This paper questions the standard assumption that inflation has no effect on import demand functi... more This paper questions the standard assumption that inflation has no effect on import demand functions. We describe a simple method for testing whether proportionate changes in prices and income influence import demands. We estimate several import demand functions and provide, some evidence that inflation influences importers' demand. We also show that, when estimating import demand functions, it is difficult to test for the correct index of inflation.
We divide countries into two technology categories: developed and developing. Agricultural effici... more We divide countries into two technology categories: developed and developing. Agricultural efficiency within each technology category was calculated. Cross-category efficiency measures were developed and combined with own-category measures to develop a technical difference index. Results indicate convergence of efficiency within both categories but divergence of efficiency between the two categories.
Multifactor productivity indices that are measured using data envelopment analysis are compared w... more Multifactor productivity indices that are measured using data envelopment analysis are compared with indices measured using a Cobb-Douglas production function. Cobb-Douglas functions are then used to measure the relative impacts of input growth and productivity on agricultural output growth. Both input growth and productivity growth have accounted for agricultural growth in developed countries. However, in developing countries output growth can primarily be attributed to the growth in fertilizer and machinery. Productivity growth has fallen in many developing countries.
This study investigates whether importers of U.S. wheat form an integrated market or a series of ... more This study investigates whether importers of U.S. wheat form an integrated market or a series of segmented markets. Two market integration tests are applied: one based on equilibrium price relationships and one based on disequilibrium price relationships. With the exception of a few importers, both tests tend to agree. This study also seeks to explain the reasons for the wide divergence in prices paid by importers of U.S. wheat. We find that factors such as the class of wheat which is purchased and the size of annual purchases influence pricing. We also find that there continues to be large persistence difference in the prices paid by importers.
The International Food and Agribusiness Management Review, 2015
China’s poultry production and consumption are growing rapidly, but rising input costs could slow... more China’s poultry production and consumption are growing rapidly, but rising input costs could slow its development. Increases in corn and soybean prices and wages are partially transmitted to rising retail chicken prices in China. Corn and soybean meal appear to be substitutes, and corn prices have a stronger impact on chicken prices than does the price of soybean meal. Modest technical change impacts partly offset the effect of rising input prices. Rising grain prices and wages, reinforced by Chinese currency appreciation, are eroding the international competitiveness of the Chinese poultry industry
This report presents multifactor productivity indices of Brazil's agricultural sector. The im... more This report presents multifactor productivity indices of Brazil's agricultural sector. The imposed restriction, that the production technology is constant returns to scale, influences calculation of indices. The difference between the constant returns-to-scale index and the more general index derived here indicates that constant returns to scale is an overly restrictive assumption for Brazilian agriculture. This report presents indices for eight categories of inputs (energy, feed and seed, fertilizers, labor, land, pesticides, livestock, and machinery) and describes and documents the data used in calculation of the indices.
This chapter extends the work of the previous chapters by fitting a long run profit function to i... more This chapter extends the work of the previous chapters by fitting a long run profit function to investigate the sources of output growth in South African agriculture. In the long run, all the conventional inputs are treated as variable, but the technology-related variables are fixed because they are beyond the control of farmers. The long run elasticities are entirely consistent with the short run results and are easier to interpret. However, education still has negative effects and the rate of return to public R&D is 113 per cent, as compared with the short run result of 44 per cent. The higher return reflects the fact that new technology is embodied in the capital items, but the long run model raises a new problem since the last chapter showed that capital stock adjustment takes 11 years. If this is assumed to be the correct lag length, the long-run ROR falls to a more reasonable 58 per cent.
The assumption of adjustment costs is used to specify a dynamic model of the U.S. economy. Output... more The assumption of adjustment costs is used to specify a dynamic model of the U.S. economy. Output is divided into in three sectors: agriculture, manufacturing, and services. The advantage of this approach is that it can measure more factors that contribute to productivity growth than a static model. Output growth and productivity are measured using data and parameters from an estimated dynamic model. Parameters that are unique to dynamic models and a returns-to-scale measure make up part of the productivity calculations. Dynamic components of productivity are less than 5 percent of productivity growth for most years. This occurs because dynamic components of productivity are a function of returns to scale, and production is measured to be close to constant returns to scale. Elasticities from the estimated model show that both manufacturing and service prices have a major impact on agricultural output. Own-price elasticities are relatively small for agriculture.
