Kim, Kwansoo

By: Kim, Kwansoo; Chavas, Jean-Paul
This study presents an econometric analysis of the effects of a government price support program on price dynamics and price volatility. Price support programs, a common feature of agricultural policy, provide a lower-bound censoring of the distribution of market prices. An econometric model of market prices is developed using a dynamic Tobit specification under time-varying volatility. The model is applied to the U.S. non-fat dry milk market. It is used to investigate the impact of market liberalization on price dynamics and price volatility in the presence of private and public stocks. The econometric results show how the price support program and stocks (both private and public) affect expected price volatility.
By: Chavas, Jean-Paul; Kim, Kwansoo; Lauer, Joseph G.; Klemme, Richard M.; Bland, William L.
This study investigates the recent evolution of corn yield, with a special focus on the tradeoff between corn profitability and risk. The analysis relies on time-series data from Wisconsin experimental farms at the edge of the Corn Belt. An econometric model of corn yield, corn grain moisture, and corn profitability is specified. Both conditional means and conditional variances are estimated for different sites in Wisconsin. The empirical analysis shows the changes in corn yield and profit over time and across space. The evidence suggests that yield trends are due mostly to technical progress, with smaller effects generated by climate change. On average, corn yield and profitability have improved faster in northern Wisconsin than in the Corn Belt. However, risk has also increased faster. Results show that the choice of corn hybrid maturity makes it easier to manage risk in the Corn Belt than in northern Wisconsin.