Christopher Udry (Yale) will present:

"Forecasting Profitability"

at 3pm on Wednesday, October 22, 2014 in 310 Silsby


Please sign up for a meeting, lunch, or dinner at:

https://docs.google.com/spreadsheet/ccc?key=0As0WQNxSJWZVdEN0MW5DNk5VM1JISXo1VUV5QndNWEE&usp=sharing


                                                                                                                Abstract

We explore how improving the skill of long-range monsoon forecasts affects farmer investments and profitability. Based on panel data from India we show that farmers respond to government forecasts, that these responses account for much of the inter-annual variability in investments, and that farmers respond more strongly to the forecast where there is more forecast skill. We also show that the return to such investments depends substantially on the conditions under which it is obtained by estimating how returns to planting-stage investments induced by variation in forecasts vary by rainfall realizations. We find that farmers with access to skilled forecasts experience increased mean profits and less variable profits and show that improved forecast skill can substitute for weather index insurance.




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