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An Econometric Evaluation Of Stabilization Policies For The U.S. Grain Market

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  • Arzac, Enrique R.

Abstract

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.

Suggested Citation

  • Arzac, Enrique R., 1979. "An Econometric Evaluation Of Stabilization Policies For The U.S. Grain Market," Western Journal of Agricultural Economics, Western Agricultural Economics Association, vol. 4(01), July.
  • Handle: RePEc:ags:wjagec:32430
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    File URL: http://purl.umn.edu/32430
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    References listed on IDEAS

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    1. Paul A. Samuelson, 1972. "The Consumer Does Benefit from Feasible Price Stability," The Quarterly Journal of Economics, Oxford University Press, vol. 86(3), pages 476-493.
    2. Turnovsky, Stephen J, 1976. "The Distribution of Welfare Gains from Price Stabilization: The Case of Multiplicative Disturbances," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 17(1), pages 133-148, February.
    3. Lucas, Robert Jr, 1976. "Econometric policy evaluation: A critique," Carnegie-Rochester Conference Series on Public Policy, Elsevier, vol. 1(1), pages 19-46, January.
    4. Tweeten, Luther G., 1967. "The Demand for United States Farm Output," Food Research Institute Studies, Stanford University, Food Research Institute, issue 03.
    5. J. P. Houck & M. E. Ryan, 1972. "Supply Analysis for Corn in the United States: The Impact of Changing Government Programs," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 54(2), pages 184-191.
    6. Gordon C. Rausser & John W. Freebairn, 1974. "Approximate Adaptive Control Situations to U.S. Beef Trade Policy," NBER Chapters,in: Annals of Economic and Social Measurement, Volume 3, number 1, pages 177-204 National Bureau of Economic Research, Inc.
    7. Houck, James P. & Ryan, Mary E., 1972. "Supply Analysis For Corn In The United States: The Impact Of Changing Government Programs," Staff Papers 13554, University of Minnesota, Department of Applied Economics.
    8. Kydland, Finn E & Prescott, Edward C, 1977. "Rules Rather Than Discretion: The Inconsistency of Optimal Plans," Journal of Political Economy, University of Chicago Press, vol. 85(3), pages 473-491, June.
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    Cited by:

    1. Bigman, David & Yitzhaki, Shlomo, 1982. "Optimizing Storage Operations: An Integration of Stochastic Simulations and Numerical Optimization," Working Papers 232612, Hebrew University of Jerusalem, Center for Agricultural Economic Research.
    2. Athanasiou, George & Karafyllis, Iasson & Kotsios, Stelios, 2008. "Price stabilization using buffer stocks," Journal of Economic Dynamics and Control, Elsevier, vol. 32(4), pages 1212-1235, April.

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    Crop Production/Industries;

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