Testing The Induced Innovation Hypothesis: An Application to UK Agriculture, 1953-90

Y. Khatri, C. Thirtle and R. Townsend

Economics of Innovation and New Technology, 1998, vol. 6, issue 1, 1-28

Abstract: This paper exploits the properties of the third order approximation of the translog cosl function lo estimate the input demand elasticities and factor-saving biases of technological change for UK agriculture. Then, cointegration techniques are used to determine the time series properties of the variables, eslablish cointegration and test for causality. The tests show that the single bias, single relative price approach, applied to the cumulative biases in previous tests, is inappropriate. Maximum likelihood techniuues show that cointegrating vectors exist and that the input prices are negatively related to the biases, as required by the hypothesis. The prices are causally prior to the biases, but for crop inputs there is also reverse causality.

Keywords: Induced Innovation; Cost Function; Coinlegration JEL Classification: 03; 031 (search for similar items in EconPapers)
Date: 1998
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Citations: View citations in EconPapers (7)

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DOI: 10.1080/10438599800000011

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