Agricultural supply represents the quantity supplied for a given price of a commodity. The supply function is an algebraic representation that shows, in this case, how much yield and acreage output changes from variations in prices and various inputs. Estimating supply functions is an important economic research topic. However, publications on this topic involving applications to agricultural crops are not plentiful, particularly for cotton. This paper focuses on the estimation of cotton supply functions and elasticities within the United States cotton industry. U.S. cotton yields appear to have been dramatically increased in recent years from newer varieties, boll weevil eradication, weather, and other technological improvements. Changes in both productivity and input cost suggest likely changes in supply relationships. Seventeen cotton producing states were divided into homogenous regions. A two equation model was used to estimate the supply functions and elasticities for each region. The results were mixed, depending on the region. There was difficulty in finding good model fits likely due to complexities of biological responses as well as policy distortions. The parameter results suggest that the major determinates of yield were weather and technology. The major determinates of estimating acreage was production in the previous year and policy variables. The overall purpose of this paper was to estimate cotton supply elasticities, which tended to be inelastic across the United States.

The unprecedented beef export growth observed in Paraguay during recent years generated a new marketing environment in its livestock sector. While changes in beef marketed along the supply chain are well-known, no efforts have been undertaken to assess welfare changes of each economic agent of the Paraguayan Beef Supply Chain. Demand and supply systems are estimated for the fattening, slaughter and beef retail markets. A vertical multi-market approach accounting for the linkages among the three markets is used to measure welfare changes of all economic agents in the new marketing environment. The results suggest that consumers and slaughterhouses are worse off, feeder and calf producers are better off and overall society is better off.

The unprecedented beef export growth observed in Paraguay during recent years generated a new marketing environment in its livestock sector. While changes in beef marketed along the supply chain are well-known, no efforts have been undertaken to assess welfare changes of each economic agent of the Paraguayan Beef Supply Chain. Demand and supply systems are estimated for the fattening, slaughter and beef retail markets. A vertical multi-market approach accounting for the linkages among the three markets is used to measure welfare changes of all economic agents in the new marketing environment. The results suggest that consumers and slaughterhouses are worse off, feeder and calf producers are better off and overall society is better off.

Understanding the evolution of water demand is of paramount importance for countries that want to implement the correct water demand management strategies that aim at increasing water use efficiency. This paper analyses household water demand in the capital city of the Mpumalanga Province of South Africa, in order to develop a better understanding of residential water demand in developing country contexts. Using survey data from 526 households in the Mbombela Municipality of Mpumalanga, South Africa, we estimate the price and income elasticities of household water demand, and investigate the factors that drive water demand of households that are located in heterogenous income groups. Households in the study areas have the unique characteristic seen in developing countries of having access to several sources of water, such as tap, ground and rainwater, implying the possibility of substitution. We run different estimation strategies that range from OLS, 2SLS and instrumental variable approaches to identify the factors that influence urban water demand. The findings reflect that price and income elasticities vary across different household groups, with price elasticities ranging from -0.140 to -0.879 and income elasticities ranging from 0.172 to 0.628. Other statistically significant variables which drive household water consumption are household size, education level, use of water saving technologies, and the use of rainwater tanks and systems. A crucial finding in this study was that water saving technologies were revealed to reduce water consumption levels by between 28.3% to 43.4%, and we hence provide specific policy recommendations based upon this finding. Overall, the results from this study can contribute substantially towards the development of appropriate and sustainable water policy making in South Africa.

While Malawi’s Farm Input Subsidy Program (FISP) has been the focus of numerous studies on the impacts of subsidies on farm-household income, yields, fertilizer use and adoption, there still has not been much empirical work quantifying the program’s effects on maize supply and demand. In this study, we use the econometric framework proposed by Roberts and Schlenker (2013) to identify the effect of FISP on maize production as well as supply and demand price elasticities in Malawi. We use national aggregate data and find that the program has increased aggregate maize supply. Our results show that FISP has had an aggregate effect across years of about 3,746,870 metric tons from 2006-2013. We also find that the program has increased farmers’ responsiveness to changes in fertilizer prices. However, our estimates suggest that higher prices lead to higher quantities of fertilizer demanded, a relationship that is not consistent with economic theory.

Since Senegal's independence in 1960, groundnuts (peanuts) have been the dominant agricultural export crop. Currently, groundnut output levels are on the decline and no clear reason for the downward trend has been found. Privatization efforts are underway as the government explores ways to breathe some life into the ailing sector, particularly as it relates to groundnut production. The 50 percent currency devaluation of 1994 constituted a major exogenous shock to the sector. Much research has been done about the macro-level impact of the changes that are taking place. However, little work has been done recently (i.e. since the devaluation) at the micro-level. This work addressed this lack by studying the micro-level dynamics of groundnut production. Elasticities were generated and used in the analysis of policy impacts on production. The own-price elasticity of supply groundnut indicated that supply response should be positive following an increase in producer price. The increase in producer prices following the devaluation did not occasion the expected supply response. Possible reasons for this failure were explored. It is hoped that the information revealed will complement the store of information on production in the Groundnut Basin that is already available. Thus, the present work will prove useful to public and private researchers and policy makers seeking to increase their understanding of the sector. / Master of Science

Whether we would like to model imports and exports, or forecast inflation, structural variation in an economy frequently causes problems. This thesis examines such variation in two dimensions: first, in a cross-section of individuals, and secondly, over time. A panel of manufacturing industries in several developed countries reveals that there is substantial variation across sectors, in the response of trade to changes in prices and incomes. Ignoring this heterogeneity can render conventional results biased and inconsistent, so a number of robust methods are used to obtain reliable estimates of long-run and short-run trade relationships. The findings point to common behaviour across sectors, which could be due to similarities in technology. The impact of structural breaks over time is examined in the second part of the thesis. Unpredictable shifts in deterministic terms such as the mean of a process are shown to generate significant forecast failure, and even the methods used to evaluated forecast accuracy are affected. Using the Kullback-Leibler discrepancy to measure the size of forecast errors, various robust mechanisms are discussed, that do not fail systematically after a break. Although they can provide a degree of insurance if a shift does occur, this comes at a cost if there is no change, and in the presence of measurement error they can exacerbate the uncertainty surrounding a forecast. An empirical illustration with a model of UK money demand provides some support for the automatic correction mechanisms, although there does seem to be a role for direct modeling of a break process.

