Satheesh V. Aradhyula

Risk Behavior and Rational Expectations in the U.S. Broiler Market

This study examines the empirical implications of extending the rational expectations hypothesis (REH) to include price uncertainty. A general estimation framework that incorporates both the restrictions on structural parameters and the variance-covariance terms is developed. GARCH time-series processes are used to generate time-varying expectations of both the means and the variances of exogenous variables. The empirical application is with a quarterly model of the U.S. broiler industry; the results indicate that the rational expectation of price variance is an important determinant of broiler supply. A formal test indicates that the restrictions implied by the REH cannot be rejected.

Endogenous risk in rational-expectations commodity models: A multivariate generalized ARCH-M approach

Abstract The feasibility of including endogenous risk in a rational-expectations model is examined by using a multivariate GARCH-M setup. Unlike previous attempts to model risk under the rational-expectations hypothesis (REH), the models full covariance structure is allowed to be time varying. The application is with a market model of the U.S. broiler industry; results indicate broiler production is responsive to time-varying price volatility, although the estimated effects are not large. The GARCH-M model is compared with one that uses a two-step approach. Evidence indicates the informationally efficient GARCH-M approach is superior.

Federal actions to address environmental justice in minority populations and low-income populations: Executive Order 12898

1-101. Agency Responsibilities. To the greatest extent practicable and permitted by law, and consistent with the principles set forth in the report on the National Performance Review, each Federal agency shall make achieving environmental justice part of its mission by identifying and addressing, as appropriate, disproportionately high and adverse human health or environmental effects of its programs, policies, and activities on minority populations and low-income populations in the United States and its territories and possessions, the District of Columbia, the Commonwealth of Puerto Rico, and the Commonwealth of the Mariana Islands.

Trading collar, intraday periodicity and stock market volatility

Using five-minute data, market volatility in the Dow Jones Industrial Average is examined in the presence of trading collars. A polynomial specification is used for capturing intraday seasonality. Results indicate that market volatility is 3.4 % higher in declining markets when trading collars are in effect. Results also support a U-shaped intraday periodicity in volatility.Using five-minute data, market volatility in the Dow Jones Industrial Average is examined in the presence of trading collars. A polynomial specification is used for capturing intraday seasonality. Results indicate that market volatility is 3.4 % higher in declining markets when trading collars are in effect. Results also support a U-shaped intraday periodicity in volatility.

Herbaceous biomass feedstock production: The economic potential and impacts on US agriculture

Abstract This paper addresses the economic feasibility and impacts on US agriculture of establishing a biomass crop industry capable of producing 8.4 million GJ of methanol or 9.9 million GJ of ethanol by the year 2030 from grasses grown as biomass feedstocks. The results suggest that such an industry could become commercially viable and that the agricultural economy would benefit. Producers of traditional and biomass crops would benefit most. Consumers and livestock producers would lose from higher crop prices, but these losses would be offset by gains to society from reduced government payments to crop producers.

Environmental justice and federalism

The authors discuss two case studies in their investigation of the complex interactions between environmental justice and government. These analyses offer a comprehensive view of both the siting and regulation of polluting activities, as well as a discussion of the effects on major natural resources such as clean air and drinking water. In each case, the authors both describe current government responses to the problem and offer specific recommendations regarding what actions should be taken in the future.

Production, Hedging, and Speculative Decisions with Options and Futures Markets: Comment

In a recent paper in this Journal, Lapan, Moschini, and Hanson (LMH) analyzed the production and hedging decisions of the competitive firm, operating in both futures and options markets. They showed that when the futures price and options premium are unbiased, options become a redundant hedging instrument (Result 1, page 68). LMH also showed that Danthines separation result-that optimal production depends only on the futures prices and is independent of hedging decisions-still holds in the presence of options, if (a) there is no basis risk, or (b) there is a constant absolute risk aversion (CARA) utility function (Result 2, page 69). When output is held fixed, LMH further showed that under CARA, a rise in the futures price increases the quantities of futures and options supplied (Result 3, page 70). In this note we investigate the effects of a change in the futures price on the supplies of options and futures by a competitive firm when output responds to futures signals. Because the firms output will necessarily change in response to an increase in the futures price, the full impact of a change in the futures price includes the indirect effects through a change in output and the direct effects considered by LMH. Because the direction of output change is generally indeterminate, so are the total effects of a change in the futures price. When evaluated at unbiased prices, however, output increases following a rise in the futures price. This increase in output has no effect on the supply of options, but increases proportionately the supply of futures, thereby reinforcing LMHs direct effect on futures. It should be noted that we do not model market-level responses such as the effect of increased output or increased supply of futures on the futures price.

Moving Beyond Income: Neighborhood Structure, Household Behavior, and Children's Health in the United States

Using insights from economics, pediatrics, psychology, and sociology, this paper examines the effects of income, income inequality, participation in religious services, maternal health, breastfeeding, household smoking, neighborhood characteristics, and racial/ethnic composition of population on child health. Using aggregate data on childrens health and well-being for 50 U.S. states derived from the National Survey of Childrens Health (NSCH, 2005), we document the following results: (1) neighborhood characteristics are a more powerful predictor of childrens health than income; (2) there is a large effect of mothers health on childrens health; (3) the independent effect of income inequality on childrens health vary across domains of child health outcomes, as some aspects of child health (mental health) are more responsive to the immediate environment of family and neighborhood than others; (4) breastfeeding has beneficial effect on childrens health, while household smoking has negative effect on childrens health and well-being; and (5) childrens who participate in religious services at least once a week have less socio-emotional difficulties compared to children who do not.