The Random Character of Stock Market Prices.

In the literature, a variety of approaches have been used to calculate demand elasticities in almost ideal demand system (AIDS) models of demand. It is common to estimate the linear approximate almost ideal demand system (LA/AIDS) instead of the AIDS. When the LA/AIDS is estimated, all of the previously reported approaches to compute elasticities are theoretically incorrect. This paper presents correct formulas for LA/ AIDS elasticities and illustrates the potential errors from using incorrect computing The almost ideal demand system (AIDS) of Deaton and Muellbauer (1980a,b) has become popular in recent years (Anderson and Blundell; Blanciforti and Green 1983a,b; Blanciforti, Green, and King; Chalfant; Eales and Unnevehr; Fujii, Khaled, and Mak; Fulponi, Heien and Willett; Murray; Parsons; Ray). A variety of approaches to computing elasticities has been used, and some of the approaches may lead to significant errors. This paper clarifies the differences between alternative approaches to estimating demand elasticities in AIDS models.

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Elasticities in AIDS Models

The Stone index typically used in estimating linear almost ideal demand systems is not invariant to changes in units of measurement, which may seriously affect the approximation properties of the model. A modification to the Stone index, or use of a regular price index instead, are both desirable practices in estimating linear AI models.

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Units of Measurement and the Stone Index in Demand System Estimation

Consumer perception and choice of minimally processed vegetables and packaged fruits

A theoretical model of consumer response to publicized food safety information on meat demand is developed with an empirical application to U.S. meat consumption. Evidence is found for the existence of pre-committed levels of consumption, seasonal factors, time trends, and contemporaneous own- and cross-commodity food safety concerns. The average demand response to food safety concerns is small, especially in comparison to price effects, and to previous estimates of health related issues. This small average effect masks periods of significantly larger responses corresponding with prominent food safety events, but these larger impacts are short-lived with no apparent food safety lagged effects on Food safety concerns in the United States have dramatically increased in the past decade with regard to incidences of contaminated meat products. Concerns have arisen because contaminated meat products can result in serious risk to the well being and health of consumers. Contamination comes from a myriad of sources, including but not limited to, outbreaks of Listeria monocytogenes, Escherichia coli (E. coli), and Salmonella (Centers for Disease Control and Prevention). Food safety problems are not isolated to the United States as other unsafe contaminates in meats have emerged across the world, including highly publicized outbreaks of Bovine Spongiform Encephalopathy (BSE) in Europe. The potential impacts of publicized food safety events on consumer’s demand for meat products in the United States include own-effects on the demand for the contaminated meat involved as well as cross-effects impacting the demand for other meats. The objective of this article is to investigate whether publicized food safety concerns surrounding beef, pork, and poultry (chicken and turkey) have impacted meat consumption. Food safety indices are constructed separately for beef, pork, and poultry

Does Food Safety Information Impact U.S. Meat Demand

Several studies have indicated that the recent shift from beef to poultry in consumption is not entirely caused by changes in rela­ tive prices or income (Braschler, Chavas, Dahlgran, Hudson and Vertin, Moschini and Meilke, Frank, Thurman). Most studies of structural change have focused on red meat consumption; only Thurman has looked closely at the poultry market, and no one has considered poultry products. Yet, the mix of chicken products marketed changed dramat­ ically during the last twenty years and should have influenced aggregate meat demand. The share of broiler slaughter marketed as whole birds declined from 74% in 1965 to 28% in 1985, while cut-up parts and processed chick­ en products increased from 26% to 72%. Whole birds are inferior goods, and cut-up parts and processed chicken are normal goods (Haidacher et al.). The shift in chicken prod­ uct mix away from whole birds should have increased the preference for total chicken. In this article two related questions are ad­ dressed. First, do consumers allocate expendi­ tures among meats by animal origin or by­ product type? Second, does disaggregation of meat into products in a meat demand model give insight into the causes of structural

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Demand for Beef and Chicken Products: Separability and Structural Change

The study's purpose is to measure the extent to which futures and option prices reflect the subjective price distribution of a subset of market participants, farmers, and grain merchandisers in Illinois. Findings suggest that in most instances the futures price is an appropriate proxy for expected price. However, volatilities implied by option premia usually overestimate the subjective variances of producers and merchandisers. These differences between individual and market expectations of variance are consistent with findings of overconfidence in the psychology literature and should be considered by analysts when making observations about hedging decisions and risk aversion.

Grain Price Expectations of Illinois Farmers and Grain Merchandisers

The objectives of this study were to: (a) quantify differences in liquidity costs between Kansas City and Chicago wheat futures contracts, and (b) identify the factors which influence liquidity in these two markets. Regression results suggest that there are significant differences in liquidity costs between Chicago and Kansas City which are in part due to the lower trading volume at Kansas City. However, there appears to be a significantly higher cost of doing business at Kansas City which is independent of trading volume. The implications of these findings to traders is that transacting is more expensive in Kansas City than in Chicago.

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Comparison of Liquidity Costs Between the Kansas City and Chicago Wheat Futures Contracts

On marketing strategies with options: A technique to measure risk and return

This paper investigates grain price relationships in the north central region by analyzing weekly prices for corn and soybeans at cash and futures markets. First differences in cash prices are compared statistically to first differences in futures prices. Next, the relationship of spatial basis changes between cash market locations is analyzed. The results indicate that cash and futures markets are not a constellation of one united grain market. Identifiable differences in price relationships exist across markets and time periods. The results have implications for hedging strategies as well as for consideration of the performance of Chicago as a delivery location for futures contracts.

James S. Eales

Papers

Demand for Beef and Chicken Products: Separability and Structural Change

Grain Price Expectations of Illinois Farmers and Grain Merchandisers

Comparison of Liquidity Costs Between the Kansas City and Chicago Wheat Futures Contracts

On marketing strategies with options: A technique to measure risk and return

An empirical analysis of cash and futures grain price relationships in the north central region.