COINTEGRATION, AND CAUSALITY: EXPLORING THE RELATIONSHIP BETWEEN AGRICULTURAL AND PRODUCTIVITY

David Schimmelpfennig () and C. Thirtle

Journal of Agricultural Economics, 1994, vol. 45, issue 2, 220-231

Abstract: This study investigates the causal relationships between total factor productivity (TFP) and explanatory variables, such as public sector agricultural extension, farmer education, private sector patents and the weather. Cointegration and Granger causality tests are applied to the UK data which were used by Hallam (1990). Unlike Hallam, we find that there is a relationship between research spending and productivity. The same methodology is applied to new data for ten EC countries and the USA. In all cases there is evidence of a long run relationship between TFP and. Pooling the data for the ten EC countries and the USA, and then testing for causality shows that expenditures are Granger prior to TFP and that TFP is also Granger prior to expenditures. This result agrees with Pardey and Craig's (1989) US study.

Date: 1994
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