TO DUAL OR NOT TO DUAL?

Research Methods/ Statistical Methods,

HEDGING AND PRODUCTION DECISIONS UNDER A LINEAR MEAN-VARIANCE PREFERENCE FUNCTION

A firm model of production and hedging decisions is developed using a mean-variance preference function. Comparative static analysis of the model generates a number of testable hypotheses. For example, the influence of price risk, production risk and hedging cost on the optimal level of production and hedging is analyzed in the framework.Farm Management,

Agricultural Precautionary Wealth

Using panel data, the relationship between income uncertainty and the stock of wealth through precautionary saving is examined. Evidence from Kansas data is consistent with the precautionary saving motive in that farm households facing greater uncertainty in income maintain larger stocks of wealth in order to smooth consumption. These results are found by regressing net worth against measures of permanent income (life-cycle income), measures of uncertainty, and demographic variables.precautionary saving, precautionary wealth, risk, Risk and Uncertainty,

Agricultural Market Structure, Generic Advertising, and Welfare

This analysis begins with a definition and discussion of productive advertising. Then, following Dixit and Norman, persuasive advertising is used to study the welfare effects of generic advertising by marketing orders. The study first examines horizontal competition when the competing advertiser is a monopoly, and results show that the socially optimal level of advertising for a competitive marketing order is positive only if advertising raises monopoly output. Next, advertising choices of a marketing order which sells its output to a monopolistic distributor are considered. If the distributor is a monopolist, then marketing order advertising raises welfare. This finding is in marked contrast to the results for the horizontal case studied by Dixit and Norman.advertising, market structure, welfare, Marketing,

AN ANALYSIS OF THE ROLE OF FUTURES PRICES, CASH PRICES AND GOVERNMENT PROGRAMS IN ACREAGE RESPONSE

An integrated investigation of futures price, cash price, and government programs is presented in the context of an econometric model of acreage supply response for U.S. corn and soybeans. The analysis refines the role of different sources of price information in the farmers' acreage decision. It is found that the government corn support price program plays a major role in corn and soybean production decisions. Also, the results indicate that futures prices are not good proxies for expected future cash prices in the presence of government programs. This raises questions about the information efficiency of futures prices when government intervenes in the market place.Crop Production/Industries,

MONEY ILLUSION, GORMAN AND LAU

Any demand equation satisfying Lau’s (1982) Fundamental Theorem of Exact Aggregation and 0° homogeneity in prices and income will have a Gorman (1981) functional form for each income term. This property does not depend on symmetry or adding up. The implications of this result are illustrated by an extensive example.Demand, exact aggregation, functional form, homogeneity

Imperfect Price Deflation in Production Systems

Numeraire prices that are measured with error create challenges for econometric estimation. A straightforward approach for a model with linear input demands, such as generated from a quadratic normalized profit function, is proposed where the numeraire price is measured with error. Numeraire measurement error is likely because expected output price is measured imperfectly by actual output price. An approach using generalized method of moments is developed to estimate such errors-in-variables systems that avoids use of extra-sample data or additional structural specifications. Monte-Carlo examination of small sample properties shows promise. Measurement error is statistically significant using aggregate U.S. agricultural data

THE ECONOMIC VALUE OF CONSUMER INFORMATION: A SELECTED, ANNOTATED BIBLIOGRAPHY

This annotated bibliography contains references on the economic value of information. The citations are listed under three topic areas: Consumer Surplus and Welfare Theory, Stabilization and Economic Welfare, and Information and Efficiency. With a few exceptions, books and lengthy reports are not annotated. Also not annotated is some literature which is superceded or judged ancillary to these topics