Agriculture in a Dynamic Cross-Sector Model

Carlos Arnade

No 278815, Staff Reports from United States Department of Agriculture, Economic Research Service

Abstract: The assumption of adjustment costs is used to specify a dynamic model of the U.S. economy. Output is divided into in three sectors: agriculture, manufacturing, and services. The advantage of this approach is that it can measure more factors that contribute to productivity growth than a static model. Output growth and productivity are measured using data and parameters from an estimated dynamic model. Parameters that are unique to dynamic models and a returns-to-scale measure make up part of the productivity calculations. Dynamic components of productivity are less than 5 percent of productivity growth for most years. This occurs because dynamic components of productivity are a function of returns to scale, and production is measured to be close to constant returns to scale. Elasticities from the estimated model show that both manufacturing and service prices have a major impact on agricultural output. Own-price elasticities are relatively small for agriculture.

Keywords: Agricultural and Food Policy; Productivity Analysis (search for similar items in EconPapers)
Pages: 28
Date: 1996-10
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Persistent link: https://EconPapers.repec.org/RePEc:ags:uerssr:278815

DOI: 10.22004/ag.econ.278815

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