A rational expectations approach to the modelling of agricultural supply: a case study of Iowa
Date
Authors
Major Professor
Advisor
Committee Member
Journal Title
Journal ISSN
Volume Title
Publisher
Altmetrics
Authors
Research Projects
Organizational Units
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.
Dates of Existence
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)
Journal Issue
Is Version Of
Versions
Series
Department
Abstract
A dynamic model for agricultural supply where expectation of exogenous variables is assumed to be formed rationally is developed. Farmers are assumed to make choices that maximize the expected present values of their incomes streams subject to dynamic and stochastic technology and their information. Their information is assumed to include the actual distributions of the exogenous variables which includes prices. Hence, farmers decision rules depend, among other things, on the stochastic processes of crop prices;The solution for the dynamic optimization problem gives a set of nonlinear simultaneous equations subject to within and cross equation restrictions. The restrictions are the implications of ration expectation hypothesis;The model is fitted to aggregate time series data on corn and soybean and other related variables from the state of Iowa. The results indicate that there is a dynamic interaction among land allocation, crop yields and crop prices. The restrictions imposed are supported by the data. The results also indicate that corn acreage is more responsive to government price support than to market price.