Darku AB, Malla S, Tran KC. Sources and Measurement of AgriculturalProductivity and Efficiency in Canadian Provinces:Crops and Livestock. Canadian Journal of Agricultural Economics. 2016;64(1):49-70.Abstract
This paper measures and assesses the variation in total factor productivity (TFP) growth among Canadian provinces in crops and livestock production over the period 1940–2009. It also determines ifagricultural productivity growth in Canada has recently slowed down as indicated by earlier studies. The paper uses the stochastic frontier approach that incorporates inefficiency to decompose TFP growth into technical change (TC), scale effect (SE), and technical efficiency change. The results indicate that productivity changes were mainly driven by TCs for crops, while the productivity changes in livestock was mainly driven by SEs and technical progress. Though change in technical efficiency is mainly positive (except for New Brunswick and Nova Scotia), its contribution to productivity growth was very little for the provinces.We also found that over the entire period, the productivity growth rates for the crop subsector are on average higher for the Prairie provinces than for the Eastern and Atlantic provinces. On the other hand, the productivity growth rates in the livestock subsector are on averagehigher in the Eastern and Atlantic provinces than in the Prairie region with the exception of Manitoba. Finally, we found that though there is some evidence of a recent decline in productivity growth for thecrops subsector, there is no such evidence in the livestock subsector.
This paper uses data on the four largest Regional Trade Agreements (RTAs) in sub-Saharan Africa to argue that the dynamic form of the gravity equation is the appropriate model to estimate the effect of RTAs on intra-African trade. The paper also suggests a better approach to examining trade relationship between members of RTAs and nonmembers. The paper uses System Generalized Methodof Moments estimator to overcome econometric issues associated with estimating dynamic models with persistent variables. The paper reports three important findings. First, a formal model selection test confirmed that the dynamic gravity model performs better than the static version. Second, the creation of COMESA and SADC has led to significant increase in trade among members. ECOWAS has increased intra-ECOWAS trade but in total has reduced intra-African trade. ECCAS has had a negative impact on both intra-ECCAS and extra-ECCAS bilateral trade flows. Third, our proposed approach to examining member-nonmember trade relationships provided the true estimates as compared to results from employing the usual approach in the literature.
Darku AB. Income inequality, status seeking,and savings rates in Canada. Canadian Studies in Population. 2014;41(3-4):88-104.Abstract
This paper uses Canadian provincial-level data and a variant of James Duesenberry’s relative income hypothesis proposed by Frank et al. (2010) to examine the relationship between income inequality and savings rates. The theory predicts that increased expenditure of top income earners leads those just below them in the income scale to spend more as well, then the next group also spends more, and so on. This phenomenon is due to people’s status seeking behaviour. Hence, increased income inequality will trigger increases in consumption by individuals in all income groups, which in turn leads to declining personal savings rates. The empirical analysis based on this theory led to some interesting findings. First, at the national level, increased income inequality has a significant negative effect on personal savings rates. At the provincial level, the relationship also emerges in eight of ten provinces. Second, both the national and provincial results imply that growth in per capita income that worsens income inequality impacts negatively on personal savings rates. I interpret the results as evidence that social factors such as status-seeking generate consumption interdependence and are significant determinants of consumption and savings decisions of Canadians.
Traditional growth and development theories have demonstrated how efficient allocation of resources in all economies depends on economic efficiency in the agriculture sector. Historically, the agriculture sector has been supplying productive resources to other sectors in the economy asits productivity and efficiency improves over time. This report takes a comprehensive and historical look at the literature on agriculture efficiency from 1950 to 2011, while focusing on the various methodologies used and important results relevant for agricultural policy formulation. The review revealed that overtime the complexity of method used to examine agricultural efficiency has increased from simple index numbers and econometric analysis to complex nonparametric and parametric analysis. The overall results indicated that farms are generally technically and scale inefficient. Smaller farms are less efficient than big farms because large farms tend to adopt new technology faster than smaller farms due to their relative better access to credit, information, and other scarce resources. Technical efficiency is related to economic factors, environmental conditions, locations, size of local market, and agricultural policies. However, in general, the level of farm inefficiencies have been reducing as new and better farm practices have been implemented over time. Farmers’ education level has positive and significant impact on farm level efficiency. Organic farmers on the average are more efficient than conventional farmers. Most importantly, different econometric specification led to different results. For policy purposes the results from the studies shed light on the importance ofimprovement in extension services and increased access to credit and other resources as critical components of agricultural policy options to make farms, particularly the small ones, more technically and scale efficient. The results also demonstrate the importance of implementingagricultural policies that pays attention to other farm characteristics such as location and type of farms.
