An Econometric Model of Dynamic and Stochastic Production with Explicit Optimization: Farmers' Decisions on Corn and Soybean Acreage
A model of optimal dynamic agricultural supply is derived and hired assuming farmers have two annual stochastic crop production activities, a joint limitation on production capacity, interdependencies between past acreage utilization and current productivity, and rational expectations. A five-equation specification is fitted to annual data, 1948-80 Estimated parameters are consistent with the theory, and the model simulates well The long-run price elasticity of corn acreage is 0.2, which is similar to those obtained from ad hoc dynamic models, but our short-run elasticities are different
Year of publication: |
1988-02-01
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Authors: | Tegene, Abebayehu ; Huffman, Wallace ; Miranowski, John |
Institutions: | Department of Economics, Iowa State University |
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