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Incorporating Policy Variables in a Model of the World Soybean/Rapeseed Market
Author(s) -
Meilke Karl D.,
Griffith Garry R.
Publication year - 1983
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 - 10.2307/1240338
Subject(s) - rapeseed , economics , commodity , simultaneous equations model , econometrics , agriculture , variable (mathematics) , agricultural policy , variables , agricultural economics , mathematics , chemistry , statistics , market economy , food science , biology , ecology , mathematical analysis
Policy variables are typically treated as exogenous variables in agricultural commodity models. In this paper evidence that policy variables can be successfully endogenized in a world trade model of the soybean/rapeseed and products market is presented. Minimum price support equations are estimated for U.S., Brazilian, and Japanese soybeans, and EC and Japanese rapeseed. Macroeconomic indicator variables are used to capture the impact of nontariff barriers in Brazil and Japan domestic‐world price link equations. Simulation experiments are conducted which indicate that the model with endogenous policy variables performs well in comparison with a model which treats policy exogenously.