bounded price variation and rational expectations in endogenous switching model of the u s corn market a model that includes bounded price variation and rational expectations by producers is estimated for the u s corn market the resulting model specification is highly nonlinear though since the probability of market equilibrium must be determined endogenously unlike previous research the cross equation restrictions implied by the rational expectations hypothesis are incorporated in the bounded prices model by using fair and taylor s 1983 procedure for obtaining maximum likelihood estimates of nonlinear rational expectations models the resulting model is compared against a standard equilibrium model with naive expectations the results show the bounded prices model is a superior specification copyright 1989 by mit press

dynamic corn supply functions a model with explicit optimization both static and dynamic models have been used to estimate aggregate supply elasticities for annual crops the early studies relied on static singleequation models in a few variables assumed static price expectations e g kohls and paarlberg and produced very small estimates of own price supply elasticities e g 0 07 for corn nerlove 1956 1958a and nerlove and addison showed that agricultural supply models incorporating adaptive price expectations and or dynamic resource adjustment produced larger estimates of supply elasticities for corn and other agricultural commodities additionally they showed that supply elasticities obtained from static models need not be bounded by the short run and long run supply elasticities of

food versus fuel an updated and expanded evidence abstract this paper replicates the study of zhang et al 2010 food versus fuel what do prices tell us energy policy 38 pp 445 451 we confirm the findings of the original paper that there was only a weak relationship between ethanol and food commodities in the period between march 1989 and july 2008 in addition we extend that study and examine the cointegration relationship between biofuels and related commodities for a considerably enlarged dataset 3 vs 1 market 26 vs 8 commodities analysis up till 2017 vs 2008 weekly vs monthly data frequency focusing on the biofuel markets of brazil the eu and the usa in the three separate periods before during and after the food crisis of 2007 and 2008 we show that studying the time variation of the relationships plays an essential role in their proper understanding our results help to clarify the wide extensive discussion about the role of biofuels prices in food shortages manifested particularly during the food crises in agreement with the original study we confirm that price series data do not support strong statements about biofuels uniformly serving as main leading source of high food prices and consequently the food shortages

correlations between biofuels and related commodities before and during the food crisis a taxonomy perspective abstract in this paper we analyze the relationships between the prices of biodiesel ethanol and related fuels and agricultural commodities with a use of minimal spanning trees and hierarchical trees to distinguish between short term and medium term effects we construct these trees for different frequencies weekly and monthly we find that in short term both ethanol and biodiesel are very weakly connected with the other commodities in medium term the biofuels network becomes more structured the system splits into two well separated branches a fuels part and a food part biodiesel tends to the fuels branch and ethanol to the food branch when the periods before and after the food crisis of 2007 2008 are compared the connections are much stronger for the post crisis period this is the first application of this methodology on the biofuel systems

evolution of the economics of agricultural policy agricultural economists helped develop farm programs to respond to the dire economic situation of the 1920s and 1930s some early authors appreciated that such policies created problems in markets for commodities and inputs over time our understanding of agricultural issues and policies has deepened through the application of improved models and tools of analysis to more extensive data we have developed better answers to old questions and have responded to changing policy instruments market contexts and policy concerns this article traces the evolution of our deepening economic understanding of the causes and consequences of agricultural policy

adjustment costs from environmental change abstract the paper is concerned with the case whereby the distribution of a firm s productivity shocks changes without the knowledge of the firm over time the firm learns about the nature and extent of the change in the distribution of the shock and adjusts incurring adjustment costs in the process the long run loss in profits due to the shift in the distribution we term the equilibrium response the transitory loss in profits incurred while the firm is learning about the distribution shift is termed the adjustment cost the theory is then applied to the problem of measuring adjustment costs in the face of imperfectly observed climate change in agriculture the empirical part of the paper involves estimating a restricted profit function for agricultural land in a five state region of the midwest us as a function of prices land characteristics actual weather realizations and expected weather we then simulate the effect of an unobserved climate shock where learning about the climate shock is by observing the weather and updating prior knowledge using bayes rule we find adjustment costs to climate change are 1 4 of annual land rents

