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A Dynamic Adjustment Model for U.S. Agriculture: 1948‐79

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  • Utpal Vasavada
  • V. Eldon Ball

Abstract

A multioutput model is developed within the adjustment cost framework to analyze the structure of dynamic adjustments in U.S. agriculture during the post‐war period. An important feature of this model is that the econometric model is consistent with dynamic economic theory. Fluctuations in capital stocks, variable inputs, and outputs are explained by changing opportunity costs. Empirical results indicated that durable equipment, farm‐produced durables, and family labor exhibited significant rigidity in adjustment as a response to exogenous shocks. Surprisingly, the hypothesis that real estate was a variable input could not be rejected. The univariate flexible accelerator hypothesis, which is widely maintained in most agricultural adjustment studies, is inconsistent with the data.

Suggested Citation

  • Utpal Vasavada & V. Eldon Ball, 1988. "A Dynamic Adjustment Model for U.S. Agriculture: 1948‐79," Agricultural Economics, International Association of Agricultural Economists, vol. 2(2), pages 123-137, October.
    • Handle: RePEc:bla:agecon:v:2:y:1988:i:2:p:123-137
    DOI: 10.1111/j.1574-0862.1988.tb00043.x
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    1. Arnade, Carlos Anthony & Gopinath, Munisamy, 1998. "Capital Adjustment In U.S. Agriculture And Food Processing: A Cross-Sectoral Model," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 23(1), pages 1-14, July.
    2. Agbola, Frank W., 2005. "Optimal intertemporal investment in Australian agriculture: An empirical investigation," Agricultural Economics Review, Greek Association of Agricultural Economists, vol. 6(2), pages 1-11.
    3. Rozelle, Scott & Huang, Jikun, 2000. "Transition, development and the supply of wheat in China," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 44(4), pages 1-29.
    4. Jean‐Christophe Bureau & Rolf Färe & Shawna Grosskopf, 1995. "A Comparison Of Three Nonparametric Measures Of Productivity Growth In European And United States Agriculture," Journal of Agricultural Economics, Wiley Blackwell, vol. 46(3), pages 309-326, September.
    5. Gardebroek, Cornelis & Oude Lansink, Alfons G.J.M., 2008. "Dynamic Microeconometric Approaches To Analysing Agricultural Policy," 107th Seminar, January 30-February 1, 2008, Sevilla, Spain 6592, European Association of Agricultural Economists.
    6. Richards, Timothy J. & Patterson, Paul M., 1998. "Dynamic Complementarity In Export Promotion: The Market Access Program In Fruits And Vegetables," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 23(2), pages 1-19, December.
    7. D. Verreth & G. Emvalomatis & F. Bunte & A. Oude Lansink, 2015. "Dynamic and Static Behaviour with Respect to Energy Use and Investment of Dutch Greenhouse Firms," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 61(4), pages 595-614, August.
    8. Muhamad, Goran M. & Heshmati, Almas & Khayyat, Nabaz T., 2021. "How to reduce the degree of dependency on natural resources?," Resources Policy, Elsevier, vol. 72(C).
    9. Shumway, C. Richard, 1995. "Recent Duality Contributions In Production Economics," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 20(1), pages 1-17, July.
    10. Suh, Dong Hee & Moss, Charles B., 2014. "Exploring Agricultural Production Systems: Interactions between the Crop and Livestock Sectors," 2014 Annual Meeting, July 27-29, 2014, Minneapolis, Minnesota 170149, Agricultural and Applied Economics Association.
    11. Agbola, Frank W. & Harrison, Stephen R., 2005. "Empirical investigation of investment behaviour in Australia's pastoral region," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 49(1), pages 1-16.
    12. Weersink, Alfons & Howard, Wayne H., 1990. "Regional Adjustment Response In The U.S. Dairy Sector To Changes In Milk Support Price," Western Journal of Agricultural Economics, Western Agricultural Economics Association, vol. 15(1), pages 1-9, July.
    13. Lin, Ni & Shumway, C. Richard, 2000. "Asset Fixity In U.S. Agriculture: Robustness To Functional Form," Ag Econ Series 12967, Washington State University, School of Economic Sciences.
    14. Tsigas, Marinos E. & Hertel, Thomas W., 1989. "Testing Dynamic Models Of The Farm Firm," Western Journal of Agricultural Economics, Western Agricultural Economics Association, vol. 14(1), pages 1-10, July.
    15. Agbola, Frank W., 1999. "The Structure of Production and Investment in Australia's Pastoral Zone," 1999 Conference (43th), January 20-22, 1999, Christchurch, New Zealand 122327, Australian Agricultural and Resource Economics Society.

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