Carlos Arnade

Estimation of Area Elasticities from a Standard Profit Function

This article demonstrates that both crop area and output elasticities can be calculated from a profit function. A Chambers/Just profit function (which includes land allocations as quasi-fixed factors) is used to derive shadow price equations for each crop area allocation. Jointly solving these shadow price equations for crop area makes it possible to calculate individual crop area elasticities. A profit function is specified to represent agricultural producers in the state of Iowa. Shadow price equations are jointly estimated with output supply and input demand equations. From these estimated equations, we derive the individual crop area response and output response to a change in prices.

The Dynamics of Individuals' Fat Consumption

Consumers are increasingly aware of the link between their lifestyle choices and the risk of noncommunicable diseases. A dynamic approach incorporating this linkage in food demand is developed, where consumers maximize utility over time by choosing fat intake to control their cumulative fat level. The resulting dynamic indirect utility function and household data on meat, fish, and dairy consumption are used to estimate a censored demand system. Results show that consumers consciously adjust, but not instantaneously, their cumulative fat level. Highly educated households have a faster rate of adjustment of cumulative fat. When cumulative fat level increases, consumers shift to dairy or white meat from red meat products.

Seasonality and unit roots: the demand for fruits

We apply seasonal unit root tests to apple and pear price and quantity data. We then develop a method for testing shifts in amplitude andjor phase of the seasonal cycles. The results have implications to econometric specifications of models which use short-run data (quarterly, monthly).

Financial constraints and output targets in Russian agricultural production.

Since the breakup of the Soviet Union, Russian agricultural production has experienced a significant decline. The rise in input prices relative to output prices and the lack of legal mechanisms to provide land as a collateral for loans suggest the existence of expenditure constraints. We test for expenditure constraints and prevalence of output-targeting as sources of inefficiency in addition to actual inefficiencies in 73 Russian farm regions (oblasts). Only six oblasts are overall efficient and the rest experienced profit losses from all three sources of inefficiency of up to 35.8 per cent. We find that 54 oblasts are subject to expenditure constraints, while output-targeting is still practised by 14 oblasts. Our results suggest that one-seventh of the overall inefficiency, and thus profit losses, is due to both financial constraints and output-targeting. Copyright

Agricultural competitiveness: The case of the United States and major EU countries☆

Growth in the agricultural GDP of four major European countries is compared with US agricultural growth for the period 1974-1993. The agricultural sectors relative prices are taken into account along with economy-wide factor market adjustments. For Denmark, France, Germany and the UK, the effects of declining real prices and changes in input levels on growth in agricultural GDP are relatively small. Total Factor Productivity (TFP) growth appears to be the major contributor to European agricultural GDP growth. In comparison, TFP is the major source of growth in US agricultural GDP, but its rate of growth is lower than the European countries. In contrast, the declining real prices for US agriculture had a relatively large effect on its GDP. However, in recent years, the effects of declining real prices and declining rates of growth in TFP on European agriculture are relatively large. In the longer-run, the relative competitiveness of US agriculture is largely dependent on its ability to sustain and increase growth in TFP.

Alternative approach to measuring oligopoly power: a wheat market example

A new approach for estimating oligopoly power coefficients is proposed. The methodology used sidesteps the difficulties of obtaining cost data and obtaining coefficients which do not satisfy the theoretical properties of the cost function.

TESTING DYNAMIC SPECIFICATIONS FOR IMPORT DEMAND MODELS: THE CASE OF COTTON

Error correction models impose few prior restrictions on dynamic model specification and allow the data to determine model structure. Despite this obvious advantage, few applications have adopted the error correction model to explain trade flows. An error correction model of cotton import demand is estimated for France, Japan, and Hong Kong. A variety of tests are applied to determine the dynamic structure of the model. We find the most general models are those that best fit the data for cotton import demand. Long-run elasticities from these general models are significantly different than elasticities derived from a comparable static model.

Locating seasonal cycles in demand models

An approach is offered that lets data determine the exact location of seasonal cycles. Rather than use deterministic variables that define the season, it allows seasonal cycles to be identified and modelled as dictated by the data in demand modelling framework.

The Effect of Exchange Rate Distortions on Grain Export Markets, The Case of Argentina

The growth of agricultural trade in the 1970s and the strong dollar and depressed commodity prices in the 1980s have increased awareness of the vulnerability of agricultural markets to economic forces outside the agricultural sector. Some of the recent agricultural developments are attributable to changes in exchange rate movements that transmit macroeconomic forces to a trade-dependent agricultural sector. Under the flexible exchange rate system, exchange rate volatility has increased (Artus and Young) because exchange rates adjust to balance external accounts for an independent level of money supply across countries. Volatility has also increased because asset markets and adjustments on the capital side of the balance of payments determine the exchange rate in the short run (Dornbush). Regardless of the sources of exchange rate movements, exchange rate changes can affect terms of trade and international competitiveness as long as they affect relative prices between traded and nontraded goods (Krueger). Even if exchange rate changes primarily adjust price levels between countries for a given level of the money supply, there are terms of trade changes in the short run. However, recent evidence indicates that exchange rate changes are greater than can be attributed to changes in domestic price levels across countries (Frenkel, Stockman).

Seasonal oligopoly power: the case of the US fresh fruit market

What has been ignored in much of the existing studies of oligopoly power is that market behaviour need not be static in nature, and oligopoly power in agriculture need not be present in every month of the year. In a market which is characterized by seasonality and supplied by different sources during different seasons, it is quite possible to observe oligopoly power during different months of the year. In this paper, a method for estimating and testing for seasonal changes in the degree of oligopoly power is introduced. It was found that in the pear market, oligopoly power coefficients remain low throughout the year. On the other hand, the grape market is characterized by higher oligopoly power coefficients and considerable season variations.