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Estimating the supply elasticity of cotton in Mali with the Nerlove Model: A bayesian method of moments approach

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  • Fousseini Traoré

    (International Food Policy Research Institute, Washington, DC 20006-1002)

Abstract

Mali is among the first cotton growers in Africa. Since the early nineties, it has been reforming its cotton sector by means of different policy measures. In this paper, we estimate the supply elasticity of cotton in order to have a precise idea about how producers react to price changes and what are the potential bottlenecks. Contrary to all the previous studies which fail to consistently estimate the long run elasticity of supply, we apply the Bayesian method of moments, following Zellner’s (1978) Minimum Expected Loss Estimators (MELO) approach. A key finding is that output supply elasticity is low in the short run due to structural constraints and high in the long run.

Suggested Citation

  • Fousseini Traoré, 2013. "Estimating the supply elasticity of cotton in Mali with the Nerlove Model: A bayesian method of moments approach," Review of Agricultural and Environmental Studies - Revue d'Etudes en Agriculture et Environnement, INRA Department of Economics, vol. 94(3), pages 303-316.
    • Handle: RePEc:rae:jourae:v:94:y:2013:i:3:p:303-316
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    Keywords

    cotton; Mali; Nerlove model; Bayesian method of moments;
    All these keywords.

    JEL classification:

    • Q11 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Aggregate Supply and Demand Analysis; Prices
    • C11 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Bayesian Analysis: General
    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes

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