Gordon C. Rausser

Commodity Price Forecasting with Large-Scale Econometric Models and the Futures Market

This paper compares the accuracy of major commercial price forecasts for corn, wheat, soybeans, soybean oil, soybean meal, cotton, live cattle, and hogs. The price-forecasting information in futures prices is evaluated by comparison. The results among commercial forecasters are mixed, but futures prices perform relatively better on average although not universally so. These results have important implications for operational risk management.

Agricultural Biotechnology's Complementary Intellectual Assets

We formulate and test a hypothesis for the dramatic restructuring that the plant breeding and seed industry has recently undergone: the reorganization can be explained in part by the desire to exploit complementarities between intellectual assets needed to create genetically modified organisms. This hypothesis is tested using data on agricultural biotechnology patents, notices for field tests of genetically modified organisms, and firm characteristics. The presence of complementarities is identified with a positive covariance in the unexplained variation of asset holdings. Results indicate that coordination of complementary assets has increased under the consolidation of the industry.

Effects of Changes in the Level of U.S. Beef Imports

Regulatory policies pertaining to beef imports are analyzed on the basis of an econometric model of the livestock sector. The model encompasses the consumption, production, trade, and retail and farm prices of fed beef, other beef, pork, poultry, and inventory levels of livestock used in the production of these products. In terms of consumer welfare, increased beef imports reduce the retail price of all meats with the larger reductions occurring for lower quality of manufacturing beef products, while in the case of producer welfare such increases reduce slaughter steer, cull cow, and feeder calf prices with a heavier burden being placed on cattle breeders relative to cattle feeders.

Estimation of Perceived Risk and Its Effect on Property Values

A dynamic, discrete-time model is estimated in order to analyze the evolution of perceived risk around a hazardous waste site and its effect on property values. Residential property values are modeled as a function of housing attributes and perceived risk from a nearby hazardous waste site using an hedonic-price framework. Perceived risk enters the model as a state equation, which includes a media coverage variable. Results indicate that media coverage and high prior risk perception increase current perceived risk. Increased perceived risk surrounding the hazardous waste site, in turn, lowers property values. (JEL D80, R1)

Political Preference Functions and Public Policy Reform

A model of policy making is developed where governments seek to maximize support from social groups through the combination of both PERT (social-welfare-increasing) and PERT (welfare-transferring) policies. The implicit weights of a political preference function shift with a change in the relative cost of interest group organizing. Attention is paid to the degree of wealth transfers as total social welfare increases because of PERT policy changes. The model demonstrates that, in the case of two competing groups, the weight given to one group in the allocation of social surplus will increase as total social welfare increases with a bias toward the other group. The relative weights placed on consumers and producers based on PEST policies alone are misleading indicators of the political influence of groups. A number of general implications of this political economic analysis for the reform of public policies are investigated.

STIGMATIZED ASSET VALUE: IS IT TEMPORARY OR LONG-TERM?

Stigma is a negative attribute of real estate acquired by environmental contamination and reflected in its value (Elliot-Jones, 1996). Using a model of neighborhood turnover with external economies, we show that both temporary stigma and long-term stigma are possible equilibrium outcomes after the discovery and cleanup of a hazardous waste site. The existence and duration of stigma are examined using hedonic price techniques with data from housing sales prices in Dallas County, Texas. We find that results depend critically on distance from the hazardous waste site. Neighborhood turnover due to changes in the level of poverty also appears likely.

Hazardous waste sites and housing appreciation rates

The dynamic effect of a hazardous waste site is analyzed by investigating the causal relationship between housing appreciation rates and house location in relation to a hazardous waste site using resale data from individual sales transactions in Dallas County, Texas. The results indicate that in the period in which the hazardous waste site was identified and cleanup occurred, residential property owners in close proximity to the hazardous waste site experienced lower housing appreciation rates. In the first post-cleanup period, they gained some of the lost ground with a higher appreciation rate. In a subsequent post-cleanup period, their appreciation fell in line with property owners whose properties are located farther away from the hazardous waste site. This suggests that a long-run equilibrium has been reached since appreciation rates were not significantly different across the Dallas housing market in the second post-cleanup period. Although the results indicate that adjustment takes time, an equilibrium is eventually reached for the houses in this repeat sales data set. An important implication of our analysis is that since the post-cleanup recovery was not immediate, property owners should be compensated for their loss of liquidity.

Productive and Predatory Public Policies: Research Expenditures and Producer Subsidies in Agriculture

Governments are postulated to maximize a political preference function in choosing two policy instruments: research expenditures (a productive policy) that improve social welfare and production subsidies (a predatory policy) that incur deadweight losses. Each policy affects the distribution of income between producers and consumers. Governments determine the optimal mix of policies, taking into account interaction effects between research and subsidy expenditures. In addition to providing an explanation for underinvestment in research, the paper determines conditions under which research and subsidy policies are complementary. Such conditions are shown to characterize U.S. agriculture. Underinvestment in research is therefore less severe than in some other countries.

Private/Public Research: Knowledge Assets and Future Scenarios

Knowledge and know-how have always played a critical role in agricultural, resource, and environmental systems (ARES). In our areas of expertise, as well as throughout American society, it has long been recognized that prosperity rests on knowledge and its useful applications. At the dawn of the twentyfirst century, however, the source, the concentration, the distribution, and the use of knowledge could change dramatically. While this has been true for some time in other segments of the U.S. economy, it has seriously emerged as a fundamental force in ARES only over the course of this last decade of the twen-

The political economy of public research investment and commodity policies in agriculture: an empirical study

The paper tests a political economy theory of simultaneous government decision-making on income redistribution through commodity policies and on public research investment in agriculture. We use data from 37 countries on agricultural protection and public agricultural research expenditures (PARI). The empirical results are consistent with the political economy hypotheses. The analysis suggest that structural changes in the economy have important effects on the political incentives for governments not only to subsidize or tax farmers, but also to invest in public agricultural research. Furthermore, the analysis supports the hypotheses that the impact of such structural changes on government decision-making on PARl is non-linear and conditional on other factors. Regarding the impact of political institutions, the results suggest that more democracy neither leads to more distortionary transfers (agricultural protection), nor to lower investment in public goods (PARI).