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Effect of Public Price Forecasts on Market Price Variation: A Stochastic Cobweb Example
Author(s) -
Smyth David J.
Publication year - 1973
Publication title -
american journal of agricultural economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.949
H-Index - 111
eISSN - 1467-8276
pISSN - 0002-9092
DOI - 10.2307/1238668
Subject(s) - economics , variance (accounting) , econometrics , variation (astronomy) , price variance , financial economics , physics , accounting , astrophysics
This paper analyzes the effect of less than perfectly accurate forecasting in a stochastic cobweb model when public announcement of the forecasts influences suppliers' behavior. The forecasts considered in the analysis reduce the time variance of price, but the forecasts that minimize the variance are not always the most accurate.