a rational expectations model of agricultural supply this work suggests a dynamic linear rational expectations modeling strategy for using time series observations to study the impact of product prices on agricultural production and land allocation the farmer s decision consists of specifying each period the portion of his land to be devoted to the growing of alternative crops the dynamic element in the farmer s problem comes from the technology a quadratic production technology is used the farmer s optimal land allocation decision rules are derived as linear functions of past land allocations expectations of future product prices and other exogenous variables and they can be interpreted as an optimal crop rotation assuming rational expectations and the exogeneity of prices for a small open economy one obtains closed form linear regression equations representing decision rules and stochastic processes these are then estimated and tested using maximum likelihood methods and aggregate data from the egyptian agriculture

the demand for alcoholic drink in the united kingdom 1963 78 1983 the demand for alcoholic drink in the united kingdom 1963 78 applied economics vol 15 no 1 pp 125 140

acreage decisions under risk the case of corn and soybeans an acreage supply response model is developed under expected utility maximization the resulting framework is used to specify and estimate a system of risk responsive acreage equations for corn and soybeans in the united states particular attention is given to the truncation effects of government price supports on the distribution of corn and soybean prices also a wealth variable is included in the acreage equations the empirical results indicate that risk and wealth variables play an important role in cornsoybean acreage decisions the analysis also shows that cross commodity risk reduction is important in acreage allocation decisions

replacement of agricultural price supports by area payments in the european union and the effects on pesticide use this article determines the contribution of recent european union agricultural policy reforms on the use of pesticides our theoretical model extends the multioutput generalization of the lichtenberg zilberman damage control technology model developed by chambers and lichtenberg our empirical analysis uses farm level data for a sample of french farms results suggest that price effects on the use of pesticides are always more elastic than area payment effects this indicates that policy reforms consisting of a reduction in price supports in favor of area payments may reduce application of crop protection inputs such policy changes which represent a certain degree of decoupling took place under the 1992 common agricultural policy reforms

the influence of commodity programs on acreage response to market price with an illustration concerning rice policy in the united states farm programs influence the parameters of typically estimated supply functions we develop and apply an approach that uses detailed information about farm program incentives and constraints to identify underlying structural acreage response parameters when the data reflect behavior under complex government commodity programs we illustrate the approach with data on rice acreage response to market price in the united states for u s rice estimates that fail to appropriately incorporate the program rules under which market data were generated are three to four times smaller than the structural parameters that are useful for most policy analysis or projections under alternative policies

producer surplus and risk this paper examines the welfare economics of producer behavior under risk aversion hicksian marshallian and money equivalent measures are explored it is found that under decreasing absolute risk aversion compensating variation is less than the ordinary marshallian surplus which is less than the money equivalent measure under constant absolute risk aversion all measures coincide finally bounds on compensating and equivalent variations using ordinary producer surplus in a manner analogous to willige approach in consumer theory under certainty are studied similar results hold mutatis mutandis for input demands

seasonality in dynamic regression models this paper examines the implications of treating seasonality as an unobserved component which changes slowly over time this approach simplifies the specification of dynamic relationships by separating non seasonal from seasonal factors we illustrate this approach using the consumption model of davidson et al 1978 and estimate a stable error correction model between consumption income and prices over the period 1958 92 more generally we argue that autoregressive models are unlikely to successfully model slowly changing seasonality and may confound seasonal effects with the dynamic responses of prime interest our approach can be used in a wide range of cases and we show that there is little loss in efficiency even if seasonality is deterministic

assessing the impacts of stochastic trend in crop acreage supply response model this paper demonstrates the need to revisit the way a technical change has been incorporated in a crop acreage supply response model three different versions of technological change were introduced and compared no trend deterministic trend and stochastic trend the results confirm the need to treat a technology variable as a stochastic trend for better results in crop acreage supply response model specifications

