Progress 10/01/09 to 09/30/14
Outputs
Target Audience: Farmers, processors, agricultural lenders, agricultural insurers, agricultural policymakers, academics, research economists Changes/Problems:
Nothing Reported
What opportunities for training and professional development has the project provided?
Nothing Reported
How have the results been disseminated to communities of interest? I have disemated the results in the graduate classroom, scholarly publications, presentations at professional meetings, presentation to audiences of farmers and agricultural lenders, given workshops on risk management methods to varied audiences. What do you plan to do during the next reporting period to accomplish the goals?
Nothing Reported
Impacts
What was accomplished under these goals?
I developed a series of theoreitical and simulation models of Incomplete financial and insurance markets that provided insights into the efficiency and profitability of the agricultural financial systems in developing countries. The research provided a better understanding the risk exposure of agricultural producers in developing countries, especially risk induced by global climate change; generated novel risk management strategies to be employed by poor agricultural producers, particularly producers without access to formal credit and insurance markets; provided insights ino the relative performance of public and market institutions in supplying risk-management opportunities for poor agricultural producers; generated new agricultural insurance designs to manage catastrophic risk and the impacts of global climate change; provided insignts into appropriate institutional frameworks for delivering new insurance and financial products in developing countries; and generated financial and risk analysis curricula at the graduate level, particularly in the area of economic development.
Publications
- Type:
Journal Articles
Status:
Accepted
Year Published:
2015
Citation:
Wu, Ruohan and Mario J. Miranda. Exports, Innovation and Production Growth: A Dynamic Heterogeneous Firm Model with Learning and Entry Costs. Working Paper, Department of Economics, The Ohio State University. Forthcoming The Journal of International Trade & Economic Development .
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Progress 01/01/13 to 09/30/13
Outputs
Target Audience: The target audience for my work include 1) government agricultural policymakers in the USA and abroad; 2) international economic development practitioners, donors, and research scholars interested in the potential benefits of insurance on the poor of the developing works; 3) private insurers and reinsurers interested in developing private insurance markets in developing countries. Changes/Problems:
Nothing Reported
What opportunities for training and professional development has the project provided? Four of my doctoral advisees defended their doctoral dissertations in calendar 2013. I continue to supervise eight doctoral students working on issues related to this project. How have the results been disseminated to communities of interest? During calendar 2013, I made ten presentations. Although the presentations were primarily to academic audiences, they were frequently attended by insurance industry professionals, government policymakers, and international development practitioners. What do you plan to do during the next reporting period to accomplish the goals? I plan on continuing my agressive program of outreach. I plan on delivering at least three conference presentations. I also expect to be adressing insurance industry professionals, government policymakers, and international development professionals in Africa, where I have initiated a major research project on agricultural insurance and credit in Ghana, with plans to expand to Senegal.
Impacts
What was accomplished under these goals?
1. Differential Effects of Food Security Policies on Subsistence Farmers and the Urban Poor - The Cases of Senegal and Ghana. The analysis provided an improved understanding of the food security problems faced by poor rural farmers and urban laborers who subsist on a generic staple food commodity. We learned more about the relative costs and benefits of different food security policies, including: buffer stock reserves, temporary export bans, transportation and trade infrastructure enhancements, agricultural index insurance, and direct cash transfers to promote food-security among the poor. All policies were found have impacts that depend on whether the poor reside in an urban center or a rural area; benefits at the national level were also found to depend on whether the country is predominantly an importer or an exporter of the staple food commodity. 2. Buffer Stocks, Export Restrictions, and the World Food Price Crisis. In our analysis, we learned how restrictive export policies instituted by exporters during times of low global supplies and high world prices affect global agricultural commodity supply and price stability and how these policies affect the food security of the urban and rural poor in developing countries. 3. A Heterogeneous Agent Model of Aggregate Loan Default in the Presence of Insurable Systemic Risk. We were able to obtain a deeper understanding of the determinants of default and delinquency rates experienced by micro-financial banks that have substantive agricultural loan portfolios and are thus exposed to systemic risk in the form of droughts or other natural disasters. The analysis also demonstrated the potential value of meso-index insurance products to manage the systemic loan default risk borne by such banks 4. Borrowing, Savings, and Insurance and Emergence from Poverty Traps. We obtained a deeper understanding of the role borrowing, saving, and insurance play in an agent's decision to adopt higher yielding but riskier crop practices. In particular, we derived a better understanding of how government policies can be designed to encourage adoption of new technologies among poor farmers and how these policies might help them emerge from poverty.
