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Abstract

In this study, a general model of annual jute acreage is developed, based on the assumptions of lagged adjustment of actual to desired area, and "naive" price expectations. A number of different formulations see examined empirically in order to arrive at the particular general model. The results of fitting this model to data from the three major producing countries-Bangladesh India, and Thailand indicate that jute garage is indeed quite responsive to changing economic factors. The elastic nature of jute acreage to prices, both of jute and of rice or other alternative crops, is an important aspect of the world jute market. The analysis suggests that the principal determinant of area under jute in these countries is the jute farmer's expectations of the relative price of jute compared to the alternative crops, which is largely determined by is preceding year's prices.

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