ethanol and field crops is there a price connection abstract we analyze the relationship between the prices of ethanol corn soybeans wheat and cattle in nebraska u s we focus on long run price relations short run granger causality in sample and out of sample predictability linkages between returns on ethanol field crops and cattle since the ethanol market has been subject to many policy interventions our analysis takes structural breaks and parameter instabilities into account using modern statistical techniques we find no evidence that ethanol returns granger cause food price variations conversely both in sample and out of sample results suggest that ethanol is granger caused and can be predicted by returns on corn no linkages between ethanol and cattle are found

sources of increased instability in indian and u s cereal production recent growth in indian and u s cereal production has been accompanied by a more than proportional increase in the standard deviation of production this study applies variance decomposition procedures to state data on crop production to analyze the sources of this increased instability it is found that production has become significantly more covariate between states and crops largely because of increased yield variability and a loss in offsetting patterns of variation between crop yields in different states these changes may be associated with more variable prices with higher yielding technologies and with a narrowing of the genetic base

modelling the trend and seasonals within an aids model of the demand for alcoholic beverages in the united kingdom the argument that is put forward in this paper is that failure to represent stochastic trend and stochastic seasonality in an aids model leads to a misspecified and possibly structurally unstable model this proposition is verified by estimating an aids model of the demand for alcoholic beverages in the united kingdom three versions of the model are estimated and it is demonstrated that the version allowing for stochastic trend and stochastic seasonality performs better than the other two versions of the model in terms of the diagnostics tests and goodness of fit measures the best estimated model turns out to possess the properties of having common components and being homogenous further empirical testing reveals the presence of stochastic trends and cointegration between the budget shares of beer and wine the results clearly indicate that there has been a shift away from the consumption of beer towards wine copyright 2002 john wiley sons ltd

weather shocks coping strategies and consumption dynamics in rural ethiopia summary rural households adopt a broad range of strategies to cope with adverse weather shocks previous studies have examined the effectiveness of individual coping strategies in mitigating the impact of adverse weather shocks but no study to date has presented a comprehensive evaluation of alternative coping strategies we employ household panel data spanning 15 years to estimate the impact of weather shocks on consumption and poverty dynamics in rural ethiopia along with the effectiveness of household coping strategies in alleviating the impact of shocks we find that rainfall increases are positively associated with per adult equivalent consumption while high temperatures are negatively associated with consumption in terms of household coping strategies formal social safety net transfers mitigate the impact of adverse rainfall shocks on consumption and off farm employment mitigates the impact of high temperature shocks simulations suggest that rainfall shocks and formal social safety net transfers significantly influence household poverty dynamics by contrast high temperature shocks and off farm employment have less impact on poverty dynamics the results highlight the need for social protection programs that support existing household coping strategies and that can rapidly respond to weather shocks

biofuel related price transmission literature a review abstract in this article an extensive review of the rapidly growing biofuel related time series literature is carried out the data used the modeling techniques and the main findings of this literature are discussed providing a review of this flourishing research area is relevant as a guidepost for future research this literature concludes that energy prices drive long run agricultural price levels and that instability in energy markets is transferred to food markets

rice trade liberalization and implications for u s policy the u s government s rice program treats rice as a homogeneous commodity even though rice s two primary subspecies indica and japonica are differentiated commodities in world markets trade liberalization under the uruguay round of gatt is expected to increase demand for japonica more than for indica we develop a u s rice model which treats rice as a differentiated product u s government programs are modeled and trade liberalization scenarios are analyzed under alternative policies compared to the current policy a more flexible u s policy that treats rice as a differentiated commodity could result in both higher farm incomes and lower government expenditures after trade liberalization

modelling the trend and seasonality in the consumption of alcoholic beverages in the united kingdom a univariate time series analysis of the consumption of beer wine and spirits in the uk over the period 1964 1995 is presented the analysis shows that the consumption of beer and wine exhibits stochastic seasonality while the consumption of spirits exhibits deterministic seasonality moreover the three series are found to have stochastic trends analysis of the out of sample forecasting power of the various models reveals that the model with stochastic trend and seasonality is superior to other models the results cast doubt on the validity and soundness of the practice of modelling the consumption of alcoholic beverages by assuming deterministic trend and seasonality

