Estimating Input Use and Production Costs From Farm Survey Panel Data

Econometric estimation of enterprise input use and production costs offers a less expensive alternative to special surveys. Estimates of input allocation are of use within programming models, for policy analysis and income forecasting. However, simple ordinary least squares estimation has been plagued by a number of problems and the results have been disappointing. This paper provides some empirical evidence on the extent to which these problems can be overcome, or at least mitigated, through exploitation of panel data sets and appropriate panel data estimation techniques. The results confirm that this approach provides some improvement in estimation results, but some practical and methodological problems remain.     

Estimating the social welfare effects of New Zealand apple imports

International trade of agricultural products not only generates wealth but is also responsible for the introduction of invasive pests beyond their natural range. Comprehensive bioeconomic modelling frameworks are increasingly needed to assist in the resolution of import access disputes. However, frameworks that combine welfare analysis attributable to trade and invasive species spread management are lacking. This study provides a demonstration of how a comprehensive economic framework, which takes into account both the gains from trade and the costs of invasive species outbreaks, can inform decision‐makers when making quarantine decisions. We develop a partial equilibrium trade model considering international trade and combine it with a stratified dispersal model for the spread and management of potential outbreaks of an invasive species. An empirical estimation is made of the economic welfare consequences for Australia of allowing quarantine‐restricted trade in New Zealand apples to take place. The results suggest the returns to Australian society from importing New Zealand apples are likely to be negative. The price differential between the landed product with SPS measures in place and the autarkic price is insufficient to outweigh the increase in expected damage resulting from increased fire blight risk. As a consequence, this empirical analysis does not support the opening up of this trade.     

An Application of spectral analysis in determining crop Rotation Frequencies

Spectral analysis has been applied many times in agricultural economics in determining harmonic characteristics of observed time series. However, spectral techniques have rarely been applied in conjunction with models which stress economic relationships. But two such empirical approaches are possible. One can use either frequency-domain regression of times series, i.e., general distributed lag estimation, in which time series of all important economic variables are considered [4, 5, 11], or one can use ordinary econometric estimation methods and then study frequency content of estimated disturbances with spectral techniques [1, Chapter 10]. The application of spectral analysis in this paper corresponds to the latter case. Ordinary time-domain (rather than frequency-domain) regression methods are used because the general lag relationship estimated here is not a case included in the general frequency-domain regression model. First, nonlinear regression techniques are used to explain the usual economic content of acreage supply response. Then estimated disturbances are investigated using spectral analysis to determine the importance of cyclic behavior in aggregate supply response. Specifically, this paper demonstrates how a cross section of time series may be pooled to obtain statisticaly significant findings when time series are short. These methods are demonstrated in an investigation of harmonic content in regression disturbances apparently due to crop rotation.     

Household size and residential water demand: an empirical approach*

The effectiveness of pricing policies depends on the price elasticity of consumption. It is well documented that residential demand for water is influenced by heterogeneity associated with differences in the size of the household and socioeconomic characteristics. In this paper, we focus on household size. Our initial hypothesis is that users’ sensitivity to changes in price is different depending on the number of household members. To this end, we carry out an empirical estimation of urban water demand in Zaragoza (Spain) distinguishing between households with different sizes using data at the individual level. As far as we are aware, this approach to urban residential water demand is new in the literature. The analysis suggests that all households are sensitive to prices regardless of size. A more relevant finding is that small households are more sensitive to price changes.     

The Use of Conditional Cost Functions to Generate Estimable Mixed Demand Systems

Mixed demand systems have been virtually ignored in empirical work solely because derivation of these systems requires closed forms for both direct and indirect utility functions. This article proposes the alternative of using a conditional cost function to generate empirical mixed demand models. This approach allows the estimation of mixed demand systems, which are explicit in an unobservable variable (utility), but may lack a closed form representation in terms of observable variables such as prices, quantities and expenditure. Results indicate that this approach is operationally feasible, which opens up a wider range of mixed demand specifications in static analyses.     