Publications
- Type:
Journal Articles
Status:
Under Review
Year Published:
2013
Citation:
Collier, Benjamin, Mario J. Miranda, and Jerry R. Skees. Natural Disasters and Credit Supply Shocks in Developing and Emerging Economies. Working Paper, Department of Agricultural Economics, University of Kentucky.
- Type:
Journal Articles
Status:
Other
Year Published:
2013
Citation:
Farrin, Kathleen M. and Mario J. Miranda. Premium Benefits? A Heterogeneous Agent Model of Credit-Linked Index Insurance and Farm Technology Adoption. Working Paper, Department of Agricultural, Environmental & Development Economics, The Ohio State University.
- Type:
Journal Articles
Status:
Other
Year Published:
2013
Citation:
Guizar-Mateos, Isai, Mario J. Miranda, and Claudio Gonzalez-Vega. The Role of Credit and Savings in the Dynamics of Technology Decisions and Poverty Traps. Working Paper, Department of Agricultural, Environmental & Development Economics, The Ohio State University.
- Type:
Conference Papers and Presentations
Status:
Other
Year Published:
2013
Citation:
Miranda, Mario J. and Kathleen M. Farrin. Effects of Index Insurance on Aggregate Agricultural Loan Defaults and Technical Transformation. Presented at
o Peking University, Beijing, China, June 21, 2013.
o East China Normal University, Shanghai, China, June 24, 2013.
o China Agricultural University, Beijing, China, June 25, 2013.
o Research Center for Rural Economy, Beijing, China, July 1, 2013.
o Central University of Finance and Economics, Beijing, China, July 3, 2013.
o Chinese Academy of Agricultural Science, Beijing, China, July 4, 2013.
o Renmin University of China, Beijing, China, July 9, 2013.
- Type:
Conference Papers and Presentations
Status:
Other
Year Published:
2013
Citation:
Miranda, Mario J. and Kathleen M. Farrin. "Coupled Credit and Index Insurance Contracts and Technical Transformation in Developing Countries: A Structural Dynamic Heterogeneous Agent Modelling Approach." Presented to the Department of Agricultural Economics, University of Georgia, Athens, Georgia, August 14, 2013.
- Type:
Conference Papers and Presentations
Status:
Other
Year Published:
2013
Citation:
Miranda, Mario J. and Kathleen M. Farrin. "A Heterogeneous Agent Model of Credit-Linked Index Insurance and Farm Technology Adoption." Presented at the International Agricultural Risk, Finance, and Insurance Conference, Vancouver, Canada, June 16-18, 2013.
- Type:
Conference Papers and Presentations
Status:
Other
Year Published:
2013
Citation:
Miranda, Mario J., Donald F. Larson, and Kathleen M. Farrin. Differential Effects of Food Security Policies on Subsistence Farmers and the Urban Poor. Presented at the International Food Policy Research Institute - U. of Bonn Conference on Food Price Volatility and Food Security, Bonn, Germany, January 31 to February 2, 2013.
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Progress 01/01/12 to 12/31/12
Outputs
OUTPUTS: I addition to the manuscript that was published (see below), I also developed four new manuscripts: 1. Differential Effects of Food Security Policies on Subsistence Farmers and the Urban Poor - The Cases of Senegal and Ghana. 2. Buffer Stocks, Export Restrictions, and the World Food Price Crisis. 3. A Heterogeneous Agent Model of Aggregate Loan Default in the Presence of Insurable Systemic Risk. 4. Borrowing, Savings, and Insurance and Emergence from Poverty Traps. PARTICIPANTS: Nothing significant to report during this reporting period. TARGET AUDIENCES: The target audience for my work include 1) government agricultural policymakers in the USA and abroad; 2) international economic development practitioners, donors, and research scholars interested in the potential b benefits of formal insurance on the poor of the developing works; 3) private insurers and reinsurers interested in developing private insurance markets in developing countries. PROJECT MODIFICATIONS: Nothing significant to report during this reporting period.