the effects of policy expectations on crop supply with an application to base updating we develop a dynamic model to assess the effects of policy expectations on crop supply and illustrate the approach with estimates of the effects of base updating in u s crop programs for corn and soybeans in the corn belt the effect of base updating is relatively small because relevant crop alternatives are subject to similar policies and the alternatives are substitutes in production increasing acreage of one program crop to capture future payments from base updating reduces future payments from the alternative crop we also use our model to assess the effect of base updating on acreage response to prices

causality and predictability in distribution the ethanol food price relation revisited abstract this paper examines the relationship between biofuels field crops and cattle prices in the u s from a new perspective we focus on predictability in distribution by asking whether ethanol returns can be used to forecast different parts of field crops and cattle returns distribution or vice versa density forecasts are constructed using conditional autoregressive expectile models estimated with asymmetric least squares forecast evaluation relies on quantile weighed scoring rules which identify regions of the distribution of interest to the analyst results show that both the centre and the left tail of the ethanol returns distribution can be predicted by using field crops returns on the contrary there is no evidence that ethanol can be used to forecast any region of the field crops or cattle returns distributions

supply demand and technology in a multiproduct industry texas field crops the purpose of this paper is to examine the structure of agricultural production for six texas field crops cotton grain sorghum wheat corn rice and hay which account for nearly 95 of recent field crop value specific objectives are to a test the structure of technology to determine i if output and input utilization choices for individual products are independent of production decisions about other outputs and ii if products and or inputs can be consistently aggregated b estimate a coherent set of interrelated supply functions for the six commodities and input demand functions for fertilizer and hired labor because the empirical focus of this paper is specific to one state the results will be of limited value for interpreting specific production relationships elsewhere however the problem is of common interest in production agriculture and the techniques used demonstrate an important application of dual modeling

crop insurance acreage decisions and nonpoint source pollution the redirection of farm policy in the 1996 farm bill has generated much interest in seeking environmentally friendly and economically viable ways to protect farm income agricultural insurance has been suggested as such an instrument this article estimates the effect of crop insurance on crop mix and the resulting change in chemical use in the central nebraska basin providing corn insurance will shift land from hay and pasture to corn which will increase chemical use at the extensive margin this extensive margin effect dominates the effect of crop insurance on the application rate leading to an increase in total chemical use

dynamic adjustment in the u s dairy industry a dual model is used to examine the dynamic structure of the u s dairy industry properties implied by the theory of the competitive firm and independent adjustment of two quasi fixed inputs labor and herd size are tested and not rejected instantaneous adjustment however is soundly rejected for each quasi fixed input input adjustment to optimal levels is estimated to take about two years for labor and ten for cows quality adjustments of the labor and cow series do not fully embody the technological change that has occurred in this industry over the study period

unbiased estimation of the inflationary effects of relative price disturbances abstract most recent versions of the expectations augmented phillips curve have incorporated terms to capture the effects of relative price disturbances this paper demonstrates that the standard specification of these equations leads to biased estimates of the coefficients on the relative price terms and that this bias reduces seriously the out of sample fit of the price equation a remedy is suggested that eliminates the source of the coefficient bias and improves the predictive accuracy of the model

the contribution of weather variability to economic sectors every day people make economic decisions based on the weather affecting sales of companies in a wide range of economic sectors in many cases the impact of weather on sales is not constant from

methods of estimation for models of markets with bounded price variation introduction there has been a considerable amount of literature on the estimation of models which are in disequilibrium see fair and jaffe 1972 fair and kelejian 1974 amemiya 1974 maddala and nelson 1974 goldfeld and quandt 1975 laffont and garcia 1977 bowden 1978 etc the main feature of these models is that there is a demand function a supply function a min condition and in some models a price adjustment equation the cornerstone equation in these models is q1 min d1 s where d t quantity demanded at time t s t quantity supplied at time t q t quantity transacted at time t this equation which says that the short side of the market always prevails separates the sample points into those belonging to demand and those belonging to supply one can classify the models into two categories those with sample separation known and those with sample separation unknown but the important point is that the min condition implies under the usual assumptions that the probability of equilibrium is zero for any t however there are many practical cases where some of the observations refer to equilibrium points and some to disequilibrium points this is because trading in many markets is confined to some limits on price and the disequilibrium occurs only when these limits are violated there are minimum wage laws in labor markets usury laws in credit markets and trading limits in commodity markets in all such cases the markets are sometimes in equilibrium and sometimes in disequilibrium the present paper discusses methods of estimation for models of such markets

