Information Rigidities in USDA Production Forecasts
AAEA members release new research in AJAE
New research applies a recently-developed test to USDA crop production forecast revisions for corn, soybeans, and wheat and finds no significant evidence that USDA crop production forecasts are smoothed, strategically. Rather, it shows that information rigidities are the more likely culprit, due to the production and yield information that is either too costly to obtain or too noisy. The study states USDA forecasters, on average, place between 20% - 50% weight on previous information for corn, soybeans, and wheat production projections and between 5% - 45% for yield forecasts of the same crops.
In the new article “Information Rigidities in USDA Production Forecasts” released in the AJAE, Raghav Goyal from Louisiana State University and Michael Adjemian from the University of Georgia, seek to understand why revisions to the USDA crop production and yield forecasts are somewhat predictable.
Goyal says, “Because U.S. field crop information is characterized by rigidities, USDA may be able to improve its forecasts by improving the data that forecasters use—perhaps by making investments in satellite or remote sensing technology.”
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ABOUT AAEA: Established in 1910, the Agricultural & Applied Economics Association (AAEA) is the leading professional association for agricultural and applied economists, with 2,500 members in more than 60 countries. Members of the AAEA work in academic or government institutions as well as in industry and not-for-profit organizations, and engage in a variety of research, teaching, and outreach activities in the areas of agriculture, the environment, food, health, and international development. The AAEA publishes three journals, the Journal of the Agricultural and Applied Economics Association (an open access journal), the American Journal of Agricultural Economics and Applied Economic Perspectives & Policy, as well as the online magazine Choices and the online open access publication series Applied Economics Teaching Resources. To learn more, visit www.aaea.org.
Contact: Allison Ware
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Email: aware@aaea.org