ABSTRACT
This chapter examines new directions that commodity modeling can take. It focuses on future theoretical developments, future improvements in application, some remaining challenges, and conclusions. Needed improvements in the theoretical aspects of commodity modeling are presented according to the steps of the modeling method: specification, estimation and simulation. Policy simulation analysis has been applied extensively as a means of assessing the welfare impact of commodity policies. Here the target or dependent variables entering the welfare function of the policy maker are determined by conducting successive simulations based on a set of exogenous variables or instruments, which reflect alternative policies that he can control. Including stochastic disturbances in commodity simulation experiments can help to evaluate policies where climate influences production or else to validate a model where its cyclical or stability properties are of interest.
