Estimating Supply Response in the Presence of Farm Programs

Lee, David R.; Helmberger, Peter

doi:10.2307/1240670

Cited by 114 publications

(32 citation statements)

References 13 publications

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“…Over the years, additional variables have also been used to explain the change in agricultural land use. These variables include output price relative to a variable input price index (Lee and Helmberger 1985;Tweeten and Quance 1969), expected price (Gardner 1976), acreage value (Bridges and Tenkorang 2009), and expected net returns (Chavas and Holt 1990;Davison and Crowder 1991). Davison and Crowder argue that using expected net returns to explain acreage decisions is better than using price alone because net returns account for changes in input prices.…”

Section: Introductionmentioning

confidence: 99%

Agricultural Land Elasticities in the United States and Brazil

Barr

Babcock

Carriquiry

et al. 2011

Applied Eco Perspectives Pol

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The elasticity of aggregate supply is one key to understanding the degree to which policyinduced increases in demand for biofuel feedstocks or agricultural CO2 offsets will result in higher prices or expanded supply. In this paper we report land supply elasticities for the United States and Brazil estimated directly from the observed changes in cropland and estimated changes in expected returns. The resulting aggregate implied land-use elasticities with respect to price are quite inelastic in the United States and more elastic in respectively AbstractThe elasticity of aggregate supply is one key to understanding the degree to which policyinduced increases in demand for biofuel feedstocks or agricultural CO 2 offsets will result in higher prices or expanded supply. In this paper we report land supply elasticities for the UnitedStates and Brazil estimated directly from the observed changes in cropland and estimated changes in expected returns. The resulting aggregate implied land-use elasticities with respect to price are quite inelastic in the United States and more elastic in Brazil (0.007-0.029 and 0.382-0.895, respectively). However, with pasture land included in Brazil, implied elasticities become much less inelastic (0.007-0.245).

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Section: Introductionmentioning

confidence: 99%

Agricultural Land Elasticities in the United States and Brazil

Barr

Babcock

Carriquiry

et al. 2011

Applied Eco Perspectives Pol

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“…In recent years considerable research, both theoretical and applied, has been aimed at improving the specification and estimation of aggregate agricultural supply relationships (e.g., Eckstein 1985; Lee and Helmberger 1985;Choi and Johnson 1987). Although many issues have been investigated, two recurring themes have been the manner in which agents form expectations about future prices, and the effects of revenue or price uncertainty on production decisions.…”

Section: Introductionmentioning

confidence: 99%

Risk Behavior and Rational Expectations in the U.S. Broiler Market

Aradhyula

Holt

1989

American J Agri Economics

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This study examines the empirical implications of extending the rational expectations hypothesis (REH) to include price uncertainty. Unlike previous studies, a general estimation framework that incorporates both the restrictions on structural parameters and the variance-covariance terms is developed. A new time series approach known as GARCH processes is also used to generate time-varying expectations of both the means and the variances of exogenous variables in the REH model with risk.The empirical application is with a quarterly model of the U.S. broiler industry; the results indicate that the rational expectation of price variance is an important determinant of broiler supply. Additionally, a formal test indicates that the restrictions implied by the REH cannot be rejected. The restricted model also compares favorably with an unrestricted version that uses instruments for the mean and the variance of expected prices.

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“…Much of the literature addressing the effect of government programs on supply response to market price has attempted to control for government programs in the econometric analysis (e.g., Houck and Ryan 1972;Lee and Helmberger 1985). McDonald and Sumner (2003) argue that these approaches do not allow recovery of the "structural" supply parameters that are not conditional on existing government programs.…”

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confidence: 99%

The Effects of Policy Expectations on Crop Supply, with an Application to Base Updating

Hendricks

Sumner

2014

American J Agri Economics

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We develop a dynamic model to assess the effects of policy expectations on crop supply and illustrate the approach with estimates of the effects of base updating in U.S. crop programs. For corn and soybeans in the Corn Belt, the effect of base updating is relatively small because relevant crop alternatives are subject to similar policies and the alternatives are substitutes in production. Increasing acreage of one program crop to capture future payments from base updating reduces future payments from the alternative crop. We also use our model to assess the effect of base updating on acreage response to prices.

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Estimating Supply Response in the Presence of Farm Programs

Cited by 114 publications

References 13 publications

Agricultural Land Elasticities in the United States and Brazil

Agricultural Land Elasticities in the United States and Brazil

Risk Behavior and Rational Expectations in the U.S. Broiler Market

The Effects of Policy Expectations on Crop Supply, with an Application to Base Updating

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