This study estimates the demand for domestic air travel services in the United States in order to calculate the fare and expenditure elasticities of demand. We segmented the market according to number of operating airlines, distances and traveler types. Using Seemingly Unrelated Regression to estimate the Almost Ideal Demand System (AIDS), we find that the expenditure and uncompensated own-fare elasticities are around unity and consistent with the previous literature. Results reveal a tendency of uncompensated own-fare elasticity to decrease as distance increases, and a tendency of uncompensated own-fare elasticity to increase as number of airlines increases. Due to few observations, business travelers' results are not reliable to make any conclusion. Leisure travelers' results are closer to all travelers' results.

The copper smelting industry has under gone extreme change over the past three decades. These changes have reordered dramatically the demand for inputs and the way in which those inputs have been utilized. The stimulus for change has come from multiple sources, and chief among these stimuli has been the mandate to sharply curtail the atmospheric release of sulfur dioxide. Even though the total emissions were lower than those from steam generation of electricity and from the refinery and petro-chemical industry, the perceived local and regional impact of sulfur dioxide forced extreme changes in the utilization of fundamental inputs of capital, labor, energy and materials.This study attempts to analyze these input use changes by modeling the industry as a translog cost function and by generating a number of associated elasticities. In addition to the four basic inputs, the model includes as control variables output, and other variables that represent pollution abatement and technical change.The challenge of estimating a large model on a limited number of observations has delivered information that is more limited in scope than was originally desired. The proxy for technical change did not produce significant parameters and the pollution abatement proxy is limited in its participation in the results. The range of elasticities computed reveal a picture of an industry characterized by inelasticity, in general, labor and energy being part of the exceptions. The industry is found to be sensitive to output level in its degree of elasticity among inputs.The translog model is found to be an effective tool for industry analysis. The promise of detailed analytical information may be even greater at the firm level where data are more accurate and the number of observations far greater.

In Chapter 1 of this thesis we examine two key empirical questions in public economics by exploiting the 2009 Polish tax reforms. First, we estimate the degree of substitution between employment and self-employment tax bases – on the extensive margin. In particular, we quantify the impact of changes in the differential in rates of taxation between the two tax bases on the propensity of taxpayers to declare any positive level of employment or self-employment income. Second, we contribute to the literature on elasticities of taxable income on the intensive margin – the responsiveness of taxable income to changes in marginal tax rates – by providing estimates which are more likely to be robust to changes in year-to-year income dynamics than previous estimates. To identify these effects, we exploit variation in marginal and total tax rates around the 2009 reforms which occurs independently of an individual’s position in the income distribution as a result of joint reporting with a spouse. At the same time, to obtain the extensive-margin responses, we exploit the uniqueness of the 2009 Polish tax reforms, which left the tax schedule un-changed for some types of self-employment while changing the tax schedule for the employed. The baseline estimates of the intensive-margin elasticities are around 0.2-0.3 for the employed and around 0.5-0.7 for the self-employed. The estimates jointly make possible the decomposition of the deadweight losses of the tax reform into intensive and extensive-margin responses, with the contribution of the extensive margin found to be around 7% of the total. In Chapter 2, we examine the optimal non-linear taxation in an environment in which individuals have the option of engaging in either employment or self-employment activity. We build on the estimates from Chapter 1 to calibrate an extension of the classic Mirrleesian model which allows for extensive-margin transitions between employment and self-employment. The results help rationalise the preferential tax treatment of self-employment income versus employment income given in certain tax systems. They also illustrate the ways in which the possibility of extensive-margin transitions between tax bases moderate the incentive to give such preferential treatment. Based on the parameterisation here, the presence of the extensive-margin ap- pears to have a limited impact on the optimal marginal and total tax rates faced by the employed and self-employed. This, together with the earlier decomposition of deadweight losses in Chapter 1 by types of response, points towards a limited role of the extensive margin as a consideration for optimal-tax design, at least as far as the employment and self-employment tax bases are concerned. Chapter 3 turns to a fundamental question in health economics: how do health states change over the life-cycle, and how does the risk of adverse health-shocks change over the life-cycle? Most economic models of individuals’ behaviour over the life-cycle, to the extent to which they incorporate a measure of health risk, assume a simplified unidimensional measure of health. We contribute to this literature by estimating a flexible dynamic factor model of health and health risk over an individual’s life using the rich health data from the Health and Retirement Study (HRS). We find that the many potentially collinear health indicators found in the HRS can broadly be summarized into four underlying factors. Three of these correspond to what may be termed subjective health measures, such as self-reported mobility, while a fourth corresponds to objective measures, including the number of overnight hospital stays, doctor visits and medical spending. The persistence of these underlying factors and the variance of their shocks are estimated as parameters of a vector auto-regressive process. We obtain results about the deterministic evolution of the health factors with age, the level of risk relating to each health measure, as well as heterogeneity by level of education. These are intended as building blocks of an ongoing project concerning the optimal design of disability insurance, given the health risks faced by individuals.