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SUPPLY CONTROL WITH LIMITED INFORMATION: AN ECONOMETRIC STUDY OF TOBACCO PRODUCTION IN GREECE
Author(s) -
Zanias George P.,
Jones George T.
Publication year - 1985
Publication title -
journal of agricultural economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.157
H-Index - 61
eISSN - 1477-9552
pISSN - 0021-857X
DOI - 10.1111/j.1477-9552.1985.tb00168.x
Subject(s) - econometrics , economics , heating degree day , econometric model , statistics , production (economics) , control variable , population , variable (mathematics) , measure (data warehouse) , control (management) , mathematics , microeconomics , computer science , energy consumption , engineering , mathematical analysis , demography , management , database , sociology , electrical engineering
In the absence of explicit data that would facilitate a direct measure of the variable degree of control over exportable tobacco in Greece, a statistical measure was devised for it corresponding to the probability that control did adversely affect production in a particular year. This was measured by simulating the supply equations from the free market period over the control period and relating the discrepancies to the standard errors of the simulated values. The period 1948–1980 was re‐analysed using this control variable jointly with lagged prices as supplementary ‘independent’ variables. The best estimate of the long‐run price elasticity is considered to be near 3 but falls below 2 with a normal degree of control. The normal long‐run effect of control on production was near 30%. Other effects of considerable importance were the level of the rural population, weather and trend. The analysis required the use of several sophisticated econometric techniques including Schmidt's formula for the error of a cumulative projection.