Separation and hedging results with state-contingent production

A state-contingent model of production under uncertainty is developed and compared with more traditional models of production under uncertainty. Producer behaviour with both production and price risk, in the presence and in the absence of futures and forward markets, is analysed in this state-contingent framework. Conditions for the optimal hedge to be positive or negative are derived. We also show that, under plausible conditions, a risk-averse producer facing price uncertainty and the ability to hedge price risk will never willingly adopt a nonstochastic technology. New separation results, which hold in the presence of both price and production risk, are then developed. These separation results generalize Townsend's spanning results by reducing the number of necessary forward markets by one.

Applying linear time-varying constraints to econometric models: With an application to demand systems

When linear equality constraints are invariant through time they can be incorporated into estimation by restricted least squares. If, however, the constraints are time-varying, this standard methodology cannot be applied. In this paper we show how to incorporate linear time-varying constraints into the estimation of econometric models. The method involves the augmentation of the observation equation of a state-space model prior to estimation by the Kalman filter. Numerical optimisation routines are used for the estimation. A simple example drawn from demand analysis is used to illustrate the method and its application.

Models of alcohol use by young adults: An examination of various attitude-behavior theories

Objective: The aim of this study was to test the effectiveness of various attitude-behavior theories in explaining alcohol use among young adults. The theory of reasoned action (TRA), the theory of planned behavior and an extension of the TRA that incorporates past behavior were compared by the method of maximum-likelihood estimation, as implemented in LISREL for Windows 8.12. Method: Respondents consisted of 122 university students (82 female) who were questioned about their attitudes, subjective norms, perceived behavioral control, past behavior and intentions relating to drinking behavior. Students received course credit for their participation in the research. Results: Overall, the results suggest that the extension of the theory of reasoned action which incorporates past behavior provides the best fit to the data. For these young adults, their intentions to drink alcohol were predicted by their past behavior as well as their perceptions of what important others think they should do (subjective norm). Conclusions: The main conclusions drawn from the research concern the importance of focusing on normative influences and past behavior in explaining young adult alcohol use. Issues regarding the relative merit of various alternative models and the need for greater clarity in the measure of attitudes are also discussed.

Forecasting regional crop production using SOI phases: an example for the Australian peanut industry

Using peanuts as an example, a generic methodology is presented to forward-estimate regional crop production and associated climatic risks based on phases of the Southern Oscillation Index (SOI). Yield fluctuations caused by a highly variable rainfall environment are of concern to peanut processing and marketing bodies. The industry could profitably use forecasts of likely production to adjust their operations strategically. Significant, physically based lag-relationships exist between an index of ocean/atmosphere El Nino/Southern Oscillation phenomenon and future rainfall in Australia and elsewhere. Combining knowledge of SOI phases in November and December with output from a dynamic simulation model allows the derivation of yield probability distributions based on historic rainfall data. This information is available shortly after planting a crop and at least 3-5 months prior to harvest. The study shows that in years when the November-December SOI phase is positive there is an 80% chance of exceeding average district yields. Conversely, in years when the November-December SOI phase is either negative or rapidly falling there is only a 5% chance of exceeding average district yields, but a 95% chance of below average yields. This information allows the industry to adjust strategically for the expected volume of production. The study shows that simulation models can enhance SOI signals contained in rainfall distributions by discriminating between useful and damaging rainfall events. The methodology can be applied to other industries and regions.

Virtual plants - integrating architectural and physiological models

Recent advances in computer technology have made it possible to create virtual plants by simulating the details of structural development of individual plants. Software has been developed that processes plant models expressed in a special purpose mini-language based on the Lindenmayer system formalism. These models can be extended from their architectural basis to capture plant physiology by integrating them with crop models, which estimate biomass production as a consequence of environmental inputs. Through this process, virtual plants will gain the ability to react to broad environmental conditions, while crop models will gain a visualisation component. This integration requires the resolution of the fundamentally different time scales underlying the approaches. Architectural models are usually based on physiological time; each time step encompasses the same amount of development in the plant, without regard to the passage of real time. In contrast, physiological models are based in real time; the amount of development in a time step is dependent on environmental conditions during the period. This paper provides a background on the plant modelling language, then describes how widely-used concepts of thermal time can be implemented to resolve these time scale differences. The process is illustrated using a case study. (C) 1997 Elsevier Science Ltd.

A defense of backwards in time causation models in quantum mechanics

This paper offers a defense of backwards in time causation models in quantum mechanics. Particular attention is given to Cramer's transactional account, which is shown to have the threefold virtue of solving the Bell problem, explaining the complex conjugate aspect of the quantum mechanical formalism, and explaining various quantum mysteries such as Schrodinger's cat. The question is therefore asked, why has this model not received more attention from physicists and philosophers? One objection given by physicists in assessing Cramer's theory was that it is not testable. This paper seeks to answer this concern by utilizing an argument that backwards causation models entail a fork theory of causal direction. From the backwards causation model together with the fork theory one can deduce empirical predictions. Finally, the objection that this strategy is questionable because of its appeal to philosophy is deflected.