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Agricultural R&D, policies, (in)determinacy, and growth

Chung-Hui Lai, Shih-Wen Hu, Vey Wang and Chi-Chur Chao

International Review of Economics & Finance, 2017, vol. 51, issue C, 328-341

Abstract: This paper examines the effects of agricultural subsidy policies on long-run growth. The novelty of this paper lies in its investigation of how the long-run effects of a land productivity conservation subsidy and an agricultural R&D subsidy are affected by the possible emergence of the indeterminacy of equilibria in Rivera-Batiz and Romer's endogenous growth model with elastic labor. The analysis shows that if the technology growth rate is more sensitive to a change in the land productivity conservation subsidy policy than the consumption growth rate, the policy will generally enhance (harm) long-run growth when the balanced growth path is indeterminate (determinate). Furthermore, the agricultural R&D subsidy will enhance (harm) economic growth when the balanced growth path is determinate (indeterminate).

Keywords: Land productivity conservation; Subsidy; Agricultural R&D; Endogenous growth (search for similar items in EconPapers)
JEL-codes: O30 O40 Q10 (search for similar items in EconPapers)
Date: 2017
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Handle: RePEc:eee:reveco:v:51:y:2017:i:c:p:328-341