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

Margaret Andrews

Journal of Development Economics, 1985, vol. 17, issue 1, 117-129

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.

Date: 1985
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Persistent link: https://EconPapers.repec.org/RePEc:eee:deveco:v:17:y:1985:i:1:p:117-129

DOI: 10.1016/0304-3878(85)90025-2

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