Abebayehu Tegene

Land Tenure and the Adoption of Conservation Practices

We use a logit adoption model with data on 941 U.S. corn producers from the 1996 Agricultural Resource Management Study to analyze the influence of land tenure on the adoption of conservation practices. We extend previous analyses by distinguishing renters according to lease type and by distinguishing practices according to the timing of costs and returns. We find that cash-renters are less likely than owner-operators to use conservation tillage, but share-renters are not. Both cash-renters and share-renters are less likely than owner-operators to adopt practices that provide benefits only over the longer term (grassed waterways, stripcropping, and contour farming).

Estimating the Public Value of Conflicting Information: The Case of Genetically Modified Foods

Environmental groups have become the chief antagonists toward agricultural biotechnology innovations. They demonstrate and disseminate private information with the objective of changing the behavior of consumers and producers. We use experimental auctions with adult U.S. consumers and show that this information reduces significantly the demand for genetically modified (GM)-food products and that it has significant public good value—an average of 3 cents per product purchased, or roughly

Dynamic Corn Supply Functions: A Model with Explicit Optimization

2 billion annually. We also show that the dissemination of independent third-party information about agricultural biotechnology dissipates most of the public good value of negative GM-product information. (JEL D83, Q18)

Evaluating forecasting models of farmland prices

A model of optimal dynamic agricultural supply is derived and fitted assuming farmers have two annual stochastic crop production activities, a joint limitation on production capacity, interdependencies between past acreage utilization and current productivity, and rational expectations. A five-equation specification is fitted to annual data, 1948–80. Estimated parameters are consistent with the theory, and the model simulates well. The long-run price elasticity of corn acreage is 0.2, which is similar to those obtained from ad hoc dynamic models, but our short-run elasticities are different.

Trade flows, relative prices, and effective exchange rates: a VAR on Ethiopian data

Abstract A set of rigorous diagnostic tools is used to evaluate the forecasting performance of five farmland value models. The models are two variations of the present-value model (PV1 and PV2), an ARIMA, a vector autoregression (VAR), and an error-correcting model (ECM). One- and three-period-ahead out-of-sample forecasts are evaluated in terms of forecast accuracy (root mean-squared error) and the ability to predict turning points (Henriksson-Merton test). By the Henriksson-Merton test, the error-correcting model generates superior forecasts at both forecasting horizons. The vector autoregressive model performs poorly by root mean-squared error criterion, as does ARIMA in predicting turning points in the three-period-ahead forecast.

Kalman filter and the demand for cigarettes

The dynamic response of trade flows to price and effective exchange rate changes is examined via VAR using quarerly data from Ethiopia for the period 1973(i)–1985(iv). The results show one-way Granger-causality running from prices and exchange rates to imports and exports without significant feedback. Imports and exports exhibit similar response patterns to unexpected changes in relative prices and exchange rates. The responses of imports and exports are larger and the adjustment takes longer when relative prices rather than exchange rates caused a change in international prices. In the long-run, changes in prices account for a larger percentage of the forecast error variances in imports and exports than exchange rate changes. It is shown that devaluation may have an initial adverse effect on the trade balance.

Evidence on the Existence of Speculative Bubbles in Farmland Prices

kalman filter estimates of price, income and advertising elasticities are presented. An analysis of structural change in the demand for cigarettes in the US for the period 1929–86 is made. Estimated price and income elasticities are generally smaller, and the advertising elasticity larger, than estimates previously found. Cigarette demand is inelastic with respect to price and income, and advertising elasticity is statistically insignificant for the most part. Furthermore, both income and price elasticities decline over time while advertising elasticity tends to rise. Four time periods where structural change has occurred are identified. The health scare reports and the Fairness Doctrine Act have a significant impact on per capita cigarette consumption.

An error correcting model of farmland prices

We conduct tests for the contribution of speculative bubbles to farmland prices. These tests are carried out under the hypothesis that farmland investors rationally form expectations. The outcome of tests reported here allows us to infer whether farmland prices are determined by market fundamentals-discounted returns from the highest economic land use-or whether rumors about farmland price movements are self-fulfilling. The tests are stationarity and cointegration tests relating farmland prices to rents. The tests are carried out using data from three farm production regions-the Corn Belt, the Northern Plains, and the Lake States. In each region, we find little evidence to reject the hypothesis that market fundamentals determine farmland prices.

Consumer demand for cholesterol-lowering enhanced margarine products

Granger has demonstrated that if two variables are integrated of order one and are conitegrated, they can be modelled as having been generated by an error correction mechanism. Cointegration and error correction systems allow long-run components of variables to obey equilibrium constraints while short-run components are allowed to have flexible dynamic specification. Using data from five Corn Belt States in the US, we show that farmland prices and cash rents are each integrated of order one and are model is estimated. The error correction term is found to be significant in both equations, indicating Granger causality running in both directions. Historical simulation of the model is performed. The price equation peroformed better although both equations simulate reasonably well.

The Effects of Prior Beliefs and Learning on Consumers' Acceptance of Genetically Modified Foods: Implications for Diet and Behavior*

Abstract The development and introduction of nutritionally enhanced margarines in the mid-1990s offered the opportunity to improve public health through the use of a cholesterol-lowering food product. Product approval in the USA followed that in Europe. The public approval and market acceptance of the nutritionally enhanced product illustrate the challenges faced by offering improved health attributes through food product innovation. Although the product Benecol received public endorsement and was relatively quickly accepted by Finnish consumers, public acceptance has been slower in the USA. Our study traces consumer response to the introduction of nutritionally enhanced margarine products in the US market. Household scanner data allow estimation of hedonic price functions and a probit model on the choice of the health-promoting product attribute. US consumers of the enhanced margarine products place a relatively high value on the cholesterol-lowering attribute, although a relatively small share of households purchase the products that include it.