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Tobit regression to estimate impact of EU market intervention in dairy sector

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  • Wocken, Meike
  • Kneib, Thomas

Abstract

This study examines the effect of European intervention politics in the European butter market in the context of market liberalization using the example of Germany. A heteroscedastic Tobit model is estimated using German butter market data from 1973-2010. There is evidence that price support has reduced price instability in the butter market. Simulation indicates that enhancing intervention price causes an increase in the expected butter price in the long-run, even though if market price is higher than intervention level. We find changing effects of stockpiling. If difference between market and intervention price is small and stock quantity is high, it significantly contributes to reducing price volatility. On the contrary if price difference is large and stock quantity low, the effect of reducing price volatility decreases.

Suggested Citation

  • Wocken, Meike & Kneib, Thomas, 2012. "Tobit regression to estimate impact of EU market intervention in dairy sector," 123rd Seminar, February 23-24, 2012, Dublin, Ireland 122528, European Association of Agricultural Economists.
  • Handle: RePEc:ags:eaa123:122528
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    File URL: http://purl.umn.edu/122528
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    References listed on IDEAS

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    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Censored regression; market liberalization; butter market; Agricultural and Food Policy; Risk and Uncertainty; C5; D4; Q11.;

    JEL classification:

    • C5 - Mathematical and Quantitative Methods - - Econometric Modeling
    • D4 - Microeconomics - - Market Structure, Pricing, and Design

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