Estimating Price Elasticities of Supply for Cotton: A Structural Time-Series Approach

Shepherd, Ben (2006): Estimating Price Elasticities of Supply for Cotton: A Structural Time-Series Approach.

Abstract

The Kalman Filter is used to estimate a structural time-series model of cotton supply for 30 countries and 16 aggregated regions. Estimated short run supply elasticities with respect to the world price are presented for all 46 countries and regions. While they are broadly within the expected range in light of previous work, they indicate extensive cross-country and regional heterogeneity, as well as considerable parameter uncertainty in some cases. Finally, some proposals are made for incorporating both the core estimates and their sampling distributions into applied equilibrium models.

• Item Type: MPRA Paper
• Institution: Commodities and Trade Division, FAO
• Language: English
• Keywords: Cotton; price elasticity of supply; structural time-series model; Kalman Filter
• Subjects: Q - Agricultural and Natural Resource Economics ; Environmental and Ecological Economics > Q1 - Agriculture > Q11 - Aggregate Supply and Demand Analysis ; Prices; C - Mathematical and Quantitative Methods > C2 - Single Equation Models ; Single Variables > C22 - Time-Series Models ; Dynamic Quantile Regressions ; Dynamic Treatment Effect Models ; Diffusion Processes

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