Impacts
1. Differential Effects of Food Security Policies on Subsistence Farmers and the Urban Poor - The Cases of Senegal and Ghana. The analysis provided an improved understanding of the food security problems faced by poor rural farmers and urban laborers who subsist on a generic staple food commodity. We learned more about the relative costs and benefits of different food security policies, including: buffer stock reserves, temporary export bans, transportation and trade infrastructure enhancements, agricultural index insurance, and direct cash transfers to promote food-security among the poor. All policies were found have impacts that depend on whether the poor reside in an urban center or a rural area; benefits at the national level were also found to depend on whether the country is predominantly an importer or an exporter of the staple food commodity. 2. Buffer Stocks, Export Restrictions, and the World Food Price Crisis. In our analysis, we learned how restrictive export policies instituted by exporters during times of low global supplies and high world prices affect global agricultural commodity supply and price stability and how these policies affect the food security of the urban and rural poor in developing countries. 3. A Heterogeneous Agent Model of Aggregate Loan Default in the Presence of Insurable Systemic Risk. We were able to obtain a deeper understanding of the determinants of default and delinquency rates experienced by micro-financial banks that have substantive agricultural loan portfolios and are thus exposed to systemic risk in the form of droughts or other natural disasters. The analysis also demonstrated the potential value of meso-index insurance products to manage the systemic loan default risk borne by such banks 4. Borrowing, Savings, and Insurance and Emergence from Poverty Traps. We obtained a deeper understanding of the role borrowing, saving, and insurance play in an agent's decision to adopt higher yielding but riskier crop practices. In particular, we derived a better understanding of how government policies can be designed to encourage adoption of new technologies among poor farmers and how these policies might help them emerge from poverty.
Publications
- Miranda, Mario J. and Katie Farrin. 2012. "Index Insurance for Developing Countries." Applied Economic Perspectives and Policy.
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Progress 01/01/11 to 12/31/11
Outputs
OUTPUTS: Chen, Shu-Ling and Mario J. Miranda. "The Effects of Crop Insurance Participation on Upland Cotton Acreage Abandonment", Journal Manuscript, submitted to the American Journal of Agricultural Economics. Wang, Hui and Mario J. Miranda. "A Heterogeneous Agent Model of Strategic Credit Card Defaults over the Business Cycle." Working Paper. Chen, Yong, Elena Irwin, Ciriyam Jayaprakash, and Mario J. Miranda. "Regional Growth, Resilience, and Optimal Management in a Coupled Ecological-Economic Model." Working Paper. Svarch, Malena. "A Heterogeneous Household Model of Consumption Smoothing with Imperfect Capital Markets and Income Risk-Sharing." Doctoral Dissertation. Case Studies in Dynamic Heterogeneous Agent Models in Finance and Insurance. PARTICIPANTS: I presented a Pre-conference Workshop, "Applied Computational Economics", at the Annual Meetings of the Agricultural and Applied Economics Association, Pittsburgh, PA, July 23, 2011. I worked with two World Bank teams to perform agricultural sector risk assessments of Ghana and Honduras. TARGET AUDIENCES: Through my work in 2011, I reached audiences in the economic development community as well as officials of government agricultural agencies in various countries through my international work; I reached the community of professional peers and scholars through my pre-conference workshop on applied computational economics. PROJECT MODIFICATIONS: Nothing significant to report during this reporting period.
Impacts
Results have allowed us 1) to assess the costs associated with moral hazard in the U.S. crop insurance program in Southern and Greal Plains states; 2) understand the incentives to default on unsecured consumer debt; 3) understand the dynamic interactions between regional economic growth and environmental degradation, and 4) led to a clearer understanding of how poor farmers in developing countries manage systemic and idiosyncratic risk.
