Utah State University undertook a study of the potential localized economic impacts of land designated as wilderness. The original proposal for $3 10,000 over five years was scaled back to $210,000 over three years due to the absence of funds. The primary source of funds for the study was from Utah State University's portion of mineral lease funds, but other contributors included the Department of Community and Economic Development, the Utah Agricultural Experiment Station, the Utah Extension Service, and the Department of Economics (Colleges of Agriculture and Business) at Utah State University.

An Economic Base Study for San Juan County

Donald L. Snyder et al. — Mon, 10 Dec 2012 11:58:00 PST

In the summer of 1994, the Economics Department at Utah State University contracted with San Juan County to complete an economic base study as a follow-up to a 1968 study submitted by Planning and Research Associates (PRA). In addition to providing an update on the status of various economic resources, the study team was also challenged to estimate trade-offs between different economic sectors in the county. The information contained in the present study is broken down into five sections. First, the results of previous studies are summarized. Second, a listing and analysis of various economic resources is provided. Third, a cost of community services (COCS) study is presented. Fourth, trade-offs between select industries are discussed utilizing data from an input-output model and related work. Fifth, major economic issues are identified and discussed.

International Competitiveness in Wheat Production

Jay C. Andersen et al. — Mon, 10 Dec 2012 11:57:59 PST

The future competitiveness of U.S. wheat producers who have exported more than half their crop in recent years was analyzed. Trends in production and trade, and enterprise accounts and budgeting were used to assess the comparative costs of various competing U.S. and foreign producers. The future success of U.S. wheat producers is dependent on their own efficiency, government agricultural programs, weather, and many factors pertaining to general government policies. Relative currency values, success of development programs in foreign countries and administered pricing programs throughout the world are important concerns.. In spite of all the exogenous factors, it is believed that the quality of the basic production resources and the managerial abilities of producers will, in the longer term, determine the ability to compete. Careful enterprise accounting and quality management decisions will be decisive in determining wheat producers' welfare.

Economic Feasibility of Assembling Grade A Milk by Protein Content

Rondo A. Christensen et al. — Fri, 07 Dec 2012 15:39:20 PST

For the first time in the federal milk order system, the USDA has recommended the use of multiple component pricing in charging handlers for surplus Grade A milk used in manufactured products, and in paying producers for Grade A milk. The recommended plan would price milk on the basis of its protein and butterfat components. Th is would be a change from the historic method of pricing milk per hundredweight at 3.5 percent butterfat, plus a butterfat differential. This recommendation follows a public hearing held March 18-20, 1986, in Salt Lake City, Utah, and would apply to the new "Great Basin" federal milk order under a proposal to merge the present Great Basin and Lake Mead federal orders (USDA). The pricing plan adopted could become a model for inclusion in other federal milk orders.

An Analysis of Inefficiency on Dairy Farms in Ecuador Using Stochastic Production and Profit Frontiers

DeeVon Bailey et al. — Fri, 07 Dec 2012 15:39:20 PST

The relative technical allocative, and scale inefficiencies of small, medium, and large-sized dairy farms in Ecuador was investigated. Large farms were found to be the most technically efficient group. However, medium-sized farms were discovered to be the most allocatively efficient group of farms. Capital inputs were found to have the largest output elasticity. Government retail milk pricing ceilings in Ecuador reflect a farm level milk price which is likely above average costs for many producers. However, marginal costs exceed the farm level price indicating that increasing efficiency of the farms would be an essential part of any government designed to increase milk production.

Impact of Transportation, Processing, and Energy Costs on Optimum Number, Size, and Location of Dairy Plants in the Intermountain West

Rondo A. Christensen — Fri, 07 Dec 2012 15:39:19 PST

At one time most milk markets were local in nature. The assembly, processing, and distribution of milk, and the balancing of supplies with demand , all took place in relatively small geographic areas. Subsequent advances in technology, economies of size, and competitive forces have led to fewer but larger more centrally located processing plants, and to the balancing of milk supplies with demand on a wider scale. As a result, most milk markets are now statewide, if not regional in structure.