Demand System Estimation with Upward-Sloping Supply

There are three important implications of this work. First, demand systems estimates that overlook supply response are as subject to simultaneous equations bias as single ad hoc demand equations. Theil shows theoretically that assuming supply curves are perfectly elastic, when in fact they are not will underestimate price responsiveness in demand equations. An empirical example is presented that demonstrates that the price elasticities generally increase when upward-sloping supplies are assumed.
Second, the iterative testing procedure presented may provide direction for model building when the true structure of the system is unknown. For example, the results of the Wu-Hausman test indicate that assuming chicken supply is perfectly elastic in a model of the Japanese livestock industry is justified. The results also indicate that the supplies of Wagyu beef, dairy beef, pork and fish are upward-sloping and therefore should be modeled as endogenous variables in the demand system.
Third, the results emphasize the sensitivity of projections of Japanese beef imports to the assumptions underlying the demand system. If perfectly elastic meat supplies are assumed for an analysis of reducing Japanese beef import liberalization, the results will likely underestimate the impacts on beef imports.
In summary, the supply curves for agricultural products tend to slope upward within the time periods used for traditional policy analysis and demand system estimation, which in turn implies that prices are determined endogenously within the system. Endogenous price determination is contrary to the assumptions that underlie the theoretical foundations and many empirical applications of demand systems. We present a methodology to test for and adjust demand systems for endogeneity. The importance of this adjustment is demonstrated by using an analysis of the liberalization of the Japanese beef market.     

Rights-Based Management and Alaska Pollock Processors' Supply

Using data from the Alaska pollock fishery, this study investigates the link between the implementation of rights-based management and processors' price-responsiveness in a multiproduct fishery. The analysis is based on cointegration with structural breaks to provide empirical evidence of a change in the long-run relationship between processors' production, product prices, and whole fish deliveries. The results indicate that the endogenously determined structural breaks happened near the time when this fishery implemented individual fishing quotas. Furthermore, the estimation of the cointegrating vector indicates that the processors of this fishery are significantly more price-responsive after the change in management.     

Household Composition and Brazilian Food Purchases: An Expenditure System Approach

The use of household level data for food demand analysis requires the researcher to address issues such as purchase censoring and the impacts of household age/gender composition on such demand. This analysis adopts an estimation approach to modeling censored food expenditures. The major methodological contribution of this analysis is our incorporation of an endogenous equivalence scale measure within the expenditure system. Our empirical application is concerned with Brazilian household food expenditures. We use the estimated adult equivalence scales to evaluate a measure of household welfare represented by per-adult equivalent food expenditures. We find a significant shift of the distribution of per capita food distributions when comparing member count versus adult equivalent-based per capita distributions.     

Frontier production functions and technical efficiency: a survey of empirical applications in agricultural economics

The modelling and estimation of frontier production functions has been an important area of econometric research during the last two decades. Försund, Lovell and Schmidt (1980) and Schmidt (1986) present reviews of the concepts and models involved and cite some of the empirical applications which had appeared to their respective times of publication. This paper seeks to update the econometric modelling of frontier production functions associated with the estimation of technical efficiency of individual firms. A survey of empirical applications in agricultural economics is an important part of the paper.     

基于三明治估计的全国土壤墒情估计方法

土壤墒情监测对于科学灌溉、抗旱资源调配均意义重大,文章针对全国范围墒情监测中由于监测点数据少、分布不均及数据点之间关系松散等导致的空间估计效果较差的问题,对全国范围的土壤墒情空间分布规律与空间估计方法展开研究。采用适用于分层异质性表面进行空间估计的三明治估计方法,以全国县域土壤墒情监测数据为采样数据,以全国降水栅格数据与土壤分类数据作为分区数据,以县行政区作为报告单元,实现土壤墒情监测点数据到面数据的上推。采用交叉验证方法对三明治估计效果进行验证,并与距离反比、克吕金、自然临近点和样条4种常规插值方法进行对比。结果表明:三明治估计的误差均值为1.66%,误差标准差为25.16%,墒情等级估计准确率为60.7%;与其它对比方法相比,三明治估计的结果在误差均值与误差标准差上并没有表现更好,三明治估计的误差均值小于样条插值方法但大于其它方法,误差标准差与距离反比、克吕金及自然临近点方法接近。总体来看,三明治估计能够获得与一般插值方法类似的估计效果,但是由于其更符合土壤墒情空间分布以及采样数据情况,因此其结果更可靠和易于解释,能更好地满足全国土壤墒情监测的应用需要。     

