Rational Expectations and Output Supply: Evidence from the Sugar Cane and Coffee Industries in Jamaica
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Publisher:Ohio State University. Department of Agricultural, Environmental, and Development Economics
Series/Report no.:Ohio State University. Department of Agricultural Economics and Rural Sociology. ESO (Economics and Sociology Occasional Paper). No. 1260
This paper investigates the rationality and price responsiveness of sugar cane and coffee farmers in Jamaica for the period 1960-1980. The output supplied by these farmers is modeled to incorporate anticipation by farmers of commodity board actions. The structure of constraints imposed by the rationality of these anticipated responses 1s derived and tested by means of a likelihood ratio test statistic. The results support the joint hypothesis of rationality and price responsiveness. Policy implications of the anticipated response function are also identifies.