Dynamic Corn Supply Functions: A Model with Explicit Optimization
Miranowski, John; Tegene, Abebayehu; Huffman, Wallace E.
American Journal of Agricultural Economics Vol. 70 no. 1 (February 1988): 103-111.
A model of optimal dynamic agricultural supply is derived and hired assuming farmers have two annual stochastic crop production activities, a joint limitation on production capacity, interdependencies between past acreage utilization and current productivity, and rational expectations. A five-equation specification is fitted to annual data, 1948-80 Estimated parameters are consistent with the theory, and the model simulates well The long-run price elasticity of corn acreage is 0.2, which is similar to those obtained from ad hoc dynamic models, but our short-run elasticities are different.Published Version