Composite price expectations: An empirical analysis for the Spanish horticultural sector

Abstract

AbstractThis article aims to determine the extent to which available information is used to formulate price expectations in the horticultural sector in southeastern Spain. In recent decades this sector, which exports mainly to European Union (E.U.) food distribution centers, has witnessed a greater correlation between production and marketing due to the influence of cooperatives. This has led to an increase in the availability and use of information for forecasting the different variables. This analysis proposes the combination of rational expectation models and lagged price expectation models. It also compares the proposed model with other traditional expectation models. The results suggest that current market information (rational expectation viewpoint) is being used complementary to lagged prices and show the suitability of a rational composite expectation model. [EconLit classification: D840, Q110, Q130]. © 2007 Wiley Periodicals, Inc. Agribusiness 23: 57–83, 2007.