In this study we examine changing relationships among maize prices in four global markets. In doi... more In this study we examine changing relationships among maize prices in four global markets. In doing so, we allow the quantity of exports to play a role in both price transmission and price response. That is, we adapt threshold cointegration methods to search for critical export volumes that enhance (or diminish) the role a region’s price plays in the world market. We find that the short run response of prices in both Argentina and Ukraine is influenced by the level of Ukraine’s exports. However the period where Ukraine’s exports reached their threshold coincides with the period that Argentina imposed export restrictions on maize. We also find that there are numerous country specific price thresholds that influence each market’s short run response to a price shock.
This paper examines the relationships among maize prices for four countries to determine if newly... more This paper examines the relationships among maize prices for four countries to determine if newly emerging exporters, Brazil and Ukraine, influence the international price of maize. Our work focuses on each market's participation in the price discovery process rather than trying to determine a price leader. We find that the United States plays the largest role in price discovery, followed by Argentina, Brazil, and Ukraine. We also search for export thresholds and find that Ukraine's contribution to price discovery rises slightly when an export threshold of 2.3 million tons is reached. No export thresholds were found for Brazil. Export thresholds for Argentina were found but only have a minor impact on price relationships. We also found that price relationships vary considerably across seasons of the year.
This study connects Mexico’s imports of U.S. broiler meat with its imports of feed products. Two ... more This study connects Mexico’s imports of U.S. broiler meat with its imports of feed products. Two demand systems for Mexico are estimated: a two-stage Almost Ideal Demand System (AIDS) model for broiler meat and a demand for feed derived from a translog cost function representing the production of Mexican chickens. The models are estimated using data from 1997 to 2016. Given a change in policy where Mexico completely replaces U.S. broiler meat imports, the imports of U.S. feed products will increase. If Mexico does not completely replace U.S. imports with domestic broiler production, our model suggests that Mexican imports of U.S. feed fall.
This paper explores the transmission of the international prices agricultural commodities to the ... more This paper explores the transmission of the international prices agricultural commodities to the domestic Chinese market over a period of time when China was both opening up to world market and constantly adjusting it agricultural policies in response to changing world market conditions. An ECM model is estimated which distinguishes between short and long run transmission and enables account for the impact that past price variability has on the transmission of prices. The model specification also allows us to test whether China can influence world commodity prices and to distinguish between the transmission of expected and unexpected price changes to China. We find significant differences in transmission across commodities, with Chinese soybeans and soymeal and chicken price being the most integrated with world prices and rice being the least integrated. We also find that short run transmission of prices are much lower than long run price transmissions, suggesting that stabilization policies may delay-but not eliminate-transmission of price shocks for many commodities.
ABSTRACT This article provides a means for testing whether buyers or sellers are responsible for ... more ABSTRACT This article provides a means for testing whether buyers or sellers are responsible for a drop in sales following a market shock. We show that suppliers’ responses dominated the market reaction to the 2006 US Food and Drug Administration warning to avoid fresh spinach contaminated with potentially deadly bacteria Escherichia coli O157:H7. A modified Durbin-Wu-Hausman test for temporary price endogeneity is developed and used in a leafy green vegetable demand model. Test results indicate the price of bagged spinach was exogenous before the announcement but endogenous for approximately 12 weeks afterward. We show these results are consistent with the notion that suppliers temporarily limited the availability of spinach to consumers. Instead of consumers choosing the quantity purchased given exogenous prices, it was suppliers who limited the quantity marketed and consumers’ choices established the market price.
ABSTRACT This paper uses the Gonzalo–Granger price discovery method to determine whether wheat pr... more ABSTRACT This paper uses the Gonzalo–Granger price discovery method to determine whether wheat prices are primarily discovered in the Northern Hemisphere or Southern Hemisphere and whether the price discovery process changes throughout the calendar year. Testing U.S. hard red winter prices against Argentina's wheat price we find that the United States dominates the price discovery process 7 months of the year. Testing U.S Portland soft white prices against Australia's wheat price we find that both countries play a significant role in price discovery but the relative country contribution to price formation varies throughout the year. We also find that the price discovery process changes over time. [EconLit citations: D4, C1, F15].
