TESTING DYNAMIC MODELS OF THE FARM FIRM

In this paper two models of dynamic firm behavior are fitted to a data set developed from business records of Indiana dairy farms. The parametric restrictions implied by a cost-of-adjustment model are rejected. A less restrictive, disequilibrium model is accepted; this is a model of partial and interrelated adjustment among inputs and outputs. The results suggest that adjustment in quasi-fixed inputs is slow affecting the adjustment in variable inputs and outputs.Agricultural Finance, Livestock Production/Industries,

World Agriculture and Climate Change: Economic Adaptations

Recent studies suggest that possible global increases in temperature and changes in precipitation patterns during the next century will affect world agriculture. Because of the ability of farmers to adapt , however, these changes are not likely to imperil world food production. Nevertheless, world production of all goods and services may decline, if climate change is severe enough or if cropland expansion is hindered. Impacts are not equally distributed around the world.climate change, world agriculture, Environmental Economics and Policy,

AGRICULTURAL POLICY REFORM IN THE WTO: THE ROAD AHEAD

Agricultural trade barriers and producer subsidies inflict real costs, both on the countries that use these policies and on their trade partners. Trade barriers lower demand for trade partners' products, domestic subsidies can induce an oversupply of agricultural products which depresses world prices, and export subsidies create increased competition for producers in other countries. Eliminating global agricultural policy distortions would result in an annual world welfare gain of $56 billion. High protection for agricultural commodities in the form of tariffs continues to be the major factor restricting world trade. In 2000, World Trade Organization (WTO) members continued global negotiations on agricultural policy reform. To help policymakers and others realize what is at stake in the global agricultural negotiations, this report quantifies the costs of global agricultural distortions and the potential benefits of their full elimination. It also analyzes the effects on U.S. and world agriculture if only partial reform is achieved in liberalizing tariffs, tariff-rate quotas (limits on imported goods), domestic support, and export subsidies.Agricultural and Food Policy, International Relations/Trade,

Estimation and hypothesis testing using dynamic models of firm behavior

Recent applications of dynamic firm models have utilized data aggregated across commodities and firms. This approach has several shortcomings: (i) restrictive conditions must be applied to ensure exact aggregation across firms, (ii) the estimated dynamic structure is unlikely to represent any of the sub-aggregates, and its is likely to differ from the summed sub-aggregate structures, and (iii) degrees of freedom considerations dictate relatively simple models which do not capture complex dynamic relationships. This thesis develops a panel data set from business records of Indiana dairy farms for the years 1971 to 1982. It distinguishes two capital stocks (machinery and dairy herd), two outputs (crops and milk), and four inputs (hired labor, crop, livestock and other inputs). A cost of adjustment model, derived from a quadratic value function, is fitted to this data. The implied parametric restrictions are rejected implying that intertemporal profit maximization is not consistent with observed behavior. A less restrictive, disequilibrium model is accepted at a 0.025 level of probability. This is a model of partial and interrelated adjustment among commodities with long run behavior characterized by a quadratic profit function. Estimates of the adjustment coefficients suggest: (i) the own-adjustment coefficient for the dairy herd (0.448) is twice as large as that for machinery, (ii) expansion in any capital stock reduces the short run demand for the other stock, and (iii) expansion in machinery temporarily reduces crop production as well as short run demands for hired labor, and crop and livestock inputs. Sample means of adjustment speeds (i.e., that portion of desired adjustment accomplished in a year) were computed over the 1971-82 period. Most of them differed markedly from the own-adjustment coefficients, because cross-adjustment effects, which are taken into account in the computation of adjustment speeds, were large. Extreme cases are milk production and the dairy herd; their adjustment speeds were equal to $-0.03$%. Adjustment in crop production and machinery was not significantly affected by disequilibrium in the dairy herd; their adjustment speeds equalled 90% and 23%, respectively. Hired labor, crop and livestock inputs were significantly affected by disequilibrium in capital stocks, with adjustment speeds equal to 79%, 57%, and 67%, respectively

An analysis of U.S. regional implications of tariff reductions under the Doha Round of negotiations

Simulated effects of tariff reductions under the Doha Round negotiations are analyzed with emphasis on their regional implications in the United States. The simulations are performed with an applied general equilibrium model of the U.S. economy, which has 13 single-output industries and 11 regions. Ten regions represent the U.S. economy; the eleventh region represents the rest of the world. The model is calibrated to recent data for domestic-world price gaps

Identifying agricultural investment opportunities in sub-Sahara Africa - A global, economy-wide analysis

Sub-Saharan Africa (SSA) is the most important development challenge of the 21st century. Poverty is higher in most African countries than elsewhere in the developing world. According to the recently published Report of the Commission for Africa without economic growth, Africa cannot make substantial reductions in poverty. Among three proposed policy options the Commission recommends that African countries invest significantly in agriculture. Policy makers in the region face a dilemma: which sector within the agriculture will yield the highest return for a given budget? This paper simulates productivity gains in sub Sahara African agriculture subject to trade-offs between gains in crops and gains in livestock. The simulated results suggest that for sub-Sahara Africa, as a whole, research in crops would generate higher welfare benefits than any sharing of research funds between crops and livestock. Even under the most favorable conditions for livestock, sub-Sahara Africa gains more from research in crops than from research in livestock. This result does not mean that investing in livestock and other non traditional, high-value commodities is not important. In many successfully transforming economies in SSA, domestic and foreign demand for these products is growing rapidly providing ready market outlets for increased domestic production for these high value commodities

Effects of EU Sugar Trade Reforms on Poor Households in Africa: A General Equilibrium Analysis Presentation

This paper analyses the effects of the EU sugar reforms on poor households in African countries. Our analysis will be based on a modified version of the GTAP computable general equilibrium (CGE) framework. This is a preliminary analysis of a broader study which has the intention to analyse the impact of the EU sugar regime reform in the Sugar Protocol (SP) which by 2008 will become one of the agreements of the Economic Partnership Agreements (EPA). The scope of the study is to evaluate the effects produced in those countries sugar cane producer signatories of the SP in terms of loss in export earnings and household incomes in the light also of the Everything but Arms initiative. We will focus our analysis on Malawi (LDCs), Tanzania (LDCs), Zimbabwe (developing), Madagascar (LDCs), Uganda (LDCs), Botswana (developing) Mauritius (developing), Nigeria (developing) Zambia (LDCs) Rest of South African Customs Union (SACU) Rest of Southern African Development Community (SADC) and Rest of SubSaharan Africa. Moreover our data will include EU, Brazil, Rest of Developed, Rest of Developing and rest of LDCs. We will combine expenditure-distribution statistics with information contained in the GTAP data to identify several household groups by per capita expenditure. Expenditure groups will be different from each other due to differences in consumption patterns and income shares from different sources. We will also discuss insights learned from multiple households in the CGE model, and the importance of getting demand elasticities and resource ownership patterns right. Preliminary results will be compared with results obtained from standard GTAP and further rooms of improvements and revisions will be underlined for future studies

U.S. labor employment effects of liberalization in foreign insurance markets

We assess the U.S. labor effects of liberalization in the foreign property and casualty insurance market. First, we estimate the effects of barriers and regulations on U.S. exports and sales. We then simulate the effects of liberalization in certain insurance markets with a partial equilibrium model of trade and foreign direct investment. Our findings suggest that liberalization would cause U.S. labor employment by insurance companies to increase by less than 1 percent