WHY ARE ESTIMATES OF AGRICULTURAL SUPPLY RESPONSE SO VARIABLE

Estimates of the response of agricultural supply to movements in expec ted price display curiously large variation across crops, regions, and time periods. We argue that this anomaly may be traced, at least in p art, to the statistical properties of the commonly used econometric es timator, which has infinite moments of all orders and may have a bimod al distribution. We propose an alternative minimum-expected-loss estim ator, establish its improved sample properties, and argue for its usef ulness in the empirical analysis of agricultural supply response.