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The European Sugar Policy Following the GATT Agreements. An Analysis of Some Development Scenarios by Patricia Combette, Éric Giraud-Héraud and Vincent Réquillart Much criticism has been made of the common organisation of the sugar market based on a quota system. The purpose of this paper is to present the results of a study of possible reforms to the common organisation of the sugar market. The presentation of its COM characteristics highlights the role of taxes in production choices and in the transmission of global price variations on the internal sugar market. The article studies the effect on producer surpluses of a reduction in the European quota, the creation of a single quota and the effect of adapting to the constraints imposed by the GATT. A reduction in the overall quota to comply with these constraints brings about an increase in producer surpluses.

The Common Organisation of the Banana Market in the European Union: Impact of the Size of the Tariff Quota Applied to Dollar and Non-Traditional ACP Bananas by Hervé Guyomard, Nadine Herrard, Catherine Laroche and Chantai Le Mouël On 1 July 1993, the European Union (EU) finally set up a common banana market. The new common organisation of the market (COM) replaces a host of complex and heterogeneous national policies, which were incompatible with the single market. The new regulations focus essentially on i) setting a tariff quota in the EU for Latin American and non-traditional ACP (Africa, Caribbean and Pacific countries) bananas and ii) the concepts of partnership between trade in community and traditional ACP bananas on one side and trade in Latin American bananas on the other side. The purpose of this article is twofold. Firstly, it proposes a simplified framework for analysing the way in which the international banana market functions in a COM set-up in the EU. Secondly, it analyses the sensitivity of market equilibria to the size of the EU tariff quota on Latin American and non-traditional ACP bananas based on simulations made using an international banana market partial equilibrium model.

Measuring Productivity Using Distance Functions by Ahmed Barkaoui, Jean-Christophe Bureau and Jean-Pierre Butault Productivity measures are highly sensitive to the conventions adopted to measure service flows and fixed factor utilisation costs. An approach based on distance functions can measure productivity without using data on the prices of either factors or products. This method consists of estimating Malmquist indices. It is based on less restrictive assumptions than the traditional methods and sidesteps many problems regarding data and conventions for the costs of the use of capital, family labour and the earth. This method is applied to measure the "agricultural" sector's productivity in 12 countries. An empirical comparison with traditional indices highlights the advantages and disadvantages of this approach.

Applying MLP Artificial Neural Networks to Forecasting the Price of a TVaded Option by Antonio Fiordaliso This article looks at forecasting the call price for a three-month Eurodollar (ED3) contract. The aim is to set up a neural forecasting model that can eventually be incorporated into a fuzzy expert system for active trading and hedging of option portfolios. The article details some of the problems and techniques involved in setting up ANN (Artificial Neural Network) models for a forecast based on one and then several explanatory variables. The neural architecture considered is that of the multi-layer perceptron (MLP). The neural forecasts are compared with those obtained using other forecasting techniques.

Firms and In-Service Training by Emmanuel Delame and Francis Kramarz The law of 16 July 1971 provides for firms of at least 10 employees to contribute to financing in-service training. Although the largest and most skilled firms spend more than the legal minimum (1.2% of their payroll in 1987), others pay this sum to the government or specialised organisations without spending anything on training. Between these two extremes are the firms that spend exactly the minimum sum on training. This study examines 495 industrial firms to show the consistency of training patterns over time (those that have trained will train and those that have not trained are unlikely to do so in the future). Only the firms that train a great deal play their game well with higher profit and increased productivity for the skilled worker.

The NAIRU in France: The Shortcomings of a Phillips Curve by Yannick L'Horty and Florence Thibault The Phillips curve has long been the preferred instrument for explaining the link between wages and unemployment. Its implicit NAIRU level theoretically provides a valuable guide for economic policy in that it can be used to assess the respective opportunities of supply policy and demand policy. The article opens with a review of this relation's given bases and its main implications. It then discusses its shortcomings in a situation where the unemployment rate remains sustainably high and goes on to highlight the advantages of a wage curve representation in level. As an example, an evaluation of the French NAIRU is made based on a standard price- wage loop specified in terms of growth rates without an error correction term, i.e. in line with standard modeling practice. The NAIRU thus evaluated shows no upward trend since 1 970. As a linear combination of stationary variables, it is itself a stationary variable and fluctuates around a constant that by definition corresponds to the average level of actual unemployment. Consequently, no reliable measure of equilibrium unemployment can be found to satisfy Phillips' initial aim, which was to justify the intervention of economic policy.

The Determinants of Equilibrium Unemployment: Estimating a WS-PS Model by Yannick L'Horty and Nicolas Sobczak This study proposes an evaluation of equilibrium unemployment in France based on an estimation of a WS-PS model using quarterly macroeconomic data. First of all, the theoretical determinants of equilibrium unemployment are discussed in relation to a wage bargaining model with extremely general specifications. A multivariate estimation of a minimal model is then used to show two cointegration relations, from which the structural forms of the price and wage equations are identified. The minimal model is subsequently used as a basis to explore the role of a number of variables likely to contribute to the formation of equilibrium unemployment. Examples of these variables are the tax and social security contributions wedge, terms of trade, unemployment benefits and the mismatch. Univariate and multivariate estimates made using an enhanced model therefore reveal the determining role of the wage wedge, the slowdown in productivity gains and, to a lesser extent, replacement earnings in the rise in equilibrium unemployment in France.

An Estimation of Employment and Wage Equations at Sector Level Using Quarterly Data by Jean-Pierre Laffargue and Yannick L'Horty This article estimates two labour demand and labour cost setting equations using French quarterly data for the different market sectors. These equations are based on a theoretical model of monopolistic competition among firms and wage bargaining between firms and unions. The estimating methods make allowance for recent developments in univariate cointegration theory and include a number of specification and coefficient stability tests. Employment appears to be extremely rigid and its labour cost elasticity is negative. The cost of labour is fairly flexible and increases with the replacement rate and the wage wedge, but decreases with the progressive increase in the wage wedge. The effects of technological change and the length of the working week on these two variables are also studied.

Are Changes in Activity Rates Solely Short Run? by Alain Jacquot A macroeconomic analysis of the labour supply typically finds short-run changes in activity rates, i.e. activity rates sensitive to (short-run) variations in unemployment during the cycle. The econometric conclusions of this article suggest that activity rates are also sensitive in the long run to (lasting) changes in the unemployment rate. The labour supply could consequently increase more in the future than inferred by the working population trend forecasts if the equilibrium unemployment rate were to fall or even simply stabilise.

Matching Job Offers and Unemployment in France by Martial Maillard This paper develops an econometric study of the matching process for job offers and the unemployed on the French labour market. An aggregate analysis is made considering the hiring of full-time employees on long-term contracts. It uses monthly data relating to the period from 1974 to mid-1992. The hypothesis of the constancy of the matching function's returns on scale is not rejected, while a decrease in the efficiency of the labour market's functioning since 1974 is observed.