Finance and Economics Discussion Series (FEDS)
July 1997
Why Are Estimates of Agricultural Supply Response so Variable?
Francis X. Diebold and Russell L. Lamb
Abstract:
Estimates of the response of agricultural supply to movements in expected price display curiously large variation across crops, regions, and time periods. We argue that this anomoly may be traced, at least in part, to the statistical properties of the commonly-used econometric estimator, which has infinite moments of all orders and may have a bimodal distribution. We propose an alternative minimum- expected-loss estimator, establish its improved sampling properties, and argue for its usefulness in the empirical analysis of agricultural supply response.
Full paper (849 KB Postscript)Keywords: Agricultural supply response, Bayesian estimation, MELO estimation
PDF: Full Paper
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