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Estimating Price Elasticities of Supply for Cotton: A Structural Time-Series Approach

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  • Shepherd, Ben

Abstract

The Kalman Filter is used to estimate a structural time-series model of cotton supply for 30 countries and 16 aggregated regions. Estimated short run supply elasticities with respect to the world price are presented for all 46 countries and regions. While they are broadly within the expected range in light of previous work, they indicate extensive cross-country and regional heterogeneity, as well as considerable parameter uncertainty in some cases. Finally, some proposals are made for incorporating both the core estimates and their sampling distributions into applied equilibrium models.

Suggested Citation

  • Shepherd, Ben, 2006. "Estimating Price Elasticities of Supply for Cotton: A Structural Time-Series Approach," MPRA Paper 1252, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:1252
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    Cited by:

    1. Ethan Sabala & Stephen Devadoss, 2021. "Spatial equilibrium analysis of Chinese tariff on world cotton markets," The World Economy, Wiley Blackwell, vol. 44(7), pages 2188-2202, July.
    2. Traoré, Fousseini, 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 (RAEStud), Institut National de la Recherche Agronomique (INRA), vol. 94(3).
    3. Shepherd, Ben & Delpeuch, Claire, 2007. "Subsidies and regulatory reform in West African cotton: What are the development stakes?," MPRA Paper 2289, University Library of Munich, Germany.
    4. Motamed, Mesbah J. & Arriola, Christine & Hansen, James & MacDonald, Stephen, 2013. "Cotton and Hydropower in Central Asia: How Resource Competition Affects Trade," Economic Information Bulletin 262128, United States Department of Agriculture, Economic Research Service.
    5. Ashok, K.R. & Uma, K. & Prahadeeswaran, M. & Jeyanthi, H., 2012. "Economic and Environmental Impact of Bt Cotton in India," Indian Journal of Agricultural Economics, Indian Society of Agricultural Economics, vol. 67(3), pages 1-24.
    6. Ozcan Ozturk, 2018. "Effects of Price Transmission and Exchange Rate Elasticities of Three Developing Countries on the World Cotton Trade," Applied Economics and Finance, Redfame publishing, vol. 5(1), pages 91-101, January.
    7. Delpeuch, Claire, 2007. "EU and US safeguards against Chinese textile exports: What consequences for West African cotton-producing countries?," MPRA Paper 2319, University Library of Munich, Germany.

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    More about this item

    Keywords

    Cotton; price elasticity of supply; structural time-series model; Kalman Filter;
    All these keywords.

    JEL classification:

    • Q11 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Aggregate Supply and Demand Analysis; Prices
    • 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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