Study of Short-Run Grain Movements on the Inland Waterway System

Abstract

Time series techniques-particularly impulse-response functions and variance decompositions-are used to characterize the short-run relationships between 17 variables in a vector autoregressive model designed to trace the short-run interconnections among variables affecting lockages on the Mississippi and Illinois Rivers. The model contains five categories of variables: lockages, barge rates, grain bids, rail rates, and rail deliveries. Variance decompositions are constructed that identify barge rates as the most important variable affecting lockages at both short and long horizons. Barge rates are, in turn, explained largely by lockages and rail rates, indicating two-way feedback or bidirectional causality between lockages and barge rates. Impulse-response functions are also examined. The variance decompositions indicate that barge rates are important in explaining lockages, and the impulse-response functions show how lockages and other variables respond to such shocks. In general, there is a substitution ...