PUTTING THE "ECON" INTO ECONOMETRICS

Should econometricians always incorporate economic theory in their models or only when unrestricted estimators are found to violate an inviolable theory? Using Monte Carlo experiments, we find that econometricians should use economic theory to the fullest extent possible. To paraphrase Leamer's classic article, we should put the "econ" into econometrics.Research Methods/ Statistical Methods,

MULTIPRODUCT PRODUCTION CHOICES AND PESTICIDE REGULATION IN GEORGIA

An increasing emphasis on surface and groundwater quality and food safety may result in some form of pesticide regulations. A restricted profit function model of Georgia agriculture is used to examine the short-run effects of 2 and 5 percent reductions in all pesticides. Point estimates of short-run impacts, along with their 90 percent confidence intervals are presented.Agricultural and Food Policy,

NUMERAIRE CHOICE IN AGRICULTURAL SUPPLY ANALYSIS

Economic theory provides little guidance for selecting a numeraire in estimating dual function profit functions. In this study, we examine the choice of numeraire price (equation) for profit function models of Iowa agriculture. The choice of numeraire is evaluated by forecasting accuracy and with a non-nested specification test.Research Methods/ Statistical Methods,

FORECASTING AGRICULTURAL PRICES USING A BAYESIAN COMPOSITE APPROACH

Forecast users and market analysts need quality forecast information to improve their decision-making abilities. When more than one forecast is available, the analyst can improve forecast accuracy by using a composite forecast. One of several approaches to forming composite forecasts is a Bayesian approach using matrix beta priors. This paper explains the matrix beta approach and applies it to three individual forecasts of U.S. hog prices. The Bayesian composite forecast is evaluated relative to composites made from simple averages, restricted least squares, and an adaptive weighting technique.Demand and Price Analysis,

ECONOMIC CRITERIA FOR EVALUATING COMMODITY PRICE FORECASTS

Forecasts of economic time series are often evaluated according to their accuracy as measured by either quantitative precision or qualitative reliability. We argue that consumers purchase forecasts for the potential utility gains from utilizing them, not for their accuracy. Using Monte Carlo techniques to incorporate the temporal heteroskedasticity inherent in asset returns, the expected utility of a set of qualitative forecasts is simulated for corn and soybean futures prices. Monetary values for forecasts of various reliability levels are derived. The method goes beyond statistical forecast evaluation, allowing individuals to incorporate their own utility function and trading system into valuing a set of asset price forecasts.Commodity prices, Forecast evaluation, Value of information, Consumer/Household Economics,

THE EFFECT OF GOVERNMENT PROGRAMS ON ACREAGE RESPONSE OVER TIME: THE CASE OF CORN PRODUCTION IN IOWA

Corn acreage response in Iowa is examined using a time-varying parameter regression model. Separate estimates of the permanent portion of the parameter vector are obtained for each year over the period 1957-82. The estimated elasticities are grouped into “program” and “nonprogram” periods. The results indicate corn acreage response is more own-price elastics, and the elasticity is less variable under government acreage control programs than under a “nonprogram” regime. The assumption of parameter constancy is shown to be inappropriate for modeling Iowa corn acreage response over time.Agricultural and Food Policy, Crop Production/Industries,

NONCONSTANT PRICE EXPECTATIONS AND ACREAGE RESPONSE: THE CASE OF COTTON PRODUCTION IN GEORGIA

An adaptive regression model is used to examine the relative importance of cash and government support prices in determining cotton production over time. The results show that the cash price is more important as a source of price information for cotton producers than the government program price. The cash price was shown to have a greater influence on acreage response in every year, including periods thought to be dominated by government commodity programs.Adaptive regression, Cotton acreage response, Price expectations, Crop Production/Industries,

ECONOMICS OF POULTRY LITTER UTILIZATION AND OPTIMAL ENVIRONMENTAL POLICY FOR PHOSPHORUS DISPOSAL IN GEORGIA

Poultry litter can be used as plant nutrients or cattle feed. Both of these alternatives may increase phosphorus concentration in the nearby watershed. Use of phosphorus consistent litter application rule in nutrient management combined with permit system has potential to curtail the over production of litter and prevent the possible contamination of water.Environmental Economics and Policy, Resource /Energy Economics and Policy,

RATIONAL EXPECTATIONS ESTIMATION OF GEORGIA SOYBEAN ACREAGE RESPONSE

The general method of moments procedure is used for estimating a soybean acreage response function assuming the producers hold rational expectations. Results indicate that soybean, corn, and wheat futures prices, lagged acreage, and government programs are significant factors for determining soybean plantings. Implications of the results are that crop acreage selection by Georgia producers is not very responsive to demand shocks. Thus, producers in other regions are more likely to absorb impacts from these shocks on crop acreage selection.Soybeans, GMM, Elasticities, Crop Production/Industries,

The Impact of Coordination of Production and Marketing Strategies on Price Behavior: Evidence from the Idaho Potato Industry

High potato price volatility, decreasing demand for fresh potatoes and prices below the cost of production led to a decision of a number of Idaho potato growers to organize the United Fresh Potato Growers of Idaho, a marketing cooperative. The programs and strategies of the cooperative target both the production and marketing of fresh potatoes in Idaho. To evaluate the effectiveness of the programs implemented by the cooperative, we examine the level and volatility of fresh potato prices during two periods: before the cooperative was organized and when the cooperative is in the market. We find empirical evidence suggesting that fresh potato prices were higher and less volatile during the period when the cooperative was in the market.agricultural markets, cooperative, price volatility, potato industry, Agricultural and Food Policy, Crop Production/Industries, Demand and Price Analysis, Marketing, Q10, Q11, Q13,