Contemporaneous Correlation and Modeling Canadas Imports of U.S. Crops Report as inadecuate

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A multicrop model of Canadian demand for US crops is estimated with Zellner's seemingly unrelated regression (SUR), which corrects for the distortion problem in contemporaneous correlation, and with ordinary least squares (OLS), which ignores the problem Comparing inference parameters, trade elasticity estimates, and out-of-sample foremast performance of the Canadian import demand model's SUR and OLS versions demonstrates the importance of addressing contemporaneous correlation, even though both estimators are unbiased This article addresses three shortcomings of the agricultural trade literature frequent failure to account for easily corrected econometric problems, excessively wide ranges of trade parameter estimates, and frequent failure by researchers to validate models beyond the sample

Keywords: Canadian imports ; wheat ; corn ; contemporaneous correlation ; Zellner's seemingly unrelated regression ; ordinary least squares ; price elasticities of import demand ; forecast performance

Subject(s): Crop Production/Industries

International Relations/Trade

Issue Date: 1988

Publication Type: Journal Article

PURL Identifier: Published in: Journal of Agricultural Economics Research, Volume 41, Number 1

Total Pages: 6

Record appears in: United States Department of Agriculture (USDA) > Economic Research Service > Journal of Agricultural Economics Research

Author: Babula, Ronald A.



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