Table 1. Open in new tab...

Table 1.

Parameterization

Parameter	Economic interpretation	Assigned value
β	Annual discount factor	0.95
η	Income elasticity	0.5
α	Own-price demand elasticity	−0.4
γ	Commodity budget share	0.15
Y	Income	6.67
d	Normalization parameter of demand function	0.39
θ	Parameter defining risk aversion	−2.62
k	Physical storage cost	0.06
τ	Trade cost	0.2
μ	Normalization parameter of world yield distribution	1
ε^H, ε^w	Probability distribution of yield	B(2, 2) · 0.5 + 0.75

Parameter	Economic interpretation	Assigned value
β	Annual discount factor	0.95
η	Income elasticity	0.5
α	Own-price demand elasticity	−0.4
γ	Commodity budget share	0.15
Y	Income	6.67
d	Normalization parameter of demand function	0.39
θ	Parameter defining risk aversion	−2.62
k	Physical storage cost	0.06
τ	Trade cost	0.2
μ	Normalization parameter of world yield distribution	1
ε^H, ε^w	Probability distribution of yield	B(2, 2) · 0.5 + 0.75