a market equilibrium analysis of the impact of risk on the u s rice industry an economic model of supply demand for u s rice suggests that increases in risk result in decreased acreage and increased marketing margins in a market equilibrium context the empirical results also suggest rice production and rice prices are more responsive to changes in risk faced by marketing firms than changes in risk faced by producing firms

food versus fuel what do prices tell us abstract sorting out the impacts of biofuels on global agricultural commodity prices is impossible without turning to data and distinguishing between the short run versus the long run impacts using time series prices on fuels and agricultural commodities the aim is to investigate the long run cointegration of these prices simultaneously with their multivariate short run interactions results indicate no direct long run price relations between fuel and agricultural commodity prices and limited if any direct short run relationships in terms of short run price movements sugar prices are influencing all the other agricultural commodity prices except rice with sugar the number one world input for ethanol results indicate increased ethanol production is potentially influencing short run agricultural commodity prices overall results support the effect of agricultural commodity prices as market signals which restore commodity markets to their equilibria after a demand or supply event shock

restricting the market for quota an analysis of tobacco production rights with corroboration from congressional testimony regulatory programs that restrict output levels often impose restrictions on the transfer of rights to produce or to use particular inputs in this paper we use a unique cross section time series data set from north carolina to quantify the welfare effects of transfer restrictions for poundage quota under the u s flue cured tobacco program we find that the deadweight costs of such restrictions are small but that the distributional effects are substantial we analyze congressional testimony on quota transfer legislation and conclude that our estimates of the distributional effects are consistent with expressed views of market participants

output dynamics of the g7 countries stochastic trends and cyclical movements using a time series framework the paper studies the interactions of the annual real per capita gdp data of the g7 countries evidence is found of six common nonstationary processes behind the international output dynamics in addition there is evidence for the existence of a common business cycle among these countries the trend and cycle components of each output series are obtained with a procedure that accounts for the presence of both the common nonstationary and cyclical factors it is found that the relative variability and the correlation of the trend and cycle components are not similar across the g7 countries

the demand for alcohol in the uk a comment in a recent article appearing in this journal mcguinness 3 explores the effects of income prices advertising and availability on the consumption of alcohol in the uk his conclusions regarding the effects of advertising on consumption have attracted considerable attention 1 5 from an economic viewpoint his findings regarding the relatively weak and uncertain influence of income on the growth of demand are equally notable the purpose of the present comment is to show that certain unusual features of mcguinness s analysis have important implications for his reported findings mcguinness s regression analysis is based on the first differences of 21 annual observations 1955 75 the general approach used is illustrated by the following representative equation

nonlinearities in the u s corn ethanol oil gasoline price system we use a smooth transition vector error correction model to assess price relationships within the u s ethanol industry monthly ethanol corn oil and gasoline prices from 1990 to 2008 are used in the analysis results indicate the existence of long run relationships among the prices analyzed strong links between energy and food prices are identified

stochastic trend weather and us corn yield variability regional corn yield models incorporating stochastic trends prices and weather variables are estimated hypothesis tests suggest yield variability has increased because of an increase in error variance and an increase in weather related effects decomposition of the error variance shows much of its increase is due to an increased correlaion between regional yields

multiple input multiple output production choices and technology in the u s wheat region duality theory motivates a translog expected profit function consistent with multiple products price uncertainty preseason climate constraints acreage control policies and possibly nonhomothetic technology although multiple outputs are allowed enterprise specific data is not necessary instead time series measures of output revenues and expected prices input expenses and prices and fixed input flows are employed appropriate measures of elasticities of choice returns to size and biases in technological change are derived results indicated decreasing returns to size rather limited though complementary responsiveness of choices to price changes and the nature of biases in technological changes

