Stabilizing the U.S. Corn Markets

This article considers stabilization policies when the government acts before and after the weather is known, uses intervention rules that exclude discretion, and considers multiple policy instruments. Simulations shed light on the benefits and costs of corn-market stabilization and the desirability of acreage control or scarcity policy. Coordinated policies consistently reduce the variability of farm prices and incomes. Further, welfare comparisons against the unregulated market are favorable for some programs. Perhaps the government should avoid joint management of acreage and inventories, though, unless there are exceptional circumstances.