Parametric and Non‐Parametric Estimates of Willingness to Pay for Forest Recreation in Northern Ireland: A Discrete Choice Contingent Valuation Study with Follow‐Ups

In this study we show that forest areas contribute significantly to the estimated benefits from outdoor recreation in Northern Ireland. Secondly we provide empirical evidence of the gains in the statistical efficiency of both benefit and parameter estimates obtained by analysing follow‐up responses with Double Bounded interval data analysis. As these gains are considerable, it is clearly worth considering this method in CVM survey design even when moderately large sample sizes are used. Finally we demonstrate that estimates of means and medians of WTP distributions for access to forest recreation show plausible magnitude, are consistent with previous UK studies, and converge across parametric and non‐parametric methods of estimation.     

A Subjective Well-being Equivalence Scale for Mexico: Estimation and Poverty and Income-distribution Implications

The estimation of equivalence scales is crucial in cases where a well-being comparison of persons living under different household arrangements is needed: for example, to identify the poor, to calculate poverty rates and to estimate income inequality. In spite of the importance of equivalence scales for economic policy, there is little theoretical guidance on their estimation, and most empirical studies have been carried out in developed countries. Traditional estimation methods have been criticized because of their limitations for making welfare comparisons. This paper uses a subjective well-being approach to estimate equivalence scales. The approach provides an equivalence scale founded on economic satisfaction, which can be used to make welfare comparisons for persons living under different household arrangements—for example, in households of different sizes and with different age composition of household members. The empirical study has been carried out for Mexico using a large database. The implications of the subjective well-being scale for the assessment of poverty and income inequality in Mexico are shown on the basis of a national survey and by comparison with alternative scales.     

Optimal Hedging with a Subjective View: An Empirical Bayesian Approach

The standard optimal hedging model has been the preferred theoretical model of normative hedging behavior. In empirical applications, the model is often implemented with the parameter certainty equivalent (PCE) procedure. However, the PCE procedure completely ignores parameter estimation risk and subjective views. We develop an "empirical" Bayesian optimal hedging model that not only effectively accommodates parameter estimation risk, but also provides hedgers with a theoretically intuitive yet quantitatively rigorous framework to blend their subjective views and a "marketwide" or "firmwide" consensus in determining optimal hedging positions (ratios).     

DEMAND FOR FOOD IN GREECE: AN ALMOST IDEAL DEMAND SYSTEM ANALYSIS

This paper provides an analysis of food demand in Greece using the Almost Ideal Demand System and annual food expenditure data for the period 1950–1986. The focus is on the estimation of a complete matrix of price and income elasticities for the various food commodity groups for Greece. The empirical analysis points to the dominant position that meat and other livestock products have acquired in the diet of Greek consumers during a period of high income growth and rising living standards. Further increase in meat and milk demand is expected to take place as long as incomes keep rising.     

Capital market imperfections in economic transition: empirical evidence from Ukrainian agriculture

This article investigates the link between financing and investment in Ukrainian agriculture during economic transition. The main contribution of the study is to provide empirical evidence for the coexistence of financial constraints and soft budget constraints (SBCs). This is of particular importance because credit constraints and SBCs have completely different economic effects. The lack of differentiation between these forms of capital market imperfections yields overlapping effects of financing on investment and may therefore cause a misinterpretation of econometric results. Our empirical analyses are based on an econometric estimation of the Euler investment equations for 529 large farms from three Ukrainian regions between 2001 and 2005. The results confirm that financial variables significantly influence farms' investment, providing empirical evidence of an imperfect capital market in Ukrainian agriculture. It turns out that credit constraints in the Ukrainian agricultural sector are more important than SBCs. We show that the estimated level of financial constraints for profitable farms with access to loans is higher if both types of capital market imperfections are appropriately distinguished.     