Publications
- No publications reported this period
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Progress 01/01/10 to 12/31/10
Outputs
OUTPUTS: Results have been disseminated via scholarly presentations at the Conference on the Financing Agricultural Value Chains, San Jose, Costa Rica; the School of Business, Technological University of Monterrey, Guadalajara, Mexico; the Department of Economics, University of Guadalajara, Guadalajara, Mexico; at the Masters in Microfinance Graduate Program, University of Bergamo, Bergamo, Italy; the Departments of Economics and Finance, University of Bergamo, Bergamo, Italy; the Designing Index Based Weather Risk Management Programs Workshop, The World Bank, Washington, DC; the Weather Index Insurance Workshop sponsored by the Alliance for Green Revolution in Africa, Cape Town, South Africa; the Conference of the African Association of Agricultural Economists, Cape Town, South Africa; the International Summer School in Economics, University of Los Andes, Bogota, Colombia; and the Agricultural & Applied Economics Association 2010 Annual Meeting, Denver, Colorado. PARTICIPANTS: Nothing significant to report during this reporting period. TARGET AUDIENCES: Managers of agricultural banks, insurers, microfinance organizations, and cooperatives; financial and insurance sector regulators; academic experts in the field of agricultural risk and insurance. PROJECT MODIFICATIONS: Nothing significant to report during this reporting period.
Impacts
Our research has demonstrated how to manage the risk of fire in forests that are employing carbon sequestration credits, and has shown that credits promote the use of risk mitigation strategies; the research should be of interest to forest managers, environmental groups, government agencies devoted to natural resource management and global warming issues. Our research has demonstrated that rural banks in developing countries could benefit substantially from using various forms of index insurance to manage systemic portfolio risk, allowing them to profitably expand their loan operations in rural areas subject to droughts and other natural disasters. This work will be of interest to governmental and non-governmental agencies devoted to economic development in poor countries and the micro financial institutions and small banks serving the rural sectors of those countries. Our research has explained how firms exercise their patents on genetically modified cops. This has lead to a way of valuing patents on genetically modified crops and has provided a deeper understanding of how patent options and market conditions affect the rate at which genetically modified crops will be introduced to agricultural markets. The research should be of interest to bioengineering and biogenetic enterprises developing genetically modified crops, farmers, agribusiness marketers, and government policymakers.
Publications
- Daigneault, A.J., Miranda, M.J., and Sohngen, B. (2010). Optimal Forest Management with Carbon Sequestration Credits and Endogenous Fire Risk. Land Economics. Vol. 86(1):155-172.
- Nadolnyak, D., Miranda, M.J., and Sheldon, I. (2010). Genetically Modified Crops as Real Options: Identifying Regional and Country-Specific Differences. International Journal of Industrial Organization. 92(2):.
- Miranda, M.J. and Gonzalez-Vega, C. (2010). Systemic Risk, Index Insurance, and Optimal Management of Agricultural Loan Portfolios in Developing Countries. American Journal of Agricultural Economics. 92(6):.
- Makaudze, E. and Miranda, M.J. (2010). Catastrophic Drought Insurance based on Remotely Sensed Normalized Difference Vegetation Index for Smallholder Farmers in Zimbabwe. Agrekon. 49(4):.
- Liu, P. (2010) Dependence Structure in Agricultural Index Insurance Design and Product Development. Doctoral Dissertation, Department of Agricultural, Environmental, and Development Economics, The Ohio State University.
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Progress 01/01/09 to 12/31/09
Outputs
OUTPUTS: Results have been disseminated via scholarly presentations at The Annual Meeting of the Applied and Agricultural Economics Association, Centro de Investigacion y Docencia Economicas (Mexico), Pontificia Universidad Catolica del Peru (Peru), University of Kentucky, Universidad de Los Andes (Colombia), Universidad del Pacifico (Peru), Bill and Melinda Gates Foundation. PARTICIPANTS: Nothing significant to report during this reporting period. TARGET AUDIENCES: Managers of agricultural banks, insurers, microfinance organizations, and cooperatives; financial and insurance sector regulators; academic experts in the field of agricultural risk and insurance PROJECT MODIFICATIONS: Nothing significant to report during this reporting period.