the structure of u s agricultural technology 1910 78 this paper utilizes 1910 78 time series data and a single product aggregate translog profit function to measure the structure of u s agricultural technology duality relations are used to devise a multifactor measure of biased technical change a measure of nonhomotheticity is introduced which indicates the effects scale change has had on aggregate cost shares the empirical analysis finds that different nonhomothetic technologies characterized the prewar and postwar periods differing technical change biases are consistent with relative price trends during the two periods showing that the long run structure of u s agricultural technology has been consistent with the hayami ruttan induced innovation theory

does the samaritan s dilemma matter evidence from u s agriculture the samaritan s dilemma posits a downside to charity recipients may rely on free aid instead of their own efforts anecdotally the expectation of free assistance is thought to be important for decisions about insurance and risky behavior in numerous settings but reliable empirical evidence is scarce we estimate whether the samaritan s dilemma exists in u s agriculture where both private crop insurance and frequent federal disaster assistance are present we find that bailout expectations are qualitatively and quantitatively important for the insurance decision furthermore aid expectations reduce both expenditure on farm inputs and subsequent crop revenue jel d72 h84 q18

the impact of biofuels on commodity food prices assessment of findings for years agriculture has provided most of the fuel for vehicular transportation concerns about availability of fuels balance of trade and climate change led to the introduction of biofuel programs in the united states brazil europeanunion eu andothercountries the impacts of these programs and the relationship between the food and fuel markets have become major topics of economic research this paper summarizes the main findings of alternative lines of research on the relationship between the food and fuel markets and identifies gaps and quandaries that warrant further research this is not meant to be a complete survey and it emphasizes several of our studies within the broader literature the paper distinguishes between two bodies of literature one on the relationship between food and fuel prices and another on the impact of the introduction of biofuel on commodity food prices while biofuel prices do not seem to affect food commodity prices we explain why the introduction of biofuel does moreover biofuelshavenotbeenthemostdominant contributor to the recent food price inflation and different biofuels have different impacts

effects on a corn soybean farm of uncertainty about the future of farm programs dynamic programming techniques are used to evaluate effects of uncertainty about continuation of farm programs on planting decisions during the last year of the 1990 farm bill results indicate farm level decisions are affected by uncertainty only when the farmer s subjective probability if the continuation of farm programs is very low the optimal value functions in different versions f the model can also be used to estimate the implicit value of base acreage

assessing the impact of us ethanol on fossil fuel markets a structural var approach abstract despite the growing importance of biofuels the effect of biofuels on fossil fuel markets is not fully understood we develop a joint structural vector auto regression var model of the global crude oil us gasoline and us ethanol markets to examine whether the us ethanol market has had any impact on global oil markets the structural var approach provides a unique method for decomposing price and quantity data into demand and supply shocks allowing us to estimate the distinct dynamic effects of ethanol demand and supply shocks on the real prices of crude oil and us gasoline ethanol demand in the us is driven mainly by government support in the form of tax credits and blending mandates shocks to ethanol demand therefore reflect changes in policy more than any other factor in contrast ethanol supply shocks are driven by changes in feedstock prices a principle finding is that a policy driven ethanol demand expansion causes a statistically significant decline in real crude oil prices while an ethanol supply expansion does not have a statistically significant impact on real oil prices this suggests that even though us ethanol market is small the influence of us biofuels policy on the crude oil market is pervasive we also show that ethanol demand shocks are more important than ethanol supply shocks in explaining the fluctuation of real prices of crude oil and us gasoline

estimating supply response in the presence of farm programs previous empirical research on crop supply response has given insufficient attention to the fundamentally different nature of supply response under farm programs versus competitive markets a simple theoretical model is presented which highlights the program participation option in the farmer s acreage allocation decision the model also provides the basis for different expected supply elasticities under free market and farm program regimes for corn and soybeans econometric supply estimation for corn belt states for 1948 80 using a temporally disaggregated approach confirms a greater supply elasticity for corn and a lower supply elasticity for soybeans under acreage restricting feed grain programs

