Numeraire choice in agricultural supply analysis
Abstract:Should the choice of numeraire price for modelling profit functions be arbitrary, or is more careful study needed? Here, the choice of numeraire is examined using tests for models specification and out-of-sample predictive accuracy based on the crop and livestock data obtained from Iowa. The results of this study indicate that, for this data set and functional form, it does indeed make a difference which numeraire you choose. This is in contrast to previous studies which, in general, indicated that the choice of numeraire equation is arbitrary or, more commonly, offered no justification for the netput chosen.
Document Type: Research Article
Affiliations: 1: Department of Agricultural Economics and Agribusiness, Louisiana State University, Baton Rouge, LA 70803, USA 2: Department of Agricultural Economics and Rural Sociology, University of Idaho, Idaho Falls, ID 83402, USA
Publication date: June 20, 2005