Ohemeng FLK, Carroll BW, Ayee JRA, Darku AB. The Public Policy Making Process in Ghana: How Politicians and Civil Servants Deal with Public Problems. New York: Edwin Mellen Press; 2012 pp. 415.Abstract
This book shows how governments in the developing world can succeed in creating effective policy formulas. Public policy is a process that evolves from a coalition of actors. In this book, the authors take us through the step by step process of decision making and implementation of policy initiatives in the country of Ghana. Although the desired outcomes did not always occur, these initiatives can tell scholars and policy-makers what works and does not work in a developing country along with contingency variables that make a difference in policy areas.
Darku AB. The balance of payments constraint growth model and the effect of trade liberalization on the trade balance and income growth in Ghana. The African Finance Journal. 2012;14(1):37-66.Abstract
This paper uses the balance of payment constraint (BPC) growth modeland the autoregressive distributed lag approach to cointegration toexamine the major determinants of income growth in Ghana, emphasizing the importance of exports, capital inflows and relative prices. The paper also uses the model to identify the effect of trade liberalization on the trade balance and income growth in Ghana. The main empirical results suggest that increases in the growth rates of exports, capital inflows and relative prices lead to an increase in growth of income. However, the liberalization of the external sector has not improved the income growth performance in Ghana. The results from this study questions the idea that trade liberalization leads to improvement in economic welfare of countries by raising the sustainable growth rate.
Ohemeng F, Barbara C, Ayee J, Darku AB. Economic Policies in Ghana. In: Public Policy Making Process in Ghana: How Politicians and Civil Servants Deal with Public Problems. New York: Edwin Mellen Press; 2012.Abstract
This book shows how governments in the developing world can succeed in creating effective policy formulas. Public policy is a process that evolves from a coalition of actors. In this book, the authors take us through the step by step process of decision making and implementation of policy initiatives in the country of Ghana. Although the desired outcomes did not always occur, these initiatives can tell scholars and policy-makers what works and does not work in a developing country along with contingency variables that make a difference in policy areas.
Darku AB. The impact of trade liberalization and the fiscal equalization transfer policy on provincial income disparities in Canada: an application of GMM estimation. Applied Economics. 2011;43(13):1679-1689.Abstract
This article uses the Solow growth model and the panel data method toexamine the effect of trade liberalization and the federal equalizationtransfers on income convergence among Canadian provinces between 1981 and 2006. Estimation problems of weak instruments and endogenous regressors are addressed by the use of a system Generalized Method of Moment (GMM) estimator. The results from the empirical analysis indicate that the current rate of convergence of Personal Income (PI) in Canada is 4.41% per year. This rate is considerably higher than the range of 1.80 and 2.41% per year that previous studies using least-square estimators have reported. The findings from the policy analysis show that the launching and expansion of the North America regional integration have de-accelerated the convergence speed for Canadian provinces by 3.99 and 3.15% per year, respectively. However, consistent with the results from previous studies, the fiscal transfers, which are part of the federal equalization programme, have accelerated the convergence speed for Canadian provinces.
Darku AB. Monetary Policy, Asset Prices and Inflation in Canada. International Journal of Accounting Information Science and Leadership. 2011;4(8).Abstract
This paper uses a small open economy model that allows for the effects of asset price changes on aggregate demand and inflation to investigate the role stock price bubbles and exchange rate changes have played in the conduct of monetary policy in Canada. It argues that the Bank of Canada, in pursuing its primary objective of price stability, should respond to stock price bubbles and exchange rate changes irrespective of the policy regime. Estimates of the policy rules derived from the money growth targeting and inflation targeting regimes provide evidence that the Bank of Canada has systematically responded to stock price bubbles and exchange rate changes. This is consistent with the fact that estimates of the structural model indicate that stock price bubbles and exchange rate changes have significant effect on aggregate demand and inflation. I then use counterfactual simulation analysis to determine the benefit from responding to stock price bubbles and exchange rate changes. The results imply that responding to these asset price changes leads to lower average inflation and interest rates, but at the cost of increased volatility in both variables.
Darku AB. Consumption Smoothing, Capital controls and the current account in Ghana. Applied Economics. 2010;42:2601-2616.Abstract
Much of the empirical evidence on developing economies indicates that the basic intertemporal model of the current account fails to predictthe dynamics of the actual current account series. This article arguesthat the model can predict the dynamics of the current account series if it is appropriately adjusted to reflect the nature of capital mobility andexchange rate policies in these countries. Using data on Ghana that span across capital control and liberalized regimes this article reports three finding. First, consistent with the existing empirical evidence, the basic model fails to predict the dynamics of the actual current account. Second, extending the basic model to capture variations in interest rates and exchange rates better explains the path of the actual current account balances only during the liberalized regime. Third, tests of asymmetric access to the international financial market indicate that economic agents in Ghana could not use the international financial market to smooth their consumption during the capital control regime. However, the liberalization program that reduced constraints on capital flows has enabled economic agents to use the international capital market to smooth consumption.
