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Alternative Estimates of Fed Beef Supply Response to Risk
Author(s) -
Antonovitz Frances,
Green Richard
Publication year - 1990
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 - 10.2307/1242351
Subject(s) - econometrics , futures contract , economics , variance (accounting) , autoregressive integrated moving average , elasticity (physics) , rational expectations , price elasticity of supply , statistics , price elasticity of demand , mathematics , microeconomics , financial economics , time series , accounting , materials science , composite material
Supply response models for fed beef incorporating risk by including both the mean and variance of output price are developed, estimated, and compared. Six different estimates of the mean and variance are obtained from futures prices; ARIMA processes; and naive, adaptive, and rational expectations models. Empirical estimates are compared using nonnested testing procedures and indicate that the choice of the expectations model significantly influences elasticity estimates and whether supply response is positive or negative. Empirical evidence does not support any one model in particular, suggesting that expectations are heterogenous rather than homogenous.