UNIVERSITY PARK, Pa. -- Darren Frechette, assistant professor of agricultural economics in Penn State's College of Agricultural Sciences, has received the 2002 Roy C. Buck Faculty Award in the Agricultural Sciences for his article, "The Demand for Hedging and the Value of Hedging Opportunities."

The award was founded to recognize the best refereed article published in a scholarly journal in the previous two years by an untenured faculty member in the college whose research involves the social or human sciences. Frechette published the article in the American Journal of Agricultural Economics in November 2000.

"Frechette's article is innovative and makes a significant contribution to the literature on commodity hedging," says Bruce McPheron, associate dean for research in the college. "It explores why existing models predict more hedging activity than is actually observed among agribusiness managers and farm producers, demonstrating that spatial basis risk can reduce hedging demand.

"He uses Pennsylvania's dairy inputs to demonstrate the implications of his analysis, and he clearly demonstrates the relevance of the problem he's analyzed. His article is an outstanding example of the scholarship this award was created to recognize and encourage."

Frechette has been recognized for his research on commodity storage and futures markets. He also has studied spatial economics, agricultural supply response, expectations formation and attitudes toward risk and uncertainty. Specific topics include the effect of Brazilian soybean production subsidies on futures prices and the profitability of storage facilities in the United States; the effect of the spatial distribution of production along the Mississippi River network on the time-pattern of corn prices; the effect of noise traders on futures prices; and the extent of bias in econometric estimators of supply response elasticity.

More recent publications by Frechette include "Aggregation and the Nature of Price Expectations" in the February 2001 edition of the American Journal of Agricultural Economics, and "Distinguishing Transitory Shocks from Permanent Structural Change," which he co-authored with Hyun Jin for Structural Change and Economic Dynamics in July 2002.

Frechette earned bachelor's degrees in economics and theoretical math from the Massachusetts Institute of Technology, and a doctorate in economics from North Carolina State University.

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EDITORS: Contact Darren Frechette at 814-863-8636 or Frechette@psu.edu (e-mail).

Contact: Gary Abdullah gxa2@psu.edu 814-863-2708 814-863-9877 fax #299