Causality Between Money and Price Level in India: Further Empirical Evidence

Peter J. Saunders et al. — Fri, 07 Dec 2012 15:39:18 PST

When the issue of the effect of monetary changes on an economy is addresses it is essential to initially establish the direction of casual flow in economic relationships. In particular, it is important to establish whether changes in the money stock causally affect other economic variables, such as nominal output and/or prices or whether no such relationships can empirically be found to exist. Essentially the all important theoretical question is which variables, if any, do monetary changes affect.

Milk Pricing at the Wholesale Level

Rondo A. Christensen — Fri, 07 Dec 2012 15:39:18 PST

Although the average marketing margin for fluid milk products (retail price minus raw milk price) has increased with marketing costs in recent years in the U. S., not all markets have shared in the increase, and in some, margins have decreased. This has prompted some milk handlers to examine more closely what affects milk prices, marketing margins, and pricing practices.

Deficits and Interests Rates: An Empirical Investigation

Peter J. Saunders — Fri, 07 Dec 2012 15:39:17 PST

Increasing federal government deficits have revived interest in theoretical discussions of the deficits' impact on an economy. This theoretical interest has recently been transformed into an economic policy issue in the form of the Gramm-Rudman-Hollings balanced budget legislation. Within the theoretical framework, the question of effects of increasing deficits on interest rates, and thereby on the level of investment and of economic growth is of special interest. Some economists emphasize the negative impact of deficit financing on private investment. This negative impact is largely due to the "fiscal crowd-out" whereby private investment is crowded-out by public borrowing. According to this theory, the public sector issued debt competes with the private sector demand for savings. As a result, interest rates are bid up and the crowding out of private investment occurs. Consequently, the issue of effects of deficits on interest rates is of crucial importance.

Causality of the U.S. Agricultural Prices and the Money Supply: Further Empirical Evidence

Peter J. Saunders — Fri, 07 Dec 2012 15:39:17 PST

In an important paper published in the May 1983 issue of this Journal Barnett, Bessler, and Thompson (BBT) empirically examined the direction of causality between the U. S. money supply and nominal agricultural prices. The authors deployed the direct Granger test of causation between money supply and nominal agricultural prices. Causality implications were derived from standard F-statistics. The results based on F - tests were then used to test the null hypothes is that agricultural prices are not affected by changes in the stock of money.

Inflation and Productivity in the United Kingdom: An Empirical Note

Peter J. Saunders et al. — Fri, 07 Dec 2012 15:39:16 PST

The escalating inflation in the second part of the 1970s and the early 1980s has revived interest in the theoretical relationship between inflation and the growth of productivity. The standard theoretical view maintains that the unidirectional flow of causality runs from productivity changes to inflation. It assumes that productivity growth is exogenous, and that positive productivity growth is anti-inflationary because it increases the economy's aggregate supply, which in turn offsets the inflationary pressure. An obvious implication of this view is that the inflation rate could be reduced through productivity growth.

Effects of U.S. Monetary Policy on the Third World Debt

Peter J. Saunders — Fri, 07 Dec 2012 15:39:15 PST

The availibility of international capital plays a crucial role in the economic development of many third world countries. Since the early 1980s, successful economic development of many developing countries has been threatened by a continuing financial crisis. The origins of this financial crisis can be traced to the doubts about the willingness and ability of debtor countries to meet their existing debt obligations. The main problem for many debtor countries is their inability to generate enough net foreign income to pay the interest and the principal due on foreign loans. In this respect, the world recession as well as severe economic difficulties of many debtor countries have aggravated this problem. The world recession experienced in the early 1980s led to the decline of many of the export prices of the debtor countries, which strained their ability to earn sufficient foreign incomes to service their external debts. Furthermore, many debtor countries have encountered severe econonomicdifficulties since 1980, particularly rising unemployment and falling output. This situation usually precludes pursuing restrictive domestic economic policies which would enhance the debtor countries' capacity to meet their external debt obligations.

An Empirical Investigation of the Effects of Monetary Changes on the U.K. Economy

Peter J. Saunders — Fri, 07 Dec 2012 15:39:15 PST

Theoretical discussions involving the relationship between the money supply and an economy's output has dominated the field of monetary economics for many years. Theoretically, the resolution of two separate issues is crucial - (1) the question of causality in the money-income relationship and (2) the effects of monetary changes on the two components of nominal output; i. e., the price level and real output. Two major opposing views can readily be identified: the monetarist view and the keynesian view. The monetarists' view is based on the postulates of the Quantity Theory of Money. In their view, the money supply is exogenously determined. Furthermore, according to the monetarists, there exists a direct causal flow from money to nominal output. 3 Consequently, changes in the money supply dominate movements in nominal output. Some monetarists allow for a feedback from nominal output to the money supply, but even then, monetary changes are considered the major factors determining nominal Qutput.

