|
Walter C. Labys IntroductionCommodity inventory behavior has often been considered as an intertemporal adjustment process reflecting demand and supply disequilibrium in a closed market or economy. However, some emphasis has also been placed on the nature of inventory behavior in an open economy in which international trade takes place. Private sector participants see commodity inventories and trade as a way of moving domestic and international markets towards equilibrium. Public sector participants view the inventory and trade relation as a possible solution to problems of commodity surpluses or deficits. And both private and public sector interests often coincide in the case of achieving trade balances, buffer stock management, and international price stabilization. Inventory adjustments thus can be said to play a role in the competitive international position of U.S. agricultural commodity producers. Although considerable research has taken place regarding commodity inventory adjustments, little research has taken place concerning the relation between inventories and exports and imports. There is thus a need to investigate possible dynamic relations between these variables in a time series context, so as to offer suggestions for improving trade competitiveness. This paper attempts to meet this need by performing trend, stationarity, ARCH, cointegration, and regression tests on U.S. inventory and export data for the broiler, cattle, corn, cotton, hogs, soybeans, tobacco, and wheat markets. The study begins by examining the empirical evidence on inventories in these markets and their relation to consumption and exports. Observations are made on trends, coverage, and their relative instability. Stationarity tests are first performed to further assess these trends and to examine possible cointegration between inventory variables. Deviations from such trends are then evaluated to assess the cyclical properties of the inventory series. Cointegration analysis is performed to analyze the dynamics of the relationship between commodity inventories and exports. Some regression tests then follow which examine whether a relationship exists between positive or negative movements in inventories and exports. This analysis helps to explain changes in exports as a correction to the steady-state relationship normally reflected in stock adjustments, as a measure of the disequilibrium between production and consumption. This paper consists of the following sections:
ReferencesAppendixesDocument Prepared by: Leigh H. Stribling, lstribli@acesag.auburn.edu Alabama Agricultural Experiment Station Auburn University |
|
|
|