Economic Losses Due to Forecasting Error and the U.S. Populist Movement

Economic Inquiry, 1996, vol. 34, issue 2, pages 260-75

Abstract: A farmer's crop mix is affected by the expected relative prices of the crops. A price forecasting error results in economic loss from planning a suboptimal mix. A new method of estimating economic loss due to forecasting error indicates that economic loss increased during the height of the Populist movement and then decreased. Using data for Kansas counties from 1882 to 1907, the author estimates agricultural crop mix functions using a seemingly unrelated regression procedure and calculates the economic loss due to forecasting error. Although new market opportunities must have made farmers better off, these opportunities increased the cost of price uncertainty. Copyright 1996 by Oxford University Press.

Date: 1996

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