Economics - Doctoral Theses

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The competitiveness of the Irish dairy industry in the global market: farm to trade
(University College Cork, 2023) Cele, Lungelo Prince; Hennessey, Thia; Eakins, John; Thorne, Fiona; Teagasc
The removal of the EU milk quota in 2015 has increased the exposure of the Irish dairy industry to international competitors and has raised the question of how competitive is the Irish dairy industry in the global market. The purpose of this thesis was to measure Irish dairy sector –competitiveness by examining the interaction between the farming system and the trading system of processed dairy products in the global market. In the context of the removal of the EU milk quota in 2015, it examined the competitiveness trends and rankings of the Irish dairy sector at the farm and trade levels, relative to selected European Union (EU) Member States. In 2019, Ireland was the third-largest exporter of butter in the world butter market and Irish butter prices were more volatile than other Irish dairy products. Despite the significance of butter in the dairy industry, empirical research that examines the market price dynamics and international competitor behaviour in the butter market has remained scarce. The thesis contributed to the objectives of the Food Wise 2025 and the Food Vision 2030 policies by examining the dynamics between farm milk and butter prices (linking farm and trade levels) to ensure that there is a transfer of benefits from trade to farmers through price transparency. Competitiveness indicators including partial productivity measures and accountancy-based indicators were used for farm competitiveness, and net export market share and normalised revealed comparative advantage were used for export competitiveness. A stochastic meta-frontier approach was adopted for comparing Irish regional farm technical efficiencies (proxy for farm competitiveness). The vector error correction model was applied to test the extent to which changes in competitor prices and farm milk prices had an impact on Irish butter prices. It was also used to measure the competitiveness integration relationship between global butter competitors. Amongst the countries examined, Ireland had the highest growth in partial productivity indicators and was ranked first with the lowest total costs and cash costs per kg of milk solids post-quota amongst the main European competitor countries examined. The potential challenge for Irish dairy farmers is how to lessen the relatively high land and labour costs to come in line with the main European competitor countries, which can limit farm competitiveness in the long-run. Based on the Irish regional farm technical efficiencies, the findings suggested that policies aiming to promote labor use and soil quality improvement in the East region would be useful for improving efficiency in that region post-quota. The findings also suggested that policies that related to discussion groups and management of herd size in the South region would also be useful for improving efficiency in that region post-quota. Some farms expanded beyond their optimal scale leading to a reduction in efficiency levels, especially in a region like the South West. That pointed to the need to tailor farm advice and promote caution in relation to farm expansion decisions. The regional growth patterns and insights may be used for adapting the national policy frameworks to regions in policy dialogues, i.e. to achieve the Food Vision 2030 with ambitious targets set for expansion. While Irish dairy products, such as butter and powders, have demonstrated growth potential in competitiveness post-quota, other products, i.e. cheese and liquid milk have declined. Despite the growing competition in the global butter market, Ireland became the second most competitive country in the world and was advancing rapidly at the time of analysis. Irish butter was the only Irish dairy product that had maintained a comparative advantage. Irish butter prices were more responsive to shocks in New Zealand butter prices and Irish farm milk prices in the long-run with positive bidirectional causality effects. Based on the findings, Irish dairy farmers and processors were more susceptible to pricing decisions made by international butter processors. Irish butter exports were found to be less susceptible to competitiveness changes in Belgian butter exports and more sensitive to competitiveness changes in NZ butter exports. Consequently, the key players in the Irish dairy industry can now better position themselves in the global dairy market, recognising the competitiveness dynamics of the different dairy products and their competitors. The thesis policy recommendations and areas for future research were presented in the conclusion section.
Mutual fund performance: timing and persistence
(University College Cork, 2023-04-24) Yin, Zhengnan; O'Sullivan, Niall; Sherman, Meadhbh; University College Cork; China Scholarship Council
We apply the nonparametric methodology of Jiang (2003) to examine whether bond mutual funds can time the bond market by adjusting their portfolios' market exposure based on anticipated market movement. This approach has several advantages over the widely used regression-based tests such as Treynor-Mazuy(1966) and Henrikkson and Merton (1981). Using a large sample free of survivorship bias from the US, UK, and China, we find some evidence of positive market timing of bond funds at the individual fund level. On average, bond funds show neutral to slightly negative market timing ability. After controlling for public information, we find that a number of bond funds successfully time the market based on private timing signals. In terms of categories, we find strong evidence of positive market timing for Government bond funds as a group, consistent with the findings of Huang and Wang(2014). We apply a nonparametric methodology to test the liquidity timing skills across individual equity mutual funds in three countries(the US, UK, and China). We calculate the monthly stock market liquidity using simple averages and the asymptotic principle analysis(APCA) method based on six stock liquidity measures. Using an across-measure of market liquidity from APCA, we find a relatively small number of funds demonstrate statistically positive liquidity timing skills at a 5% significance level for the period of 2000-2021. After controlling the lagged market liquidity information, we still find a small number of mutual funds that have conditional liquidity timing ability using the nonparametric method. We analyze the performance of asset allocation funds based on the best-fit multifactor model, including both stock and bond market factors. Using US and UK data, we find asset allocation funds do not outperform their benchmarks on average. We use both Treynor and Mazuy(1966) and Henrikkson and Merton (1981) methods to test the stock and bond market timing ability of allocation funds. As groups, US and UK asset allocation funds have neutral to perverse stock market timing ability. However, UK allocation funds have positive bond market timing ability. At the individual fund level, there is a range of funds that demonstrate positive stock market timing as well as bond market timing ability for both markets. We then test the performance persistence of these funds using an innovative bootstrap method to control for the non-normality issue in fund returns. We find little evidence of performance persistence for US funds for both decile portfolios and small-size portfolios. There is some evidence of performance persistence for UK funds using decile and small-size portfolios.
