Risk effects of GM corn: Evidence from crop insurance outcomes and high-dimensional methods |
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Authors: | Serkan Aglasan Barry K Goodwin Roderick M Rejesus |
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Institution: | 1. Bucak Faculty of Business Administration, Mehmet Akif Ersoy University, Burdur, Turkey;2. Department of Agricultural and Resource Economics, NC State University, Raleigh, North Carolina, USA |
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Abstract: | This study evaluates whether genetically modified (GM) corn hybrids with rootworm resistant traits (GM-RW) have lower yield risk. A crop insurance actuarial performance measure, the loss cost ratio (LCR), is used to represent yield risk. High-dimensional methods are utilized in this study to maintain parsimony in the empirical specification, and facilitate estimation. Specifically, we employ the Cluster-Lasso (cluster-least absolute shrinkage and selection operator) procedure. This method produces uniformly valid inference on the main variable of interest (i.e., the GM-RW variable) in a high-dimensional panel data setting even in the presence of heteroskedastic, non-Gaussian, and clustered error structures. After controlling for a large set of potential weather confounders using Cluster-Lasso, we find consistent evidence that GM corn hybrids with rootworm resistant traits have lower yield risk. |
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Keywords: | cluster-lasso genetically modified corn high-dimensional weather variables post-double-selection yield risk |
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