Proceeding on this basis we furnish in Table 2 estimates of elasticities for the endogenous variables
calibrated to the 1987 data point.
Table 2: Elasticity Estimates for the Dairy-processing sector, Ireland, 1987
|
Exogenous Variables | ||||||||
|
Endogenous Variable |
Price of Proc. Output |
Wage Rate |
Price of Non-Milk Materials |
Time Trend |
Volume of Milk Materials |
Capital Stock | ||
|
Processed Output |
0.69 (11.13) |
-0.02 (3.08) |
-0.68 (0.00) |
-0.01 (0.99) |
0.60 (15.71) |
0.17 (2.41) | ||
|
Labour |
0.25 (3.08) |
-0.37 (3.44) |
0.11 (0.00) |
-0.02 (1.68) |
-0.24 (2.03) |
0.45 (5.13) | ||
|
Non-Milk Materials |
1.92 (0.00) |
0.02 (0.00) |
-1.94 (0.00) |
0.00 (0.00) |
0.43 (0.00) |
0.40 (0.00) | ||
|
Milk Price |
1.28 (15.71) |
0.04 (2.03) |
-0.32 (0.00) |
-0.04 (4.83) |
0.08 (0.59) |
0.07 (0.85) | ||
|
'.K 2 by equation: 15(a): 0.99 15(b): 0.85 15(c): 0.74 15(d): 0.41 |
First-order autocorre |
lation n: |
D.W. by equation: 15(a): 1.85 15(b): 1.56 15(c): 1.64 15(d): 2.49 | |||||
t-ratios in parentheses beneath the coefficient estimates.
The most interesting results concern the milk price responses. The elasticity of milk price with
respect to milk volume implies a perfectly horizontal demand curve for milk materials. The milk
price is only affected positively by shifts in the exogenously determined processed output price and
while variations in the price of non-milk materials affect the milk price negatively the elasticity is
not statistically significant. This finding is of course consistent with our earlier mentioned result
16
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