Efficient Estimation of Hedonic Inverse Input Demand Systems

This article is concerned with efficient estimation of characteristics demand. We derive and estimate an inverse input demand system for quality characteristics by using 172,946 observations over 881 trading days in the Icelandic fish auctions. An improved estimation method based on an expanded random coefficient model is suggested as an alternative to the currently used two-stage method of Brown and Rosen . The estimates demonstrate the improved efficiency of the suggested method. A number of empirical results emerge, including a general increase in the demand for quality.     

Home Bias in Primary Agricultural and Processed Food Trade: Assessing the Effects of National Degree of Uncertainty Aversion

This study investigates the effects of national degrees of uncertainty aversion (unfamiliarity avoidance) on the magnitude of bias towards domestic products rather than imports. The empirical analysis is implemented for primary agricultural and processed food products, using a panel dataset covering trade between and within OECD countries. Primary agricultural products are often blended and associated with reference prices. Conversely, processed food products exhibit higher levels of product differentiation. The empirical results confirm expectations by emphasizing the magnifying effects of uncertainty aversion on home bias in the case of processed food products but not in the case of primary agricultural products. These magnifying effects are primarily associated with processed food products destined for final household consumption. Other results reveal significant variations between different countries (based on geo‐economic and national income categories). Our results also indicate that home bias and uncertainty aversion effects on home bias have not decreased over time. The empirical results remain robust under different estimation methods.     

Does individualization help productivity of transition agriculture?

There are large differences across transition countries with respect to agricultural‐sector performance and corresponding scope of farm restructuring and shift to individual farming. In this article we analyze the impact of individualization on productivity growth within an augmented neoclassical growth model framework. This approach allows us to circumvent criticisms on the grounds of lack of theoretical and objective criteria for inclusion of explanatory variables. Furthermore, in the empirical analysis using a panel data covering 15 transition countries over the period 1990–2001 and applying a generalized method of moments with instrumental variable estimator we are able to control for the impact of various factors and the potential endogeneity of variables. Our estimation results are robust and support the view that the shift to individual farming, as well as the overall economic reforms, has positively contributed to the productivity growth in agriculture during the first decade of transition.     

Deforestation and land use change: sparse data environments

Understanding determinants of land use in developing countries has become a priority for researchers and policy makers with a wide range of interests. For the vast majority of these land use issues, the location of change is as important as its magnitude. This overview paper highlights new economic approaches to modeling land use determinants that combine non‐traditional data sources with novel economic models and econometric techniques. A key feature is that location is central to the analysis. All data elements include an explicit location attribute, estimation techniques include the potential for complications from spatial effects, and results are location‐specific. The paper reviews the theory underlying these models. Since this paper is intended to provide the potential new researcher with an introduction to the challenges of this analysis, we present an overview of how remotely‐sensed data are collected and processed, describe key GIS concepts and identify sources of data for this type of econometric analysis. Finally, selected papers using these techniques are reviewed.     

Spatial Spillovers on Input‐specific Inefficiency of Dutch Arable Farms

Traditional benchmarking implicitly assumes that decision making units operate in isolation from their peers. For arable production systems in particular, this assumption is unlikely to hold in reality. This paper quantifies spatial spillovers on input‐specific inefficiency using data envelopment analysis and a second‐stage bootstrap truncated regression model. The bootstrap algorithm is extended to allow for the estimation of the parameter of the spatial weight matrix, which captures the proximity between producers. The empirical application concerns Dutch arable farms for which latitudes and longitudes are available. The average inefficiency across years was 3.87% for productive inputs and 2.98% for damage abatement inputs under variable returns to scale. For productive inputs technical inefficiency, statistically significant spillover effects from neighbours’ age and their degree of specialisation depended on the type of the spatial weight matrix used (inverse distance or k‐nearest neighbours). Statistically significant spillover effects of subsidy payments were adverse while statistically significant spillover effects from insurance payments were beneficial. For damage abatement inputs technical inefficiency, statistically significant adverse effects were found for neighbours’ age and subsidy payments and beneficial effects from neighbours’ insurance payments and their degree of specialisation.