Impacts
Work has lead to a deeper understanding of: optimal forest management with carbon sequestration credits, optimal management of rural banks in developing countries, the effects of moral hazard on the U.S. crop insurance program, and the viability of index insurance for rural risk management in Africa.
Publications
- Daigneault, A. J., Mario J. Miranda, and Brent Sohngen. 2009 "Optimal Forest Rotations with Carbon Sequestration Credits and Endogenous Fire Risk." Forthcoming, Land Economics.
- Miranda, Mario J. and Claudio Gonzalez-Vega. 2009 "Systemic Risk, Index Insurance, and Optimal Management of Agricultural Loan Portfolios in Developing Countries." Forthcoming, American Journal of Agricultural Economics.
- Chen, Shu-Ling and Mario J. Miranda. 2009 "Effects of Crop Insurance on Farmer Crop Abandonment", Submitted to American Journal of Agricultural Economics.
- Makaudze, Ephias M. and Mario J. Miranda. 2009 "Catastrophic Drought Insurance Based on a Remotely-Sensed Vegetation Condition Index for Smallholder Farmers in Zimbabwe." Submited to Journal of African Economies.
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Progress 01/01/07 to 12/31/07
Outputs
OUTPUTS: Output includes a) a more accurate method for rating crop insurance in high-risk regions of the USA; b) empirical techniques that may be used to assess the costs imposed by moral hazard in the US crop insurance program; and c) a full set of techniques for the design and actuarial rating of index insurance products in developing countries.
PARTICIPANTS: Individual Colloborators: Shu-Ling Chen, Doctoral Student, The Ohio State University; Jerry Skees, Price Professor of Agricultural Policy, University of Kentucky; Upmanu Lal, Professor of Earth Science, Columbia University (and two of his post-doctoral students); Luis Gonzales, Associate Professor, Monterrey Technical Institute, Mexico. Institutional Colloborators: U.S. Agency for International Development; Risk Managmene Agency, U.S.D.A,; International Research Institute, Columbia University; PartnerRe, an international reinsurer; COPEME, a consortium of microfinance institutions in Peru; various agencies of the Government of Peru.
TARGET AUDIENCES: Major U.S. crop produers; U.S. crop insurers and reinsurers; microfinance institutions and their major international donors; the Risk Management Agency, U.S.D.A and agricultural policymakers, in general; non-governmental organizations devoted to the expansion of financial services in developing countries.
PROJECT MODIFICATIONS: No major changes in approach required.
Impacts
Work has lead to a) deeper understanding of the geographical distribution of benefits from the US crop reinsurance program, b) improved methods for the actuarial rating of crop insurance products in high-risk regions of the USA; c) empirical evidence of the causes of moral hazard in the US crop insurance program; and d) introduction of a USAID-sponsored pilot program for agricultural insurance in Peru.
Publications
- Chen, Shu-Ling. 'Three Essays in Agricultural and Catastrophic Risk Management', Doctoral Dissertation, Department of Agricultural, Environmental, & Development Economics, The Ohio State University, 2007.
- Abedalrazq, K. Kwon, H. Lall, U. Miranda, M.J., Skees,J. 2007. 'ENSO-Based Index Insurance: Approach and Peru Flood Risk Management Application', Water Resources Research, 43(2007)W10416, pp 1-14.
- Chen, S. and Miranda, M.J., 2007. 'Modeling Yield Distribution in High Risk Counties: Application to Texas Upland Cotton', Forthcoming, Journal of Agricultural and Applied Economics.
- Chen, S. Miranda, M.J., 2007. 'Effects of Insurance on Farmer Crop Abandonment.' Presented at the Annual Conference of the American Agricultural Economics Association, Portland, Oregon, July, 2007.