An assessment of the impact of land structure on the economic performance of dairy farming in Ireland
(University College Cork, 2021-11-11) Bradfield, Tracy; Hennessy, Thia; Butler, Robert; Dillon, Emma; Teagasc
The European Union (EU) milk quota was abolished in 2015 leading to an increased demand for land for dairy farming in Ireland. Between 2014 and 2019, raw milk production increased by 42 percent in Ireland (Bradfield et al., 2021a). However, the land market in the Republic of Ireland is restricted by low mobility. The Republic of Ireland’s agricultural land market experiences very low levels of sales with less than 1 percent of agricultural land sold each year (CSO, 2020a). This is attributed to a strong desire of people in Ireland to keep land in the family name. Ireland also has a low level of land rental. To increase land rental on secure leases, the Irish government increased incentives in 2015 for landowners to rent out their land on long term leases. Using econometric techniques applied to farm-level Teagasc National Farm Survey data, which is part of the Farm Accountancy Data Network, this research provides contributions to the study of agricultural land markets that focus on three main research questions. These include an assessment of the factors that influence the decision to rent in agricultural land and the determinants of profit among renting dairy farms in Ireland, the effect of land fragmentation on dairy farm technical inefficiency, and the impact of land lease duration on dairy farm investment. Research findings show that dairy farms are using the rental market to improve profitability. Farm characteristics such as a small size, a high stocking rate, the presence of a successor and high levels of hired labour increase the likelihood of entering a rental agreement. Renting in land and a less fragmented farm structure reduce dairy farm technical inefficiency. Dairy farms can reduce their technical inefficiency by either renting or purchasing land parcels that are adjoining their current land resources. The results also indicate that farms with a high portion of rented land, which is rented on long-term leases, invest more in their herd and capital. This suggests that long-term land rental is a feasible means to create certainty over investments when land purchases are not possible. In conclusion, these findings highlight the benefits of an active land market to individual farmers and the overall dairy sector, which lends support to policy measures to improve the rental market and thus land mobility. Although the number of agricultural land rental agreements has risen since the removal of the EU milk quota and the increase in tax incentives for long-term land leases, Ireland continues to have the lowest level of land rental in the EU, at 19 percent, compared to an average of 54 percent (European Commission, 2018). This research recommends a review of the structure of current tax incentives for long-term leases because the existing thresholds do not maximise incentives for farmers to rent out their land. Other contributions of this research include a greater understanding of markets with an inelastic supply curve, the role long-term leases can play in improving tenure security, the importance of an extensive use of land fragmentation indicators when studying farms’ structures, and the requirement for market intervention to improve land mobility. Topics for further research are also outlined.
Macroeconomic and financial leading indicators of economic activity and sovereign bond yields: a practitioners' perspective
(University College Cork, 2021-09-01) Brady, Austin T.; Ryan, Geraldine; Kavanagh, Ella
This thesis examines how effective practitioners are at selecting leading indicators of economic activity and sovereign bond yields. The research is conducted prior to and in the aftermath of the Global Financial Crisis (GFC) in three countries: Germany, the United Kingdom (UK) and the United States (US). Empirical research such as Stock and Watson (1989, 2002a, 2002b, 2004, 2007), Artis et al (2005), Schumacher (2007), Ludvigson and Ng (2007, 2009) forecast economic activity and sovereign bond yields in the three countries. The aforementioned research has the following features: (i) use large datasets; (ii) use similar indicators across countries and time periods; (iii) have datasets that cover periods prior to the GFC and (iv) datasets that are not pre-screened for leading properties. This thesis focuses on more refined datasets, selected by two sets of practitioners: economist practitioners and fixed income practitioners. We address any potential changes impacting economic activity and sovereign bond yields by creating datasets for the period in the aftermath of the GFC. In addition, the datasets selected by economist and fixed income practitioners are pre-screened for leading properties, with only leading indicators used in the analysis. To examine the effectiveness of practitioners, this thesis develops a unique primary dataset for the three countries, based on the input of financial market practitioners, employed professionally by financial institutions. Face-to-face structured interviews with a total of 35 practitioners working in the International Financial Services Centre (IFSC) located in Dublin, Ireland, shows that whilst both sets of practitioners have access to large databases, they use smaller refined datasets when forecasting, compared to those previously examined in the literature. Practitioners operate within high-paced environments where fast decision making is key. Two types of practitioners are identified to create two distinct datasets for economic activity and sovereign bond yields: economist practitioners and fixed income practitioners. Economist practitioners use a variety of information to make forecasts of economic activity and fixed income practitioners use the latter and market-specific information to forecast sovereign bond yields. Both types of practitioners operate in real time, high-paced environments, often on behalf of clients. Economist practitioner and fixed income practitioner datasets are examined for leading properties in three time periods: the period prior to the GFC, the period during the GFC and the aftermath of the GFC. The objective is to determine whether both sets of practitioners are successful at selecting leading indicators; whether practitioners react to changes in the