Dynamic Econometric Models of Manitoba Crop Production and Hypothetical Production Impacts for CAIS

Barry T. Coyle, Ran Wei and James Rude

No 46630, Working Papers from Canadian Agricultural Trade Policy Research Network

Abstract: This study analyzes the impact of the Canadian Agriculture Income Stabilization (CAIS)program. The study begins with a specification of dynamic crop production that decomposes static short run crop acreage allocation decisions and dynamic crop yield affects. The modelling framework accommodates risk aversion, price uncertainty, and applies recent aggregation theory to aggregate weather data. Using this framework an analytical model of the impacts of CAIS on crop production is developed. Hypothetical impacts of are simulated using an aggregate Manitoba data set. The results show that CAIS has a substantial impact on the shadow prices of both inputs and outputs. These shadow price effects resulted in a 4 percent increase in long run wheat and barley yields and a 2 percent increase for canola. CAIS has a small impact on nominal wealth but the impacts depend on the properties of producers’ risk preferences. With constant relative risk aversion there is a wealth effect which in turn affects production decisions.

Keywords: Agricultural and Food Policy; International Relations/Trade; Production Economics; Risk and Uncertainty (search for similar items in EconPapers)
Pages: 71
Date: 2008-07
New Economics Papers: this item is included in nep-upt
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Citations: View citations in EconPapers (5)

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Persistent link: https://EconPapers.repec.org/RePEc:ags:catpwp:46630

DOI: 10.22004/ag.econ.46630

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