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Effect of Public Price Forecasts on Market Price Variation: A Stochastic Cobweb Example

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  • David J. Smyth

Abstract

This paper analyzes the effect of less than perfectly accurate forecasting in a stochastic cobweb model when public announcement of the forecasts influences suppliers' behavior. The forecasts considered in the analysis reduce the time variance of price, but the forecasts that minimize the variance are not always the most accurate.

Suggested Citation

  • David J. Smyth, 1973. "Effect of Public Price Forecasts on Market Price Variation: A Stochastic Cobweb Example," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 55(1), pages 83-88.
    • Handle: RePEc:oup:ajagec:v:55:y:1973:i:1:p:83-88.
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    File URL: http://hdl.handle.net/10.2307/1238668
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    Citations

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    Cited by:

    1. Freebairn, John W., 1978. "An Evaluation of Outlook Information for Australian Agricultural Commodities," Review of Marketing and Agricultural Economics, Australian Agricultural and Resource Economics Society, vol. 46(03), pages 1-21, December.
    2. John W. Freebairn, 1975. "Forecasting For Australian Agriculture," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 19(3), pages 154-174, December.
    3. Tomek, William G. & Robinson, Kenneth L., 1977. "PART V. Agricultural Price Analysis and Outlook," AAEA Monographs, Agricultural and Applied Economics Association, number 337217, january.
    4. J. W. Freebairn, 1976. "The Value and Distribution of the Benefits of Commodity Price Outlook Information," The Economic Record, The Economic Society of Australia, vol. 52(2), pages 199-212, June.
    5. Bailey, DeeVon & Brorsen, B. Wade, 1998. "Trends In The Accuracy Of Usda Production Forecasts For Beef And Pork," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 23(2), pages 1-11, December.
    6. Irwin, Scott H. & Sanders, Dwight R. & Good, Darrel L., 2014. "Evaluation of Selected USDA WAOB and NASS Forecasts and Estimates in Corn and Soybeans," Marketing and Outlook Research Reports 183477, University of Illinois at Urbana-Champaign, Department of Agricultural and Consumer Economics.
    7. Sanders, Dwight R. & Manfredo, Mark R., 2002. "Usda Production Forecasts For Pork, Beef, And Broilers: An Evaluation," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 27(1), pages 1-14, July.
    8. Freebairn, John W., 1976. "Welfare Implications Of More Accurate Rational Forecast Prices," Australian Journal of Agricultural Economics, Australian Agricultural and Resource Economics Society, vol. 20(2), pages 1-11, August.
    9. Sanders, Dwight R. & Manfredo, Mark R. & Boris, Keith, 2008. "Accuracy and efficiency in the U.S. Department of Energy's short-term supply forecasts," Energy Economics, Elsevier, vol. 30(3), pages 1192-1207, May.
    10. David J. Smyth, 1974. "The Effect of Forecasting in a Simple Stochastic Macroeconomic Model," Eastern Economic Journal, Eastern Economic Association, vol. 1(2), pages 170-172, April.
    11. Sanders, Dwight R. & Manfredo, Mark R. & Boris, Keith, 2009. "Evaluating information in multiple horizon forecasts: The DOE's energy price forecasts," Energy Economics, Elsevier, vol. 31(2), pages 189-196.
    12. Dufresne, Daniel & Vázquez-Abad, Felisa, 2012. "Cobweb theorems with production lags and price forecasting," Economics Discussion Papers 2012-17, Kiel Institute for the World Economy (IfW Kiel).
    13. Dufrfesne, Daniel & Vázquez-Abad, Felisa, 2013. "Cobweb theorems with production lags and price forecasting," Economics - The Open-Access, Open-Assessment E-Journal (2007-2020), Kiel Institute for the World Economy (IfW Kiel), vol. 7, pages 1-49.
    14. Sanders, Dwight R. & Manfredo, Mark R., 2003. "USDA Livestock Price Forecasts: A Comprehensive Evaluation," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 28(2), pages 1-19, August.

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