APPROXIMATELY OPTIMAL CARRYOVER LEVELS FOR WHEAT IN THE UNITED-STATES

This paper presents results of stochastic simulations of adherence to a first-period first-order certainty equivalence decision rule for approximately optimal wheat stocks in the United States. The decision rule is obtained by maximizing a first-order approxi mation of the discounted sum of expected producers' plus consumers' surplus less storage costs over a long-time horizon. For comparative purposes, stochastic simulations of the present system for holding stocks are also given in the paper. Stock levels under the present system were found to be higher than the certainty equivalence stock levels. © 1978 by the American Agricultural Economics Association.