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Progress 01/01/06 to 12/31/06
Outputs
1) We examined how insurance companies participating in delivery of crop insurance would change patterns of portfolio allocation across reinsurance funds in reaction to 2005 Standard Reinsurance Agreement. The returns of insurance companies under the SRA were calculated using a simulation model. A heuristic allocation rule was introduced in order to imitate portfolio allocation strategies of participating companies. The main conclusion of the analysis is that the bulk of changes in portfolio allocations are likely to be caused by the introduction of retained net book quota share reinsurance rather than adjustments in the cession limits and retention requirements for the Assigned Risk Fund. 2) We examined the contract design problem of banks that extend loans to poor borrowers and seek to maximize outreach while remaining financially sustainable. A dynamic model was developed that showed how interest rates are determined based on information about productivity and
diligence characteristics of borrowers, investment opportunities, correlation of business activities, peer monitoring costs, and social sanctions. The results indicated that, relative to the traditional static models, the dynamic model explains better the current experience in individual and group lending in developing countries. 3) ENSO related climate indices were explored for use as a proxy to extreme rainfall in one of the districts of Peru -- Piura. The ENSO index insurance product is designed to aid agricultural damage relief in Peru. Crop losses in the region are highly correlated with floods, but are difficult to assess directly. Specifically, we explored (a) the reliability of the index at different levels of probability of exceedance of maximum seasonal rainfall; (b) the effect of sampling uncertainties and the strength of the proxy's association to local outcome, (c) the potential for clustering of payoffs; (d) the potential that the index could be predicted with some lead
time prior to the flood season; and (e) evidence for climate change or non-stationarity in the flood exceedance probability from the long ENSO record.
Impacts
Work has lead to a) deeper understanding of the geographical distribution of benefits from the US crop reinsurance program and 2) introduction of a USAID sponsored pilot program for agricultural insurance in Peru.
Publications
- Vedenov, D.V., Miranda, M.J., Dismukes, R., and Glauber, J.W. 2006. Portfolio Allocation and Alternative Structures of the Standard Reinsurance Agreement, Journal of Agricultural and Resource Economics.
- Katchova, Ani L., Mario J. Miranda, and Claudio Gonzalez-Vega. 2006. A Dynamic Model of Individual and Group Lending in Developing Countries. Agricultural Finance Review.
- Khalil, Abedalrazq, Hyun-Han Kwon, Upmanu Lall, Mario Miranda, Jerry Skees. 2007, forthcoming. ENSO-Based Index Insurance: Approach and Peru Flood Risk Management Application. Water Resources Research.
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Progress 01/01/05 to 12/31/05
Outputs
We examined the potential tradeoffs and complementarities that exist between inter-year self-insurance involving saving and borrowing and intra-year market insurance employing annual price and yield risk contracts and futures and options contracts. The analysis indicated that self-insurance plays significant role in optimal farm risk management as it enables the farm household to spread the effects of income shocks across time, thereby offering an attractive alternative to the use of standard harvest-time price and yield risk contracts. Self-insurance becomes more attractive relative to standard risk contracts if the cost of credit, the subjective discount rate, and the degree of risk aversion are low.
Impacts
The research is expected to challange conventional notions regarding the usefulness of traditional crop insurance and options and futures contracts in risk management, leading to a rethinking of current government policies aimed at promoting risk management practices based on these instruments.
Publications
- No publications reported this period
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Progress 01/01/04 to 12/31/04
Outputs
We have submitted two manuscripts for publication on the actuarial performance of the US crop reinsurance program. We also initiated two international projects, in Peru and Bolivia, aimed at developing markets for catastropic agricultural insurance based on El Nino and rainfall indeces.
Impacts
The international projects are expected to expand the risk management alternatives available to small and medium sized farmers, thereby improving their economic welfare.
Publications
- Vednov,D. V., Miranda,M. J., Dismukes,R. R., Glauber,J. W., 2004. Economic Analysis of Standard Reinsurance Agreement, forthcoming Agribusiness Finance Review (2005).
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Progress 01/01/03 to 12/31/03
Outputs
No progress to report this year.
Impacts
No Impact
Publications
- No publications reported this period
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