The price elasticity of export demand for US agricultural commodities reconsidered

Abstract

In this paper, the question of whether the export demand for three agricultural commodities (corn, soybeans and wheat) in the United States has structurally changed over the 1971 to 1986 period is examined. The export demand specification considered in the analysis is one that has been used extensively in the empirical literature. The stability question is explored. The results suggest that both the export demand for corn and the export demand for soybeans destabilized over the sample period. When corrected for this instability, the estimated long run price elasticities do not allow for a definitive conclusion with regard to the question of whether the demand for exports of agricultural commodities is now elastic. This means that agricultural policy alternatives become obfuscated.