This paper uses the panel data method and data from 1982 to 2006 to examine the effect of federal equalization transfers on provincial income disparities in Canadian. Estimation problems of weak instruments and endogenous regressors are addressed by the use of a system generalized method of moment estimator. The results from the empirical analysis indicate that the current rate of convergence of personal income in Canada is 4.48 percent per year. This rate is considerably higher than the range of 1.80 and 2.41 percent per year that previous studies using least square estimators have reported. The findings from the policy analysis show that the fiscal transfers, which are part of the federal equalization program, have reduced provincial income disparities by accelerating the speed of convergence for Canadian provinces.
Darku AB. The gravity model and the test for the regional integration effect: the case of Tanzania. The Journal of Developing Areas. 2009;43(1):25-44.Abstract
This paper demonstrates that the appropriate econometric technique of testing for the effect of regional integration on bilateral trade is to augment the standard gravity model with country specific dummies instead of regional integration dummies. Using data on bilateral trade between Tanzania and her 23 trading partners over the period 1980-2004, the paper reports three important results. First, contrary to results from the traditional approach, estimates from the new econometric technique indicate that both the EU and the EAC have had moderate trade creation effects on Tanzania's bilateral trade. Second, I find that Tanzania's non-traditional trading partners such as Japan, India, Singapore, Hong Kong and the USA are relatively more opened to Tanzania's exports. Third, the results also indicate that whereas it is difficult for Tanzania's exports to penetrate foreign markets, foreign goods easily penetrate Tanzania's market. The policy implication is that the government should continue with its efforts to strengthen the EAC, and to gain more exports market to the non-traditional trading partners, if the export growth development strategy is to become a reality in Tanzania.
Darku AB. Empirical Essays in Open Economy Macroeconomics: A Policy Regime Analysis of Monetary Policy Rules and the Determination of the Current Account in Small Open Economies. Germany: VDM Verlag ; 2008 pp. 164.Abstract
This book is comprised of two parts. The first usesdata on Canada to determine the role asset pricechanges should play in the conduct of monetary policywithin the inflation targeting and money growthtargeting frameworks. The findings indicate thatirrespective of the targeting framework, the policyrule that incorporates a response to asset pricechanges controls inflation better. Contrary to theconventional view, simulation experiments indicatethat the money growth targeting policy rule is moreefficient in controlling inflation than the inflationtargeting policy rule. The second part presents theoretical and conometricanalysis of the determinants of current accountbalances for Ghana. The results point to changes inworld real interest rate, exchange rate, and theterms of trade as important determinants of currentaccount. A policy regime analysis shows that therecent implementation of capital liberalizationpolicies in Ghana has enabled Ghanaians to use the international financial market to smooth consumption. The analysis should be useful to graduate students inbusiness schools and economic departments, and anyperson who is interested in international macroeconomic issues
Adedeji OS, Handa J, Darku AB. The Balance of Payments Analysis of Developing Economies: Evidence from Nigeria And Ghana. London: Ashgate Publishing Ltd; 2005 pp. 172.Abstract
Developing countries - given their extreme economic vulnerability - are likely to be better served by maintaining flexible exchange rate regimes. That is the finding of this informative and enlightening book. Presenting unique theoretical and econometric analysis of the current account of the balance of payments of Nigeria and Ghana, this book examines the features common to the economic position of developing countries (such as recurring deficits and continual increases in external debt). The book presents a number of new theoretical modifications to the standard version of the value model of the current account, in order to reflect the major characteristics of developing economies. The book also uses rigorous econometric analyses to determine the validity of theoretical models, and examines the sustainability of these various countries' current account deficits.
Darku AB. Private Investment, Uncertainty and Irreversibility in Uganda. The African Finance Journal. 2001;3(1):1-26.Abstract
The paper uses panel data on Ugandan firms and a measure of idiosyncratic uncertainty to determine the nature of investment sensitivity to changes in perceived uncertainty among firms with different degrees of investment reversibility. Using a sample selection technique to fit a modified version of an accelerator model, the paper yielded results consistent with predictions of theories of irreversible investment. The results indicate a negative relationship between uncertainty and investment. Findings also indicate that uncertainty has a greaternegative effect on investment for firms with less reversible investment.