Alternative Measures of Risk in Commodity Supply Models: An Analysis of Sow Farrowing Decisions in the United StatesJournal of Agricultural and Resource Economics
Publication VersionPublished Version
AbstractThe role of price risk in sow farrowings is investigated by using bivariate ARCH-M and GARCH-M models and a nonparametric kernel estimator. To account for the relevant time horizon of irreversible supply decisions, predictions for mean price and conditional price variance are iterated forward. The empirical results vary markedly in terms of their implications for risk response in hog supply decisions, with the ARCH-M and GARCH-M models suggesting a small and negative risk effect. Estimates of the marginal risk premium also indicate moderate and variable departures from marginal cost pricing in sow far rowing supply decisions.
Copyright OwnerWestern Agricultural Economics Association
Citation InformationMatthew T. Holt and Giancarlo Moschini. "Alternative Measures of Risk in Commodity Supply Models: An Analysis of Sow Farrowing Decisions in the United States" Journal of Agricultural and Resource Economics Vol. 17 Iss. 1 (1992) p. 1 - 12
Available at: http://works.bepress.com/giancarlo-moschini/77/