Numeraire choice in normalized quadratic functional forms |
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Authors: | CRichard Shumway Pablo E Gottret |
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Institution: | 1. Department of Agricultural Economics , Texas A&2. M University , College Station, Texas , 77843 , USA;3. Asesoria y Representaciones , La Paz , 1584 , BoliviaAv.Simon Bolivar |
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Abstract: | A semi-nested test procedure is developed for choosing the numeraire for a normalized quadratic profit function when too few observations exist for nested hypothesis testing and when too many alternatives exis for conventional non-nested testing. Sensitivity of empirical results to choice of numeraire price is examined using agricultural data for the US and ten multistate regions. Few test conclusions vary by numeraire but own price input demand elasticities differ greatly. |
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