Individual decisions and outside influences affecting U.S. commodity markets and cropland used for grain production
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The Department of Economic Science was founded in 1898 to teach economic theory as a truth of industrial life, and was very much concerned with applying economics to business and industry, particularly agriculture. Between 1910 and 1967 it showed the growing influence of other social studies, such as sociology, history, and political science. Today it encompasses the majors of Agricultural Business (preparing for agricultural finance and management), Business Economics, and Economics (for advanced studies in business or economics or for careers in financing, management, insurance, etc).
History
The Department of Economic Science was founded in 1898 under the Division of Industrial Science (later College of Liberal Arts and Sciences); it became co-directed by the Division of Agriculture in 1919. In 1910 it became the Department of Economics and Political Science. In 1913 it became the Department of Applied Economics and Social Science; in 1924 it became the Department of Economics, History, and Sociology; in 1931 it became the Department of Economics and Sociology. In 1967 it became the Department of Economics, and in 2007 it became co-directed by the Colleges of Agriculture and Life Sciences, Liberal Arts and Sciences, and Business.
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1898–present
Historical Names
- Department of Economic Science (1898–1910)
- Department of Economics and Political Science (1910-1913)
- Department of Applied Economics and Social Science (1913–1924)
- Department of Economics, History and Sociology (1924–1931)
- Department of Economics and Sociology (1931–1967)
Related Units
- College of Agricultural and Life Sciences (parent college)
- College of Liberal Arts and Sciences (parent college)
- College of Business (parent college)
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Abstract
This dissertation is composed of four essays broadly focusing on U.S. commodity markets with an emphasis on grains and cropland used to produce grains. The essays each address specific factors surrounding commodity markets and agricultural land-use which have been relevant in individual decision-making processes or recent policy debates. The first essay is motivated by data which reveal that grain producers' hedging decisions have changed over time, and have been strongly correlated with futures price levels. Using prospect theory as the underlying behavioral framework, there are two main goals: to outline a mechanism that allows for this correlation, and to illustrate the corresponding implications for cash prices and volatility at harvest. The second essay uses an empirical approach to determine the extent to which speculative trading has influenced commodity futures prices and volatility. Tests of Granger causality are conducted in the time domain for each of 19 actively-traded commodities individually, as well as in aggregate, using seemingly unrelated regression analysis. Tests of causality are also conducted in the frequency domain to distinguish between long-run and short-run causality. The third essay seeks to provide clarity to the debate on the role of speculation in commodity derivative markets by recognizing that speculation may take more than one form. Encompassing two measures of speculation, an error correction model is used to test for a long-run level relationship between futures prices and speculation and between volatility and speculation. The goal of the final essay is to explore the implications of conventional agricultural life cycle assessments (LCAs) that fail to account for the opportunity cost associated with land scarcity. A model to represent the interests associated with biofuel production in the United States is constructed that minimizes environmental damages and accounts for the external benefits to production by choosing acreage optimally. Corn and switchgrass are modeled as crops competing for land-use.