Showing papers on "Price elasticity of supply published in 1984"

How Reliable are Simple, Single Equation Specifications of Import Demand?

Abstract: This paper examines nine models of aggregate import demand for each of five countries (Canada, Germany, Japan, United Kingdom, and United States) in an attempt to determine which of the frequently used single equation models of import demand are appropriate. An appropriate model is defined as one which generates unbiased (or at least consistent) and efficient elasticity estimates. While models without lagged adjustments and Almon lag models perform rather poorly according to these criteria, models including dynamic behavior through lagged values of the dependent variable are frequently accepted. Results are reported regarding functional form, measures of variables, and structural shift. ECONOMISTS have devoted considerable attention to the estimation of aggregate import demand elasticities because of their importance in trade theory. The simplest procedure for estimating these elasticities which is consistent with economic theory is to assume that the elasticity of supply of imports is infinitely elastic and to estimate'

The Welfare Effects of the Introduction of Storage

Abstract: This paper examines the welfare effects of introducing storage into a market with stochastic supply in which all agents are competitive profit-maximizers with rational expectations. These welfare effects are the net result of the initial increase in demand for stock-building and the partial and asymmetric reduction in the dispersion of consumption brought about by storage. The distributional impacts depend crucially on the information available to producers before storage is introduced, the elasticity of supply, the specification of the consumption demand curve, and the cost of storage.

Instrumental Price Estimates and Residential Water Demand

Abstract: Instrumental estimates of two price specifications, one motivated by the consumer decision problem given full information about rates and charges and the other an average price formulation, are developed to correct for measurement error when residential water sales are made at a schedule of rates, rather than at uniform prices. Annual water purchases of single-family residences are regressed on these instrumental price estimates, family income, and household size by ordinary least squares, based on a sample of 326 observations from metropolitan Denver, Colorado, for 1976. The resulting demand estimates are robust to the price concept specified, given proportional variation in all rates and charges, and are consistent with findings in the literature. The overall price elasticity estimates range between −0.14 in a linear model to −0.44 in a log-log model, while the estimated income elasticity varies between 0.40 and 0.55.

Commodity price stabilization : the theory and its application

Abstract: This essay attempts to clarify and simplify the results of the literature on price stabilization in order to provide a better sense of the conditions under which commodity stabilization schemes will be successful and the welfare effects of such schemes. After introducing the early framework under which price stabilization was analyzed, the paper demonstrates the variance of results under alternative and more realistic situations. It treats topics such as storage and food security, inflation and economic development, public storage and futures markets, and non-storable goods. The conclusions are: (i) some countries may lose from price stabilization even though there is a net global gain; (ii) liberalized trade reduces the need for buffer stocks; (iii) futures markets reduce instability at a lower cost than buffer stocks; (iv) many national price stabilization schemes are actually price support systems used to improve farmers' incomes; (v) good price forecasting is a prerequisite to well-managed buffer stocks; (vi) price stability in poorer countries is not sufficient to avoid occasional food shortages; and (vii) food is costly to store and may not alleviate famine if transportation and distribution systems are inadequate.

Petroleum Price Elasticity, Income Effects, and OPEC's Pricing Policy

Abstract: A key feature of this simple model for OPEC optimal oil-price determinationis the explicit recognition that increases in oil prices may shift the demand curve, and that it is to the advantage of OPEC to incorporate such shifts in oil-pricing decisions. The model also allows for the presence of a backstop technology and the presence of tariffs on oil imports. The results of the model are consistent with the literature in showing that OPEC's prices will be higher the more insensitive the real income of importing countries is to higher oil prices. The imposition of a tariff, beyond actual levels, reduces OPEC's prices without altering domestic prices and the exhaustion date. The model is relevant for studies evaluating the effects of increases in oil prices on other key variables such as real income. The authors contend that the assumed oil-price path may never take place because the appropriate determination of oil prices ought to take its effect into account. 29 references, 2 figures, 4 tables.

Accelerating Agricultural Growth in Sub-Saharan Africa: Discussion

Abstract: The three papers presented on this theme pose and address similar central question from different perspectives. Thus, while identifying similar problems they offer solutions which are derived from sharply contrasting views. My comments as a discussant are therefore aimed toward producing something of a synthesis of the basic ideas and then offering a critique of the major postulates. The papers convincingly demonstrate the magnitude of the crisis of agriculture in SubSaharan Africa. But this unity of purpose falters when one examines the reasons given by the different papers for the rather dismal performance of the region's agricultural sector over the last two decades or so. The Delgado-Mellor paper, for instance, rests its case on production constraints emanating primarily from rural labor shortage. According to this paper, massive rural-to-urban labor migration over this period is at the heart of the problem. Rural-urban migration has, in turn, been caused by low labor productivity in agriculture and high returns to urban employment sustained partly by increased capital inflows. In comparison, the Matlon-Spencer paper sees land shortage as the primary obstacle in the way of improved performance of the agricultural sector. The problem here is that, according to this paper, large proportions of land in Sub-Saharan Africa are not economically suitable for agricultural production either for environmental reasons or because the soils are unstable and highly variable in quality. In addition, and again in sharp contrast to the position taken by the DelgadoMellor paper, rapid growth of the rural population has created tremendous pressures on agricultural land. A combination of these factors has produced the land shortage constraint on agricultural expansion, given the traditional farming systems and methods of Sub-Saharan Africa. The Delgado-Mellor paper suggests that more favorable price-incentive policies would either not work at all or at best have very small once-and-for-all positive impact because of the combined effects of low agricultural supply response to price changes and an inelastic labor supply curve. A similar conclusion is implied in the Matlon-Spencer paper, although the culprit in this case in an inelastic supply of land.

Foundations of Aggregate Supply Price

Abstract: (3) WA = R1Pne + 1 _ R A n R2U, where pe is the forward-looking expectation and f31 is the credibility coefficient (or degree of belief) attached to the model and the announced policy rule. Total expectation is the weighted sum of the forwardand backward-looking beliefs. In the case of the simplest monetaristrational expectations viewpoint, P, =1, and pe = m*, where m* is the announced monetary target (with the trend in velocity offset by the economy's natural rate of growth). Aggregate supply price will be