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Tag Archives: Demand
Identifying Supply and Demand Elasticities of Iron Ore
By Zhirui Zhu
This paper utilizes instrumental variables and joint estimation to construct efficiently identified estimates of supply and demand equations for the world iron ore market under the assumption of perfect competition. With annual data spanning 1960-2010, I found an upward sloping supply curve and a downward sloping demand curve. Both of the supply and demand curves are efficiently identified using a 3SLS model. The instruments chosen are strong and credible. Point estimation of the long-run price elasticities of supply and demand are 0.45 and -0.24 respectively, indicating inelastic supply and demand market dynamics. Back-tests and forecasts were done with Monte Carlo simulations. The results indicate that 1) the predicted prices are consistent with the historical prices, 2) world GDP growth rate is the determining factor in the forecasting of iron ore prices.
Advisor: Gale Boyd | JEL Codes: C30, Q31 | Tagged: Demand, Iron Ore, Supply, Simulation, Simultaneous Equation
The Dynamics of Health Care Demand During an Illness Episode
By David Benson
Previous studies assume consumers make medical care choices over large (e.g. yearly) time steps. However, most health expenses occur in the weeks immediately following a shock to health. It is unknown whether demand during an illness episode diers from normal long-run demand. How do consumers make the sequential, dynamic choices to consume medical care during an episode of severe illness? A theory of the consumer’s short-run health investment is oered and tested empirically using the Medical Expenditure Panel Survey. It is found that demand is extremely price inelastic immediately following the shock, but is very responsive to changes in health.
Advisor: Frank Sloan | JEL Codes: I1
