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Elasticities of Fertilizer Demands for Corn in the Short and the Long Run: A Cointegrated and Error-Correcting System

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  • Denbaly, Mark
  • Vroomen, Harry

Abstract

Previous empirical models of fertilizer demand for corn or feedgrains production, which have been analyzed mainly within a static framework, indicate that the functions are price elastic or nearly price elastic. This result implies that taxes could be an effective policy tool to reduce nutrient use in agriculture. If application rates and independent variables are nonstationary, static regressions, which would then be misspecified dynamically, could result in a spurious relationship with inconsistent parameters. In this paper, we estimate a set of dynamic demand models for nitrogen, phosphate, and potash use in corn production, which accounts for nearly half of total U.S. fertilizer nutrient use. The results provide strong statistical evidence that nutrient demands for corn are price inelastic both in the short and the long run.

Suggested Citation

  • Denbaly, Mark & Vroomen, Harry, 1991. "Elasticities of Fertilizer Demands for Corn in the Short and the Long Run: A Cointegrated and Error-Correcting System," Staff Reports 278575, United States Department of Agriculture, Economic Research Service.
    • Handle: RePEc:ags:uerssr:278575
    DOI: 10.22004/ag.econ.278575
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    Cited by:

    1. Leetmaa, Susan E. & Krissoff, Barry & Hartmann, Monika, 1996. "Trade Policy And Environmental Quality: The Case Of Export Subsidies," Agricultural and Resource Economics Review, Northeastern Agricultural and Resource Economics Association, vol. 25(2), pages 1-9, October.
    2. Hartmann, Monika, 1997. "The Impact of EC Nitrogen Taxes on Agricultural Competitiveness and Welfar: Simulations with the World Trade Model TEPSIM," 1997 Occasional Paper Series No. 7 198205, International Association of Agricultural Economists.
    3. Onianwa, Odili & Alderfer, Richard & Levins, Richard A., 1992. "Taxation As A Means Of Reducing Nitrogen Fertilizer Use In Minnesota Corn Production," Staff Papers 13281, University of Minnesota, Department of Applied Economics.

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