The Impact of Input Price Inflation on the United States Farming Industry*

Abstract

The "price" ride of the y u~z e in trsditionsllp uttrihuted 10 rapid introduction uf output-increasing technology. which reduces farm industr). income as output p m s n apiinst an inelastic aggregate demand. The care for the price q u~z e has been contested on the one hand by slow intrwuction of output-increasing technolow in the 1960's (evidenced by only 1 nominal gain in U.S. farm productivity) [Cr] and hy the contention that the long-run demand for US. farm output is not price-inelastic [7].' The clasticitin for machincry and buildings are lor mainlenancc. fuel. clc. Elnrticiticr arc no1 included for machincry purcharcr and for building improvements. These latter itcms lend 10 ha\e an clarlic dcmand and are not hipniy productive per dollar spent on them. Hcnce inflation in such tcrms can be cxpcclcd to havc a small impact on aggregate farm costs. rcvcnue. and nct rcvcnue.