An Econometric Evaluation Of Stabilization Policies For The U.S. Grain Market
This paper evaluates stabilization policies by applying methods of stochastic control and dynamic analysis to an econometric model of the U.S. grain market. Its main results are: (1) the aggregate consumer and producer surplus generated by the model is insensitive to the choice of the market regime; (2) policies directed to stabilize prices at levels compatible with nondecreasing farm revenue require the management of both grain inventories and domestic supply; (3) price fluctuations are significantly less under optimal stabilization than in the unregulated version of the model; and (4) historical policies have destabilizing effects on the market model.
Volume (Year): 04 (1979)
Issue (Month): 01 (July)
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