USDA Economics Seminar: Information Rigidities in USDA Forecasts
USDA Economics Seminar - "Information Rigidities in USDA Forecasts" - Raghav Goyal, Ph.D. Candidate, UGA
Title: “Information Rigidities in USDA Forecasts.”
Presenter: Raghav Goyal, Ph.D. Candidate, UGA
Time: Monday March 14th, 2022, 3 pm EDT
Abstract: Several previous studies find that revisions to USDA production and yield forecasts for major agricultural commodities are correlated, and conclude that they are biased away from what would be observed under rational expectations due to smoothing on the part of forecasters. Yet correlated revisions may also be explained by information rigidities that cause forecasts to be infrequently updated. We apply a recently-developed test to these USDA revisions for corn, soybeans, and wheat and—contrary to previous studies—find no significant evidence of smoothing in USDA forecasts. Rather, we show that information frictions are the more likely culprit, due to production and yield information that is either too costly to obtain or too noisy to make sense of in real time. Because our results offer robust evidence that consensus USDA production and yield forecasts are characterized by information rigidities rather than smoothing, their efficiency can be improved by investments, such as in better satellite or remote sensing technology, that make crop and production information less costly to obtain and/or more precise.
Raghav Goyal is a Ph.D. candidate in the Department of Agricultural and Applied Economics at the University of Georgia. His 2021 paper in Food Policy with Mike Adjemian titled “The 2019 Government Shutdown Increased Uncertainty in Major Agricultural Commodity Markets” won the Rod Ziemer Award for Outstanding Ph.D. Paper Award in UGA’s Department of Agricultural and Applied Economics. His LinkedIn and personal pages are at: https://www.linkedin.com/in/raghav-goyal-uga/ and https://sites.google.com/view/raghav-goyal/home
Seminar Contact: Peyton Ferrier, peyton.ferrier@usda.gov
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