Induced Innovation in United States Agriculture, 1880–1990: Time Series Tests and an Error Correction Model

Colin G. Thirtle, David Schimmelpfennig () and Robert E Townsend

American Journal of Agricultural Economics, 2002, vol. 84, issue 3, 598-614

Abstract: An error correction model (ECM) of induced innovation, based on the two-stage CES production function allows direct tests of the inducement hypothesis, which are applied to U.S. data for 1880–1990. The time series properties of the variables include a structural break in 1920, cointegration is established and an ECM constructed, which allows factor substitution to be separated from technological change. Causality tests show that the factor-price ratios and R&D are Granger-prior to the factor-saving biases of technological change. The inducement hypothesis is corroborated, and identified as one factor in the complex development of U.S. agriculture. Copyright 2002, Oxford University Press.

Date: 2002
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