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

Mark Denbaly and Harry Vroomen

No 278575, Staff Reports from United States Department of Agriculture, Economic Research Service

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.

Keywords: Crop Production/Industries; Demand and Price Analysis (search for similar items in EconPapers)
Pages: 22
Date: 1991-08
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Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:ags:uerssr:278575

DOI: 10.22004/ag.econ.278575

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