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Confidence Intervals for Elasticities and Flexibilities: Re-Evaluating the Ratios of Normals Case

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  • Kling, Catherine L.
  • Dorfman, Jeffrey
  • Sexton, Richard

Abstract

Many important hypotheses in applied economics depend upon the magnitude of estimated elasticities or flexibilities. However, their statistical properties are unknown for many popular models, making standard statistical inference impossible. This problem is addressed in the present paper which analyzes and evaluates alternative methods of constructing confidence intervals for elasticities and flexibilities. The methods studied include three bootstrap-based approaches, an approximation based on a Taylor's series expansion, and approaches proposed by Fieller and Scheff�. Results show that all method's except Scheff�'s worked

Suggested Citation

  • Kling, Catherine L. & Dorfman, Jeffrey & Sexton, Richard, 1990. "Confidence Intervals for Elasticities and Flexibilities: Re-Evaluating the Ratios of Normals Case," Staff General Research Papers Archive 1582, Iowa State University, Department of Economics.
  • Handle: RePEc:isu:genres:1582
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    2. John M. Antle & Roberto O. Valdivia, 2006. "Modelling the supply of ecosystem services from agriculture: a minimum-data approach ," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, pages 1-15.
    3. Caffey, Rex H. & Kazmierczak, Richard F., Jr., 1994. "Factors Influencing Technology Adoption In A Louisiana Aquaculture System," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 26(01), July.
    4. Ward, Patrick & Shively, Gerald, 2012. "Vulnerability, Income Growth and Climate Change," World Development, Elsevier, vol. 40(5), pages 916-927.
    5. Lanfranco, Bruno A. & Ames, Glenn C.W. & Huang, Chung L. & Stegelin, Forrest E., 2001. "Wic And The Demand For Food By The Hispanic Community In The United States," Journal of Food Distribution Research, Food Distribution Research Society, vol. 32(01), March.
    6. Berning, Joshua P. & Chouinard, Hayley & McCluskey, Jill J., 2009. "Measuring the Impact of Nutrition Labels on Food Purchasing Decisions: A field experiment with scanner data," Research Reports 153338, University of Connecticut, Food Marketing Policy Center.
    7. McIntosh, Christopher S. & Shumway, C. Richard, 1991. "Multiproduct Production Choices And Policy Response," Western Journal of Agricultural Economics, Western Agricultural Economics Association, vol. 16(02), December.
    8. Hirschberg, J.G. & Lye, J.N. & Slottje, D.J., 2008. "Inferential methods for elasticity estimates," Journal of Econometrics, Elsevier, pages 299-315.
    9. Lanfranco, Bruno A. & Ames, Glenn C.W. & Huang, Chung L., 2001. "A Censored System Estimation Of Hispanic Household Food Consumption Patterns," Faculty Series 16720, University of Georgia, Department of Agricultural and Applied Economics.
    10. J. G. Hirschberg, J. N. Lye & D. J. Slottje, 2008. "Confidence Intervals for Estimates of Elasticities," Department of Economics - Working Papers Series 1053, The University of Melbourne.
    11. Gorton, Matthew & Davidova, Sophia, 2004. "Farm productivity and efficiency in the CEE applicant countries: a synthesis of results," Agricultural Economics of Agricultural Economists, International Association of Agricultural Economists, vol. 30(1), January.
    12. Isik, Murat & Coble, Keith H. & Hudson, Darren & House, Lisa O., 2003. "A model of entry-exit decisions and capacity choice under demand uncertainty," Agricultural Economics of Agricultural Economists, International Association of Agricultural Economists, vol. 28(3), May.
    13. Kim, Jae H. & Fraser, Iain & Hyndman, Rob J., 2011. "Improved interval estimation of long run response from a dynamic linear model: A highest density region approach," Computational Statistics & Data Analysis, Elsevier, pages 2477-2489.
    14. McIntosh, Christopher S. & Williams, Albert A., 1992. "Multiproduct Production Choices And Pesticide Regulation In Georgia," Journal of Agricultural and Applied Economics, Cambridge University Press, pages 135-144.
    15. Metin Cakir & Joseph V. Balagtas, 2010. "Econometric evidence of cross-market effects of generic dairy advertising," Agribusiness, John Wiley & Sons, Ltd., vol. 26(1), pages 83-99.
    16. Mario F. Teisl & Nancy E. Bockstael & Alan Levy, 2001. "Measuring the Welfare Effects of Nutrition Information," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 83(1), pages 133-149.
    17. Joseph Cooper & John Loomis, 1993. "Testing whether waterfowl hunting benefits increase with greater water deliveries to wetlands," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, pages 545-561.
    18. Rodriguez, Nestor & Eales, James S., 2015. "Structural Change via Threshold Effects: Estimating U.S. Meat Demand Using Smooth Transition Functions and the Effects of More Women in the Labor Force," 2015 AAEA & WAEA Joint Annual Meeting, July 26-28, San Francisco, California 206522, Agricultural and Applied Economics Association;Western Agricultural Economics Association.
    19. Johnston, Robert J. & Swallow, Stephen K. & Weaver, Thomas F., 1999. "Estimating Willingness to Pay and Resource Tradeoffs with Different Payment Mechanisms: An Evaluation of a Funding Guarantee for Watershed Management," Journal of Environmental Economics and Management, Elsevier, vol. 38(1), pages 97-120, July.
    20. V. Kumar & Jia Fan & Rohit Gulati & P. Venkat, 2009. "—Marketing-Mix Recommendations to Manage Value Growth at P&G Asia-Pacific," Marketing Science, INFORMS, vol. 28(4), pages 645-655, 07-08.
    21. McIntosh, Christopher S. & Williams, Albert A., 1992. "Multiproduct Production Choices And Pesticide Regulation In Georgia," Journal of Agricultural and Applied Economics, Cambridge University Press, pages 135-144.
    22. Mooney, Sian & Antle, John M. & Capalbo, Susan Marie & Paustian, Keith H., 2003. "Incorporating Uncertainty In Integrated Assessment Modeling," 2003 Annual meeting, July 27-30, Montreal, Canada 22225, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    23. Nin Pratt, Alejandro & Hertel, Thomas W. & Foster, Kenneth A. & Rae, Allan N., 2001. "Productivity Growth And Catching-Up: Implications For China'S Trade In Livestock Products," 2001 Annual meeting, August 5-8, Chicago, IL 20590, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    24. Bullock, David S. & Salhofer, Klaus, 2003. "Judging agricultural policies: a survey," Agricultural Economics, Blackwell, pages 225-243.

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