 Stochastic Technical Change and Procyclical TFP The Italian Agriculture CaseNo 108, Working Papers from Universita' Politecnica delle Marche (I), Dipartimento di Scienze Economiche e Sociali Abstract: TFP comparisons across nations, sectors and time have been frequently used to represent the relative technological levels of the production systems. In this paper the use of the TFP as a proxy of the technological level in Italian agriculture is questioned. The cyclical behaviour seems to be the most important shortcoming of the TFP measure. It clearly reveals a short-run component due to shocks on the supply side. To separate these business cycle effects from real long-run technological change, we use a stochastic process for the generation of technical change induced by R&D and Extension expenditure and a Kalman filter procedure is applied. Doing this, it is possible to separate the short-run and long-run components of the traditional TFP measure. The empirical evidence clearly reveals that supply-side shocks enter the traditional measure of productivity therefore, it represents an erroneous indicator of technological progress. A better indicator can be obtained estimating the longrun component of productivity that seems to be close to a linear trend and significantly induced by R&D and Extension public expenditure. Keywords: Cost Function; Italian Agriculture; Latent Variable; Stochastic Technical Change (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:anc:wpaper:108 Access Statistics for this paper More papers in Working Papers from Universita' Politecnica delle Marche (I), Dipartimento di Scienze Economiche e Sociali Contact information at EDIRC. |
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