A Dynamic Adjustment Model for U.S. Agriculture: 1948‐79

Abstract

In Vasavada, U. and Ball, V.E., 1988. A dynamic adjustment model for U.S. agriculture: 1948-79.Agric. Eco/l., 2: 123-137.A multioutput model is developed within the adjustment cost framework to analyze the structure of dynamic adjustments in Ll.S. agriculture during the post-war period. An important feature of this model is that the econometric model is consistent with dynamic economic theory. Fluctuations in capital stocks, variable inputs, and outputs are explained by changing opportunity costs. Empirical results indicated that durable equipment, farm-produced durables, and family labor exhibited significant rigidity in adjustment as a response to exogenous shocks. Surprisingly, the hypothesis that real estate was a variable input could not be rejected. The univariate flexible accelerator hypothesis, which is widely maintained in most agricultural adjustment studies, is inconsistent with the data.

Empirical investigation of investment behaviour in Australia's pastoral region*

“…The estimation converged after 140 iterations. The ISURE parameter estimates are asymptotically equivalent to the Maximum Likelihood estimates at the point of convergence (Vasavada and Ball 1988). Table 1 reports parameter estimates and asymptotic t-statistics derived by the ISURE method.…”

“…In addressing this issue several studies have used optimal intertemporal investment modelling to investigate dynamic adjustment behaviour of farmers (Taylor and Monson 1985;Vasavada and Chambers 1986;Howard and Shumway 1988;Vasavada and Ball 1988;Fernandez-Cornejo et al 1992;Krasachat and Coelli 1995). This approach to examine a firm's production behaviour came to prominence following the seminal works of Eisner and Strotz (1963), Lucas (1967) and Gould (1968) and later added to by Treadway (1969Treadway ( , 1970, McLaren and Cooper (1980) and Epstein (1981).…”

Dynamic input demand functions and resource adjustment for US agriculture: state evidence

“…Lyu and White (1985) and Vasavada and Chambers (1986) concluded that land is quasi-fixed. In contrast, Vasavada and Ball (1988) concluded that land is variable. If the model was applied to a developing country, the input groups would most likely be modified.…”

“…5 Other studies have aggregated inputs into smaller or similar number of groups. Friesen et al (1992) aggregate inputs into three groups: capital, labor, and materials; Vasavada and Chambers (1986) into four groups: labor, capital, intermediate materials, and land; and Vasavada and Ball (1988) into seven groups: durable equipment, real estate, family labor, farm produced durables, hired labor, and materials. Vasavada and Chambers (1986) concluded that farm labor was quasi-fixed and Vasavada and Ball (1988) concluded that family labor was fixed.…”

“…First, there are theory-based models where dynamics arise from optimal agent behavior. These models have generally taken an adjustment-cost route (e.g., see Lucas, 1967a;Nichell, 1986;Chambers and Lopez, 1984;Vasavada and Chambers, 1986;Vasavada and Ball, 1988), or resources deterioration with use (e.g., Tegene et al, 1988). Second, data-based dynamic models have been used where dynamics are used to describe the pattern of input use but do not arise from explicitly optimal agent behavior, e.g., see Friesen et al (1992).…”