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Short- and Long-Run Demand and Substitution of Agricultural Inputs

Published online by Cambridge University Press:  10 May 2017

Jorge Fernandez-Cornejo
Jorge Fernandez-Cornejo*
Affiliation:
Resources and Technology Division, Economic Research Service (ERS), U.S. Department of Agriculture
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Extract

Short- and long-run Hicksian and Marshallian elasticities are estimated, along with Morishima elasticities of substitution, using a restricted profit function and a series of decomposition equations. Convexity in prices and concavity in quasi-fixed factors of the restricted profit function are simultaneously imposed using Bayesian techniques. The empirical model is disaggregated in the input side, utilizes a Fuss-quadratic flexible functional form, incorporates the impact of agricultural policies, and introduces a new weather index. The methodology is applied to Illinois's agriculture, and implications for agriculture in the Corn Belt and the Northeast are briefly discussed.

Type
Articles
Information
Northeastern Journal of Agricultural and Resource Economics , Volume 21 , Issue 1 , April 1992 , pp. 36 - 49
Copyright
Copyright © 1992 Northeastern Agricultural and Resource Economics Association 

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Footnotes

The views expressed are the views of the author and do not necessarily represent policies or views of the U.S. Department of Agriculture.

The author wishes to thank Charlie Hallahan from ERS for developing a computer program to impose inequalities using the Bayesian approach and Dick Shumway from Texas A&M University for providing a computer version of Romain's procedure for calculating expected prices of farm-program commodities. Valuable comments about earlier versions of this paper received from C.M. Gempesaw, M. Spilker, U. Vasavada, and H. Vroomen are gratefully acknowledged.

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