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Behavior of Forward-Looking Firms In the Very Short Run (The)

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Listed:
  • Lence, Sergio H.
  • Hayes, Dermot J.
  • Meyers, William H.

Abstract

The study develops a theory of very-short-run forward-looking behavior allowing for forward trading and storage of final good and material input. Production and storage are separable from hedging decisions and depend only upon current forward and cash prices. Comparative statics are derived regarding production, pruchases, and sales. The hypotheses advanced are tested with monthly data pertaining to the U.S. soybean-processing industry. Results suggest that in short-run equilibrium futures prices of the soybean complex have had little influence on crushings or production, but they have been important determinants of inventory levels.

Suggested Citation

  • Lence, Sergio H. & Hayes, Dermot J. & Meyers, William H., 1995. "Behavior of Forward-Looking Firms In the Very Short Run (The)," Staff General Research Papers Archive 5025, Iowa State University, Department of Economics.
    • Handle: RePEc:isu:genres:5025
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    Cited by:

    1. Ziran Li & Dermot J. Hayes, 2022. "The hedging pressure hypothesis and the risk premium in the soybean reverse crush spread," Journal of Futures Markets, John Wiley & Sons, Ltd., vol. 42(3), pages 428-445, March.

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