This paper portrays traders as firms that maximize revenues across markets, including the export ... more This paper portrays traders as firms that maximize revenues across markets, including the export market. We derive the properties of an export supply function and use these properties to estimate an export supply equation. The revenue-maximizing decision can help economists determine the amount trading companies should be compensated (taxed) in the wake of a change in government programs. For example, we show that economists can estimate compensation (tax) levels which ensure traders' revenues do not change from government policy changes. We illustrate our case by estimating barley supply equations.
Journal of Agricultural and Applied Economics, 2015
This study investigates the relationship between cash and futures prices of soybeans and soybean ... more This study investigates the relationship between cash and futures prices of soybeans and soybean meal from 1992 to 2013. Error correction models are estimated for the prices of both commodities. An exogenous measure of price variability is included in both models to determine if variability increases the speed with which cash and futures prices return to their long-run equilibrium relationship. This is used to measure the impact of price variability on short-run market efficiency and the price discovery process. The findings indicate that the level of price variability influences market adjustment rates and the price discovery process.
In this paper we evaluate the performance of a dynamic model of cattle replacement and culling de... more In this paper we evaluate the performance of a dynamic model of cattle replacement and culling decisions. We derive the price of cattle when it is treated as a unit of capital and evaluate various rates of adjustment of the cattle herd to determine the length of the cattle cycle. Replacement decision is modeled as the solution to a dynamic optimization problem where the breeding herd is viewed as a capital asset that is capable of producing two outputs: calves and culled cows. The own-price, replacement and interest rate elasticities calculated for both the short-run and long-run time-frames suggest fairly rapid adjustment rates. Tests of cycle length revealed a 14-year cattle cycle.
The decision to overwinter feeder cattle hinges directly on the forecast of spring cattle prices.... more The decision to overwinter feeder cattle hinges directly on the forecast of spring cattle prices. An analysis of price forecasts from several alternative models is presented. The models are evaluated using both the traditional mean square criterion and alternative criteria. The alternative criteria evaluate the profitability of the decision implemented based upon the forecast.
This paper questions the standard assumption that inflation has no effect on import demand functi... more This paper questions the standard assumption that inflation has no effect on import demand functions. We describe a simple method for testing whether proportionate changes in prices and income influence import demands. We estimate several import demand functions and provide, some evidence that inflation influences importers' demand. We also show that, when estimating import demand functions, it is difficult to test for the correct index of inflation.
We divide countries into two technology categories: developed and developing. Agricultural effici... more We divide countries into two technology categories: developed and developing. Agricultural efficiency within each technology category was calculated. Cross-category efficiency measures were developed and combined with own-category measures to develop a technical difference index. Results indicate convergence of efficiency within both categories but divergence of efficiency between the two categories.
Multifactor productivity indices that are measured using data envelopment analysis are compared w... more Multifactor productivity indices that are measured using data envelopment analysis are compared with indices measured using a Cobb-Douglas production function. Cobb-Douglas functions are then used to measure the relative impacts of input growth and productivity on agricultural output growth. Both input growth and productivity growth have accounted for agricultural growth in developed countries. However, in developing countries output growth can primarily be attributed to the growth in fertilizer and machinery. Productivity growth has fallen in many developing countries.
This study investigates whether importers of U.S. wheat form an integrated market or a series of ... more This study investigates whether importers of U.S. wheat form an integrated market or a series of segmented markets. Two market integration tests are applied: one based on equilibrium price relationships and one based on disequilibrium price relationships. With the exception of a few importers, both tests tend to agree. This study also seeks to explain the reasons for the wide divergence in prices paid by importers of U.S. wheat. We find that factors such as the class of wheat which is purchased and the size of annual purchases influence pricing. We also find that there continues to be large persistence difference in the prices paid by importers.
