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A Sequential Rationality Test of USDA Preliminary Price Estimates for Selected Program Crops: Rice, Soybeans, and Wheat

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  • Sung No
  • Michael Salassi

Abstract

Despite recurrent evaluations on USDA price forecasts, the performance of USDA price estimates has not previously been examined in publication. To fill the void in research to this important public information, a sequential forecast evaluation procedure is applied to selected USDA price estimates: Rice, soybeans, and wheat. The evaluation procedure reveals that the USDA price estimates are short-run unbiased; however, they are not long-run rational. In addition, short-run optimality and efficiency tests suggest that USDA price estimates need to be properly scaled and fully reflect information embodied in past prices and their estimates — a possible venue to improve the predictability of USDA price estimates for the crops. Copyright International Atlantic Economic Society 2009

Suggested Citation

  • Sung No & Michael Salassi, 2009. "A Sequential Rationality Test of USDA Preliminary Price Estimates for Selected Program Crops: Rice, Soybeans, and Wheat," International Advances in Economic Research, Springer;International Atlantic Economic Society, vol. 15(4), pages 470-482, November.
    • Handle: RePEc:kap:iaecre:v:15:y:2009:i:4:p:470-482:10.1007/s11294-009-9228-5
    DOI: 10.1007/s11294-009-9228-5
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    Cited by:

    1. Bahram Sanginabadi, 2018. "USDA Forecasts: A meta-analysis study," Papers 1801.06575, arXiv.org.

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    More about this item

    Keywords

    A sequential rationality test; USDA price estimates; Time-series model; D40; Q11; C32; C53; C10; Q00;
    All these keywords.

    JEL classification:

    • D40 - Microeconomics - - Market Structure, Pricing, and Design - - - General
    • Q11 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Aggregate Supply and Demand Analysis; Prices
    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models
    • C53 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Forecasting and Prediction Models; Simulation Methods
    • C10 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - General
    • Q00 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - General - - - General

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