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An Alternative Approach To Determining The Elasticity Of Excess Demand Facing The United States

Author

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  • Miller, Douglas J.
  • Paarlberg, Philip L.

Abstract

The United States embarked on a policy assuming excess demands for commodities are elastic. Some analysts question the success of that policy and argue that excess demands for farm commodities are inelastic. The controversy is deepened because the two traditional techniques for determining excess demand elasticities yield opposing estimates. We use an alternative technique based on observed variation in commodity prices, production, and use. The point estimates show excess demands for wheat, coarse grains, soybeans, rice, and cotton are elastic. However, a one-sided bootstrap test cannot reject the null hypothesis that the excess demands for wheat, coarse grains, and soybeans are inelastic.

Suggested Citation

  • Miller, Douglas J. & Paarlberg, Philip L., 2001. "An Alternative Approach To Determining The Elasticity Of Excess Demand Facing The United States," 2001 Annual meeting, August 5-8, Chicago, IL 20587, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    • Handle: RePEc:ags:aaea01:20587
    DOI: 10.22004/ag.econ.20587
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    Cited by:

    1. Femenia, Fabienne & Gohin, Alexandre, 2007. "Estimating price elasticities of food trade functions: How relevant is the gravity approach?," Working Papers 7211, TRADEAG - Agricultural Trade Agreements.
    2. Reimer, Jeffrey J. & Zheng, Xiaojuan & Gehlhar, Mark J., 2012. "Export Demand Elasticity Estimation for Major U.S. Crops," Journal of Agricultural and Applied Economics, Cambridge University Press, vol. 44(4), pages 501-515, November.
    3. Alexandre Gohin & Fabienne Féménia, 2009. "Estimating Price Elasticities of Food Trade Functions: How Relevant is the CES‐based Gravity Approach?," Journal of Agricultural Economics, Wiley Blackwell, vol. 60(2), pages 253-272, June.

    More about this item

    Keywords

    Demand and Price Analysis;

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