Money and the UK Economy: An Empirical Study

Peter J. Saunders — Fri, 07 Dec 2012 15:39:14 PST

The question of how changes in the money, supply affect an economy has occupied economists for centuries. The origins of the debate on the effects of money on an economy can be traced to the writings of John Locke, Richard Cantillon, and David Hume, among others. Essentially, the key issue is which economic variables, such as prices, output and employment, do monetary changes affect. Two major opposing views can be readily identified: the monetarist and the Keynesian. The monetarist view is based, to a large extent, on the postulates of the Quantity Theory of Money, first outlined by classical economists of the 17th and 18th centuries. Money, according to the monetarists, has no lasting influence on any real variables in an economy (variables such as quantities of output produced, investment, and employment). Monetary changes will ultimately result in price changes only, leaving an economy's real output and employment unchanged. Keynesians, on the other hand, maintain that under conditions of unemployment, changes in the money supply can and do permanently change output and employment.

Specific Factors, Unemployment, and Immiserizing Growth in a Small Open Economy

Anjana Bhattacharyya et al. — Fri, 07 Dec 2012 15:39:13 PST

The economic rationale of import-substituting strategy of development pursued by the majority of the developing countries has long been questioned. Apart from the familiar argument that tariff tends to discourage exports and hence, can be viewed as an export tax, there is the immiserization argument proposed by Professor Johnson. Within the framework of a two-factor two-commodity model, Johnson has shown that a small tariff-imposing country may suffer a welfare loss from an increase in the stock of resources or technological change if the growth is biased in favor of the importable sector so that it tends to magnify the distortion in production caused by the tariff. The purpose of this paper is to examine the possibility of Johnson-type immiserizing growth for the developing countries characterized by massive unemployment.

The Impact of Out-of-State Markets for Utah Agriculture Products on Utah's Economy

Basudeb Biswas et al. — Fri, 07 Dec 2012 15:39:13 PST

Utah farmers, like the rest in the country, are highly productive. It is ironical that their high productivity brings troubles to the farmers. Low income elasticity of demand for agricultural products and high labor productivity in agriculture depress the relative price of agricultural products.

Adjustment Costs of Trade Liberalization: Dairy and Meat Industries in Utah

Basudeb Biswas et al. — Fri, 07 Dec 2012 15:39:12 PST

The United States is an efficient and low-cost agricultural producer demonstrated by huge domestic agricultural surpluses and exports. This is a partial reason however for the crisis now facing American agriculture: we can produce more agricultural products than can be sold at prices which provide a reasonable profit (Johnson). While the problem is quite clear, the solution is not.

Does the Dairy Price Support Program Still Work?

Rondo A. Christensen — Fri, 07 Dec 2012 15:39:12 PST

After watching the support price increase rapidly during the 1970's, plateau at $13.10 during the early 1980s, then gradually decrease to $11.35 on January 1 of 1987, many are beginning to wonder whether the price support program still works, particularly in view of the fact that while the support price has fallen in recent years, there has still been a tendency for milk production to continue to increase (Figure 1).

The Decision on the 1987 Wheat Program

Jay C. Andersen et al. — Fri, 07 Dec 2012 15:39:11 PST

Wheat producers in Utah have a choice in participating in the 1987 government wheat program. The sign up period is from October 1, 1986, to March 31, 1987. Advance deficiency payments are available upon signing up. The advance payment will be 40 percent of the projected deficiency rate at this time. For most growers it appears that participation in the program will again be much more profitable than nonparticipation. But it would be advised that you calculate the details for your own farm based on data in Table land worksheets (Tabl es 2 and 3) or similar ways to estimate the with and without conditions.

"Native American" Water Right Claims and Economic Analysis

Donald L. Snyder et al. — Fri, 07 Dec 2012 15:39:11 PST

The rights associated with the use of water in the semi-arid regions of the world are critical for agricultural, industrial, and municipal existence, development, and expansion. Such is certainly the case in the western United States.