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The ability of the standard commodity storage model to replicate annual price serial correlation is a controversial issue. Calendar year averages of prices induce spurious smoothing of price spikes, a fact that has been surprisingly overlooked in several empirical estimations of the annual commodity storage model for agricultural commodities.
We present the application of a maximum likelihood estimator of the storage model for maize prices, correcting for the spurious smoothing. We find, for this data set, serious differences in magnitudes of interest.
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