Transportation Disruptions on Grain Markets

Measuring the Effects of Transportation Disruptions on Grain Markets Michael Adjemian working with the European Association of Agricultural Economics

Dr. Michael Adjemian is collaborating with the European Association of Agricultural Economics in studying whether USDA news affects agricultural commodity futures market ambiguity. While risk is characterized as a series of probabilities that can be assigned to a set of known outcomes, ambiguity—or Knightian uncertainty—is uncertainty about the probabilities that can be assigned to some known and some potentially unknown outcomes. Ambiguity-aversion can lead traders to demand a premium to hold an asset. As researchers have found, some macroeconomic news announcements can affect market ambiguity. We intend to study this question using both reduced-form and structural econometric approaches in Rennes, France at the end of August. There will be an update on this research in the next newsletter.