The International Food and Agribusiness Management Review, 2015
China’s poultry production and consumption are growing rapidly, but rising input costs could slow... more China’s poultry production and consumption are growing rapidly, but rising input costs could slow its development. Increases in corn and soybean prices and wages are partially transmitted to rising retail chicken prices in China. Corn and soybean meal appear to be substitutes, and corn prices have a stronger impact on chicken prices than does the price of soybean meal. Modest technical change impacts partly offset the effect of rising input prices. Rising grain prices and wages, reinforced by Chinese currency appreciation, are eroding the international competitiveness of the Chinese poultry industry
This report presents multifactor productivity indices of Brazil's agricultural sector. The im... more This report presents multifactor productivity indices of Brazil's agricultural sector. The imposed restriction, that the production technology is constant returns to scale, influences calculation of indices. The difference between the constant returns-to-scale index and the more general index derived here indicates that constant returns to scale is an overly restrictive assumption for Brazilian agriculture. This report presents indices for eight categories of inputs (energy, feed and seed, fertilizers, labor, land, pesticides, livestock, and machinery) and describes and documents the data used in calculation of the indices.
This chapter extends the work of the previous chapters by fitting a long run profit function to i... more This chapter extends the work of the previous chapters by fitting a long run profit function to investigate the sources of output growth in South African agriculture. In the long run, all the conventional inputs are treated as variable, but the technology-related variables are fixed because they are beyond the control of farmers. The long run elasticities are entirely consistent with the short run results and are easier to interpret. However, education still has negative effects and the rate of return to public R&D is 113 per cent, as compared with the short run result of 44 per cent. The higher return reflects the fact that new technology is embodied in the capital items, but the long run model raises a new problem since the last chapter showed that capital stock adjustment takes 11 years. If this is assumed to be the correct lag length, the long-run ROR falls to a more reasonable 58 per cent.
The assumption of adjustment costs is used to specify a dynamic model of the U.S. economy. Output... more The assumption of adjustment costs is used to specify a dynamic model of the U.S. economy. Output is divided into in three sectors: agriculture, manufacturing, and services. The advantage of this approach is that it can measure more factors that contribute to productivity growth than a static model. Output growth and productivity are measured using data and parameters from an estimated dynamic model. Parameters that are unique to dynamic models and a returns-to-scale measure make up part of the productivity calculations. Dynamic components of productivity are less than 5 percent of productivity growth for most years. This occurs because dynamic components of productivity are a function of returns to scale, and production is measured to be close to constant returns to scale. Elasticities from the estimated model show that both manufacturing and service prices have a major impact on agricultural output. Own-price elasticities are relatively small for agriculture.
In this study we examine changing relationships among maize prices in four global markets. In doi... more In this study we examine changing relationships among maize prices in four global markets. In doing so, we allow the quantity of exports to play a role in both price transmission and price response. That is, we adapt threshold cointegration methods to search for critical export volumes that enhance (or diminish) the role a region’s price plays in the world market. We find that the short run response of prices in both Argentina and Ukraine is influenced by the level of Ukraine’s exports. However the period where Ukraine’s exports reached their threshold coincides with the period that Argentina imposed export restrictions on maize. We also find that there are numerous country specific price thresholds that influence each market’s short run response to a price shock.
This paper examines the relationships among maize prices for four countries to determine if newly... more This paper examines the relationships among maize prices for four countries to determine if newly emerging exporters, Brazil and Ukraine, influence the international price of maize. Our work focuses on each market's participation in the price discovery process rather than trying to determine a price leader. We find that the United States plays the largest role in price discovery, followed by Argentina, Brazil, and Ukraine. We also search for export thresholds and find that Ukraine's contribution to price discovery rises slightly when an export threshold of 2.3 million tons is reached. No export thresholds were found for Brazil. Export thresholds for Argentina were found but only have a minor impact on price relationships. We also found that price relationships vary considerably across seasons of the year.
This study connects Mexico’s imports of U.S. broiler meat with its imports of feed products. Two ... more This study connects Mexico’s imports of U.S. broiler meat with its imports of feed products. Two demand systems for Mexico are estimated: a two-stage Almost Ideal Demand System (AIDS) model for broiler meat and a demand for feed derived from a translog cost function representing the production of Mexican chickens. The models are estimated using data from 1997 to 2016. Given a change in policy where Mexico completely replaces U.S. broiler meat imports, the imports of U.S. feed products will increase. If Mexico does not completely replace U.S. imports with domestic broiler production, our model suggests that Mexican imports of U.S. feed fall.