transfer efficiency and distributional impacts of u s farm support evidence from a macro micro simulation the objective of this analysis is to provide insight into the transfer and distributional efficiency of farm support policies a one shot macro micro simulation model weaves together the two prominent threads in the agri cultural decoupling literature that focuses for the first part on economy wide impacts and for the second on the role of cross household het erogeneity experimental shocks to output and land subsidies that generate a 1 increase in net national farm income are compared for the united states with output subsidies shown to have lower transfer efficiency but comparable distributional impact surprisingly a more cou pled approach to policy whereby some agricul tural enterprises are excluded from program participation is found to generate a stronger reduction in inequality this is partially at tributed to the inclusive definition of a farm

modeling supply response with implicit revenue functions a policy switching procedure for rice an econometric method of estimating implicit revenue with a policy switching mechanism is proposed for supply response analysis the model develops important linkages between farm program instruments and commodity market equilibrium and allows evaluation of supply response decisions under conditions of major policy shifts the econometric procedure developed here is applied to the u s rice sector to determine program compliance noncompliance decisions under three alternative rice program periods a change in farm prices was found to affect significantly producers net returns and participation rate results indicate price impacts on acreage planted are inelastic for program participants but elastic for nonparticipants

price inertia and policy ineffectiveness in the united states 1890 1980 this paper introduces a new approach to the empirical testing of the lucas sargent wallace lsw policy ineffectiveness proposition which compares the lsw hypothesis with an alternative that states that prices respond fully in the long run but only gradually in the short run to nominal aggregate demand disturbances the empirical equations estimated for a new set of quarterly data extending back to 1890 exhibit uniformly high responses of real output and low responses of price changes to anticipated changes in nominal gnp the paper compares and tests three alternative methods of introducing persistence effects into the lsw framework

investment in u s agriculture resource adjustment problems in u s agriculture are motivated against the background of the farm problem the adjustment cost hypothesis is invoked to specify and estimate consistently a system of dynamic investment demand and output supply equations by utilizing recent advances in dynamic duality theory the investment demand equations assume the form of a multivariate flexible accelerator results indicate that labor capital services and land exhibited quasi fixity while intermediate materials were a variable factor this can be construed as a form of asset fixity within aggregate u s agriculture the univariate flexible accelerator hypothesis is rejected

constrained choices under risk there has recently been a revival of interest in the implications of rationing for economic theory extending the work of samuelson 21 tobin and houthakker 24 and pollak 16 recent papers by bruno 3 howard 8 latham 13 and neary and roberts 15 have explored the theory of producer and consumer behavior under quantity rationing these developments have provided useful hypotheses in the investigation of economic behavior for example they have stimulated a reexamination of macroeconomic disequilibrium however previous work seems to have focused on economic models in the absence of uncertainty yet given that production decisions are often made before output prices are known and in the absence of complete contingent markets sandmo 22 batra and ullah 2 and others have developed the theory of the competitive firm under price uncertainty under the expected utility maximization hypothesis such a theory provides useful information about the influence of changing economic conditions or of risk behavior on production decisions but because of the presence of short run adjustment costs leading to short run input fixity or because of regulatory or institutional constraints quantity rationing often influences production decisions in order to evaluate how rationing influences such decisions there is a need to develop a conceptual model of constrained choices of the firm under risk the objective of this paper is to explore the implications of quantity rationing in the context of production theory under price uncertainty by introducing risk and risk behavior it extends the classical analysis of quantity constrained production decisions 3 21 the implications of quantity constraints for risk responsive choice functions are derived using the concepts of compensated choice functions and virtual prices it is shown that expected price effects can be decomposed into substitution effects and wealth effects the substitution effects measure the effects of a change in expected price on the compensated choice functions the compensation being made through a change in initial wealth holding expected utility constant the wealth effects characterize risk preferences since a non zero wealth effect reflects a departure from an arrow pratt constant absolute risk aversion utility function the influence of rationing on the properties of ordinary as well as compensated choice functions is analyzed in details by deriving the implications of quantity constraints for firm behavior under uncertainty the paper presents a number of useful results concerning the influence of risk or technology on economic behavior under rationing for example a