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An Econometric Evaluation Of Stabilization Policies For The U.S. Grain Market

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  • Arzac, Enrique R.

Abstract

This paper evaluates stabilization policies by applying methods of stochastic control and dynamic analysis to an econometric model of the U.S. grain market. Its main results are: (1) the aggregate consumer and producer surplus generated by the model is insensitive to the choice of the market regime; (2) policies directed to stabilize prices at levels compatible with nondecreasing farm revenue require the management of both grain inventories and domestic supply; (3) price fluctuations are significantly less under optimal stabilization than in the unregulated version of the model; and (4) historical policies have destabilizing effects on the market model.

Suggested Citation

  • Arzac, Enrique R., 1979. "An Econometric Evaluation Of Stabilization Policies For The U.S. Grain Market," Western Journal of Agricultural Economics, Western Agricultural Economics Association, vol. 4(1), pages 1-14, July.
    • Handle: RePEc:ags:wjagec:32430
    DOI: 10.22004/ag.econ.32430
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    References listed on IDEAS

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    1. Ryan, Mary E. & Abel, Martin E., 1972. "Corn Acreage Response and the Set-Aside Program," Journal of Agricultural Economics Research, United States Department of Agriculture, Economic Research Service, vol. 24(4), pages 1-14, October.
    2. Gordon C. Rausser, 1978. "Active Learning, Control Theory, and Agricultural Policy," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 60(3), pages 476-490.
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    4. Turnovsky, Stephen J, 1976. "The Distribution of Welfare Gains from Price Stabilization: The Case of Multiplicative Disturbances," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 17(1), pages 133-148, February.
    5. Lucas, Robert Jr, 1976. "Econometric policy evaluation: A critique," Carnegie-Rochester Conference Series on Public Policy, Elsevier, vol. 1(1), pages 19-46, January.
    6. Tweeten, Luther G., 1967. "The Demand for United States Farm Output," Food Research Institute Studies, Stanford University, Food Research Institute, vol. 7(3), pages 1-28.
    7. J. P. Houck & M. E. Ryan, 1972. "Supply Analysis for Corn in the United States: The Impact of Changing Government Programs," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 54(2), pages 184-191.
    8. Alvin C. Egbert, 1969. "An Aggregate Model of Agriculture—Empirical Estimates and Some Policy Implications," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 51(1), pages 71-86.
    9. Gordon C. Rausser & John W. Freebairn, 1974. "Approximate Adaptive Control Solutions to US Beef Trade Policy," NBER Chapters, in: Annals of Economic and Social Measurement, Volume 3, number 1, pages 177-203, National Bureau of Economic Research, Inc.
    10. Compiled by: & Eaton, David J. & Steele, W. Scott, 1976. "Analyses of Grain Reserves, A Proceedings," Miscellaneous Publications 329855, United States Department of Agriculture, Economic Research Service.
    11. Houck, James P. & Ryan, Mary E., 1972. "Supply Analysis For Corn In The United States: The Impact Of Changing Government Programs," Staff Papers 13554, University of Minnesota, Department of Applied Economics.
    12. Kydland, Finn E & Prescott, Edward C, 1977. "Rules Rather Than Discretion: The Inconsistency of Optimal Plans," Journal of Political Economy, University of Chicago Press, vol. 85(3), pages 473-491, June.
    13. Gustafson, Robert L., 1958. "Carryover levels for grains: A method for determining amounts that are optimal under specified conditions," Technical Bulletins 157231, United States Department of Agriculture, Economic Research Service.
    14. Arzac, Enrique R. & Wilkinson, Maurice, 1979. "Stabilization policies for united states feed grain and livestock markets," Journal of Economic Dynamics and Control, Elsevier, vol. 1(1), pages 39-58, February.
    15. Fair, Ray C, 1970. "The Estimation of Simultaneous Equation Models with Lagged Endogenous Variables and First Order Serially Correlated Errors," Econometrica, Econometric Society, vol. 38(3), pages 507-516, May.
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    Cited by:

    1. Athanasiou, George & Karafyllis, Iasson & Kotsios, Stelios, 2008. "Price stabilization using buffer stocks," Journal of Economic Dynamics and Control, Elsevier, vol. 32(4), pages 1212-1235, April.
    2. Ospina, Enrique & Shumway, Richard, 1980. "Impact Of Corn Prices On Beef Product Mix And Prices," 1980 Annual Meeting, July 27-30, Urbana-Champaign, Illinois 278917, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).

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