This paper explores the transmission of the international prices agricultural commodities to the ... more This paper explores the transmission of the international prices agricultural commodities to the domestic Chinese market over a period of time when China was both opening up to world market and constantly adjusting it agricultural policies in response to changing world market conditions. An ECM model is estimated which distinguishes between short and long run transmission and enables account for the impact that past price variability has on the transmission of prices. The model specification also allows us to test whether China can influence world commodity prices and to distinguish between the transmission of expected and unexpected price changes to China. We find significant differences in transmission across commodities, with Chinese soybeans and soymeal and chicken price being the most integrated with world prices and rice being the least integrated. We also find that short run transmission of prices are much lower than long run price transmissions, suggesting that stabilization policies may delay-but not eliminate-transmission of price shocks for many commodities.
ABSTRACT This article provides a means for testing whether buyers or sellers are responsible for ... more ABSTRACT This article provides a means for testing whether buyers or sellers are responsible for a drop in sales following a market shock. We show that suppliers’ responses dominated the market reaction to the 2006 US Food and Drug Administration warning to avoid fresh spinach contaminated with potentially deadly bacteria Escherichia coli O157:H7. A modified Durbin-Wu-Hausman test for temporary price endogeneity is developed and used in a leafy green vegetable demand model. Test results indicate the price of bagged spinach was exogenous before the announcement but endogenous for approximately 12 weeks afterward. We show these results are consistent with the notion that suppliers temporarily limited the availability of spinach to consumers. Instead of consumers choosing the quantity purchased given exogenous prices, it was suppliers who limited the quantity marketed and consumers’ choices established the market price.
ABSTRACT This paper uses the Gonzalo–Granger price discovery method to determine whether wheat pr... more ABSTRACT This paper uses the Gonzalo–Granger price discovery method to determine whether wheat prices are primarily discovered in the Northern Hemisphere or Southern Hemisphere and whether the price discovery process changes throughout the calendar year. Testing U.S. hard red winter prices against Argentina's wheat price we find that the United States dominates the price discovery process 7 months of the year. Testing U.S Portland soft white prices against Australia's wheat price we find that both countries play a significant role in price discovery but the relative country contribution to price formation varies throughout the year. We also find that the price discovery process changes over time. [EconLit citations: D4, C1, F15].
This paper portrays traders as firms that maximize revenues across markets, including the export ... more This paper portrays traders as firms that maximize revenues across markets, including the export market. We derive the properties of an export supply function and use these properties to estimate an export supply equation. The revenue-maximizing decision can help economists determine the amount trading companies should be compensated (taxed) in the wake of a change in government programs. For example, we show that economists can estimate compensation (tax) levels which ensure traders' revenues do not change from government policy changes. We illustrate our case by estimating barley supply equations.
Journal of Agricultural and Applied Economics, 2015
This study investigates the relationship between cash and futures prices of soybeans and soybean ... more This study investigates the relationship between cash and futures prices of soybeans and soybean meal from 1992 to 2013. Error correction models are estimated for the prices of both commodities. An exogenous measure of price variability is included in both models to determine if variability increases the speed with which cash and futures prices return to their long-run equilibrium relationship. This is used to measure the impact of price variability on short-run market efficiency and the price discovery process. The findings indicate that the level of price variability influences market adjustment rates and the price discovery process.
In this paper we evaluate the performance of a dynamic model of cattle replacement and culling de... more In this paper we evaluate the performance of a dynamic model of cattle replacement and culling decisions. We derive the price of cattle when it is treated as a unit of capital and evaluate various rates of adjustment of the cattle herd to determine the length of the cattle cycle. Replacement decision is modeled as the solution to a dynamic optimization problem where the breeding herd is viewed as a capital asset that is capable of producing two outputs: calves and culled cows. The own-price, replacement and interest rate elasticities calculated for both the short-run and long-run time-frames suggest fairly rapid adjustment rates. Tests of cycle length revealed a 14-year cattle cycle.
The decision to overwinter feeder cattle hinges directly on the forecast of spring cattle prices.... more The decision to overwinter feeder cattle hinges directly on the forecast of spring cattle prices. An analysis of price forecasts from several alternative models is presented. The models are evaluated using both the traditional mean square criterion and alternative criteria. The alternative criteria evaluate the profitability of the decision implemented based upon the forecast.
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Papers by Carlos Arnade