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DYNAMIC CONTROL AS MEASURE TO STABILIZE AGRICULTUTAL MARKETS: On Theory and Options to Correct Cyclical Movements

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  • Nuppenau, Ernst-August

Abstract

This paper deals with a control theory approach to stabilize cyclical price movements. Firstly, we pursue a welfare economist’s approach, delineating a public objective function derived from consumer and producer surplus as well as trade budget at world market price. Trade is a con¬trol variable and the market price is a state variable. Moreover we assume adaptive formation of price expectation at the producer side. Secondly the control problem is outline and solved by discrete control theory. Thirdly, the paper makes suggestions how to translate the optimal control framework and results into a trade policy of the envisaged country. Finally, limitations are discussed and an outlook for broadening the concept for international concerns is offered.

Suggested Citation

  • Nuppenau, Ernst-August, 2012. "DYNAMIC CONTROL AS MEASURE TO STABILIZE AGRICULTUTAL MARKETS: On Theory and Options to Correct Cyclical Movements," 123rd Seminar, February 23-24, 2012, Dublin, Ireland 122467, European Association of Agricultural Economists.
  • Handle: RePEc:ags:eaa123:122467
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    File URL: http://purl.umn.edu/122467
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    References listed on IDEAS

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    1. Nerlove, Marc & Grether, David M. & Carvalho, José L., 1979. "Analysis of Economic Time Series," Elsevier Monographs, Elsevier, edition 1, number 9780125157506 edited by Shell, Karl.
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    More about this item

    Keywords

    dynamic control; expectations; cyclical prices; stabilization policy; Risk and Uncertainty; C54; C61; F61.;

    JEL classification:

    • C54 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Quantitative Policy Modeling
    • C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis

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