Abstract:
The elasticity of excess demand held by foreign buyers of United States
agricultural products is critical for understanding the impacts of changes in farm policy
and is a parameter that is much debated. The objective of my study is to estimate this
parameter for major U.S. export crops, including wheat, corn, and soybeans. I first
formulate an economic model of U.S. exports including country-specific, crop-specific
price transmission elasticities, supply elasticities, and demand elasticities for each of the
major importers of U.S. crops. I then regress each model with updated time-series data
sources, carry out extensive diagnostic tests, and incorporate these estimates into an
economic model of U.S. export markets to calculate the excess demand elasticities. I
provide a systematic comparison to previous estimates in the literature and find that the
foreign demand for corn and soybeans tends to be fairly elastic, while the demand for
wheat is relatively inelastic.
