| Econometric models have been used to study agricultural commodity markets in developed and developing countries. These models have been very useful in analyzing the structure of agricultural markets as well as in assessing the impact of different policy scenarios. The objectives of this study were to develop regional econometric models to analyze the supply and demand of sweet corn for the fresh and processing markets in the U.S.; to generate baseline projections; and evaluate policy scenarios.;Based on the theoretical specification, single equations for the supply, demand, and price linkage were estimated for each of the two markets. Then, all the single equations were solved in a system of equations and simultaneously estimated using the Two Stage Least Square procedure. In the two estimated models, supply and demand were found to be inelastic in input and output price, respectively.;For the processing market model, two allocation equations were derived to reflect processors' allocation decisions on the amount of the raw commodity that flow into either the canned or frozen market. Historically, the processing market represents a greater proportion of the raw commodity, about sixty percent, which is the more demand market. However, at the margin when supply is allowed to change, the model allocates more to the to the frozen segment of the market which is more elastic on the demand side.;The performance of the models was validated by the RMS percent error, impact multipliers, Theil's statistics, and turning points criteria. Based on these validation criteria, both model performed reasonable good.;Three policy scenarios were analyzed with the sweet corn model for the fresh market, and two policies scenarios with the sweet corn for the processing market model. The policies analyzed with the fresh market model were (a) a 10 percent increase in U.S. disposable income, (b) a 10 percent depreciation of Canada's currency, and (c) the elimination of Canada's tax on imports of sweet corn from the U.S. As for the processing market model, the hypothetical policies analyzed were (a) a 10 percent increase in Japan's income, and (b) the elimination of Japan's tax on imports of processed sweet corn from the U.S. The direction and magnitude of the outcomes of the policies analyzed were consistent with expectations. |
