Structural Change in Supply Response Analysis of Corn Acreage

In most previous work on supply response analyses, estimated parameters were assumed constant over time. This study compared results from time-varying parameter models for U.S. corn acreage with OLS results. The time-varying parameter models imply larger effects of prices and faster adjustment than the constant parameter model. Further, this study provides elasticity estimates that reflect structural changes over time. In particular, corn acreage has become less responsive to changes in prices through time.