business cycle when selecting additional leading indicators; whether specific indicators lead for certain periods and whether commonalities exist among leading properties selected in the three countries under examination. Our findings find evidence of the following: economist and fixed income practitioners are better at selecting leading indicators in periods of more certainty; both sets of practitioners react to changes in the business cycle when selecting leading indicators; indicators lead for specific periods; there is a small amount of indicators that do not lead economic activity and sovereign bond yields and there is no common set of indicators that lead either economic activity or sovereign bond yields across the three countries. Given that we know economist and fixed income practitioners select leading indicators, we need to determine how accurate they are when forecasting economic activity and sovereign bond yields. In order to determine this, we must create leading composite indices for each period. We create a composite index based on the leading indicators selected by both economist practitioners and fixed income practitioners, and we test the out-of-sample forecasting capacity of this index. For each country, a total of two composites are created for the 2005-2008 period, two (one composite is created for the fixed income practitioner dataset) for the 2008-2013 and one composite for the 2013-2018 period. Our results are compared to a series of benchmarks. The benchmarks used are the Autoregressive (AR) and Random Walk (RW) models. However, we include two additional composites for economic activity (the OECD and the Conference Board (CB)) and one additional index for sovereign bond yields (the Barclays bond index). The results show that the economist and fixed income practitioner composites, for Germany and the UK in particular, have equal predictive ability relative to the Barclays benchmarks in the pre-Lehman and recovery periods. The results from this thesis show that practitioners add considerable value in their indicator selection. The results from this thesis have a number of important implications going forward for practitioners. The first is that the datasets selected by both economist and fixed income practitioners should statistically examine the leading properties of their datasets, prior to forecasting economic activity and sovereign bond yields. The results show that practitioners should periodically evaluate whether the indicators practitioners use are leading instead of making the assumption that they lead. Secondly, given the robustness of the static composites constructed using PCA, practitioners should use the steps outlined by the OECD (2008) to construct leading indicator composites. Thirdly, practitioners may improve economic activity and sovereign bond yield forecasts by using the static PCA approach to construct composites.
The constructive developmental impact of effectuation on practice
(University College Cork, 2020-06) Lyons Coakley, Maria; Doyle, Eleanor
Effectuation is a non-predictive decision-making logic of control in uncertain situations, that begins with given means and is a set of techniques, principles and criteria to generate and select between possible outcomes that can be created with the means (Sarasvathy 2001, 2008). This Portfolio focuses on the constructive developmental impact of effectuation on practice, where constructive development was utilised as an apparatus of thought. Research was conducted through first-person action research to address the research question, which focused on the growth in complexity of meaning-making and impact on lived experience through effectuation. Merging the concepts of effectuation and constructive development is novel. The combination represents a contribution linking personal and professional development to action and practice. Through understanding the adaptive challenges of transitioning to effectuation, insight is generated on how the transition was made and its impact on practice. Impact is identified by analysing changes across four domains i.e. cognitive, inter-personal, affective and intra-personal (psychological quadrants). The Portfolio is organised into three essays, reflecting phases in the action research cycles and professional development journey. Essay One is a professional development review and is the pre-step and construction phase of the action research, which defines the research question and reveals the developmental focus. This essay demonstrates the forming and dominance of a causal and reductionist way of knowing. A developmental agenda of challenging and expanding meaning-making through exploring the perspectives of effectuation and systems-thinking is identified. Essay Two reports on the planning and observation phase of the action-research. It demonstrates how actively engaging with complexity, uncertainty theories and effectuation through the lens of systems-thinking challenged meaning-making. Engaging with these perspectives recognises the limitations of causal logic, particularly in a VUCA world. It identifies the strength of the practitioner attachment to goal-orientation such that practicing effectuation was a developmental challenge. Essay Three reports on the transforming practice phase of the action-research inquiry, which involved challenging assumptions, goal-orientation and domination of internal and external authorities. Through practicing effectuation, Essay Three demonstrates constructive-developmental and phenomenological differences between operating and being effectual. The Portfolio concludes with key findings for practitioners, including how being effectual supports development of mental complexity in modern and post-modern VUCA environments. It reports on how practitioners may underestimate how self-created constructs, external influences and the intra-personal quadrant are lenses impacting on their view of the world. Those interested in professional development may think that the external authority is the one to focus on, to develop an independent way-of-knowing, however this research found the subjective internal authority was also restrictive. The research has implications for organisations, such that liberating leaders and teams to be effectual could have an impact on developing a culture of innovation, adaptability, exploration and creativity.

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