Error Correction Models and Agricultural Supply Response
David Hallam and
Raffaele Zanoli ()
European Review of Agricultural Economics, 1993, vol. 20, issue 2, 151-66
This paper explores the relevance of the error correction specification to agricultural supply modeling. The theoretical basis of the model is outlined, and it is shown how the familiar partial adjustment model is a restrictive special case. In particular it is shown how the error correction model avoids the partial adjustment model's unrealistic assumption of a fixed target supply based on stationary expectations. In an analysis of U.K. pig supply an error correction model provides good empirical results, and is preferred in specification tests to the partial adjustment model. It is concluded that the error correction model provides a superior alternative to the partial adjustment model on both theoretical and empirical grounds. Copyright 1993 by Oxford University Press.
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