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Agricultural terms of trade and distributional perversities in a neo-Ricardian model

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  • Andrews, Margaret S.

Abstract

The comparative-static effects of a change in terms of trade for the agricultural sector are examined in a two-sector, neo-Ricardian model. When wages are held constant and intensive rents are earned by owners of the non-produced land resource, it is possible for a favorable shift in agriculture's terms of trade to lead to a fall in the rate of profit on circulating capital or a decline in the rental rate on land. The conditions causing these perverse profit and rental rate responses are shown to depend on the type of high-yielding technology available. The relevance of the analysis to policy making and investment in the agriculture sector is discussed.

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  • Andrews, Margaret S., 1985. "Agricultural terms of trade and distributional perversities in a neo-Ricardian model," Journal of Development Economics, Elsevier, vol. 17(1), pages 117-129.
    • Handle: RePEc:eee:deveco:v:17:y:1985:i:1:p:117-129
    DOI: 10.1016/0304-3878(85)90025-2
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    1. Mellor, John W, 1973. "Accelerated Growth in Agricultural Production and the Intersectoral Transfer of Resources," Economic Development and Cultural Change, University of Chicago Press, vol. 22(1), pages 1-16, October.
    2. John E. Floyd, 1965. "The Effects of Farm Price Supports on the Returns to Land and Labor in Agriculture," Journal of Political Economy, University of Chicago Press, vol. 73(2), pages 148-148.
    3. Yair Mundlak, 1969. "The Terms of Trade of Agriculture in Context of Economic Growth," International Economic Association Series, in: Ugo Papi & Charles Nunn (ed.), Economic Problems of Agriculture in Industrial Societies, chapter 0, pages 634-663, Palgrave Macmillan.
    4. Gibson, Bill & McLeod, Darryl, 1982. "Terms-of-trade policy in a model with non-produced means of production," Journal of Development Economics, Elsevier, vol. 10(1), pages 31-45, February.
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    Cited by:

    1. Gibson, Bill & McLeod, Darryl, 1985. "Profit, rent and the terms of trade," Journal of Development Economics, Elsevier, vol. 17(1), pages 131-139.
    2. Amitava Krishna Dutt, 1989. "Sectoral Balance: A Survey," WIDER Working Paper Series wp-1989-056, World Institute for Development Economic Research (UNU-WIDER).
    3. Andrews, Margaret S., 1985. "Profit, rent and the terms of trade," Journal of Development Economics, Elsevier, vol. 17(1), pages 141-149.

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