Dynamic Elasticities and Flexibilities in a Quarterly Model of the U.S. Pork Sector
Karl D. Skold, Matthew T. Holt
May 1988 [88-WP 32]
Skold, K.D. and M.T. Holt. 1988. "Dynamic Elasticities and Flexibilities in a Quarterly Model of the U.S. Pork Sector." Working paper 88-WP 32. Center for Agricultural and Rural Development, Iowa State University.
It has long been recognized that usual elasticity and flexibility concepts are of limited value in a multi-equation setting. This is because the response caused by a change in an exogenous variable will have feedback effects as the system obtains a new equilibrium. Consequently, it is necessary to examine total response measures in a system framework. In spite of this recognition there has been no known attempt to examine the structural implications of an econometric model by using total elasticities and flexibilities. This paper extends the results from Cavas, Hassan, and Johnson (1981) to obtain total elasticity and flexibility measures in a general dynamic model, using a quarterly model of the U.S. pork sector. The results indicate that supply elasticities are generally smaller than those reported previously.