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Abstract
A 14 equation recursive model is developed for (1) flue-cured acreage, (2) burley acreage,
(3) flue-cured price, (4) burley price, and (5) consumer demand for cigarettes. The coefficients
are estimated using data for 1954-70. The reduced form and the impact multipliers
are derived. The multipliers are used to illustrate the impact of a 3.5-cent increase in the
support rate for flue-cured tobacco. A comparison of the reduced-form estimated values
with observed values of 14 endogenous variables showed a good fit for the model over the
period studied.