Spatial Econometric Model Of Milk Supply And Demand: Analysis Of The Farm Bill Dairy Title
Files
No Access Until
Permanent Link(s)
Other Titles
Author(s)
Abstract
State level milk supply and demand are modeled on a monthly basis to examine expected payments, government loss ratios, and economic welfare implications of margin insurance programs, both with and without supply controls, in the U.S. dairy industry. A technique is developed to properly calibrate a spatial econometric supply and demand system utilizing instrumental variables to model correlated input and output prices at both the state and national levels. Supply controls are found to improve producer surplus at the expense of consumer surplus and overall economic welfare, in expectation costing the U.S. economy an estimated $105 million per month. Rather than interfering with supply in the market, margin insurance program savings could more efficiently be generated by increasing premiums. Adverse selection can be more properly managed by basing premiums on market expectations and current conditions, as opposed to codifying premium levels for the life of the program in the legislation.
Journal / Series
Volume & Issue
Description
Sponsorship
Date Issued
Publisher
Keywords
Location
Effective Date
Expiration Date
Sector
Employer
Union
Union Local
NAICS
Number of Workers
Committee Chair
Committee Co-Chair
Committee Member
Bozic, Marin