MODELING AGRICULTURAL MARKETS

New methods that help capture nonlinearities in the underlying data processes will be identified and used to study issues in empirical modeling of agricultural commodity and factor markets. Since the economic theory does not always provide a precise specification of an empirical model, an important question to ask is whether potential nonlinearities are neglected in the estimated relationships using conventional linear models. Some specific objectives of the project include:- To develop and use new statistical frameworks in analyzing the effects of nonlinear dynamics in agricultural commodity and factor markets.- To examine whether adjustment costs cause nonlinearities in market price and demand dynamics.- To test for the nonlinearities caused by the presence ofmarket frictions in agricultural markets.- To estimate models of labor supply and mobility, under the assumptions of risk and large sunk costs.- To examine the price adjustment processes and consumer demand under structural changes and other nonlinearities.