IDEAS home Printed from https://ideas.repec.org/a/kap/jproda/v37y2012i1p59-71.html
   My bibliography  Save this article

Capital use intensity and productivity biases

Author

Listed:
  • Matthew Andersen
  • Julian Alston
  • Philip Pardey

Abstract

Measures of productivity growth are often pro-cyclical. This study focuses on measurement errors in capital inputs, associated with unobserved variations in capital utilization rates, as an explanation for the existence of pro-cyclical patterns in measures of agricultural productivity. Recently constructed national and state-specific indexes of inputs, outputs, and productivity in U.S. agriculture for 1949-2002 are used to estimate production functions in growth rate form that include proxy variables for changes in the utilization of durable inputs. The proxy variables include an index of farmers’ terms of trade and an index of local seasonal growing conditions. We find that utilization responses by farmers are significant and bias measures of productivity growth in a pro-cyclical pattern. We quantify the bias, adjust the measures of productivity for the estimated utilization responses, and compare the adjusted and conventional measures.
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • Matthew Andersen & Julian Alston & Philip Pardey, 2012. "Capital use intensity and productivity biases," Journal of Productivity Analysis, Springer, vol. 37(1), pages 59-71, February.
    • Handle: RePEc:kap:jproda:v:37:y:2012:i:1:p:59-71
    DOI: 10.1007/s11123-011-0222-6
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1007/s11123-011-0222-6
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1007/s11123-011-0222-6?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to look for a different version below or search for a different version of it.

    Other versions of this item:

    References listed on IDEAS

    as
    1. Songqing Jin & Scott Rozelle & Julian Alston & Jikun Huang, 2005. "Economies Of Scale And Scope And The Economic Efficiency Of China'S Agricultural Research System," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 46(3), pages 1033-1057, August.
    2. Panos Fousekis & Aspasia Papakonstantinou, 1997. "Economic Capacity Utilisation And Productivity Growth In Greek Agriculture," Journal of Agricultural Economics, Wiley Blackwell, vol. 48(1‐3), pages 38-51, January.
    3. Pinar Celikkol & Spiro Stefanou, 1999. "Measuring the Impact of Price-Induced Innovation on Technological Progress: Application to the U.S. Food Processing and Distribution Sector," Journal of Productivity Analysis, Springer, vol. 12(2), pages 135-151, September.
    4. Moschini, GianCarlo, 2001. "Production risk and the estimation of ex-ante cost functions," Journal of Econometrics, Elsevier, vol. 100(2), pages 357-380, February.
    5. Fulginiti, Lilyan E & Perrin, Richard K, 1993. "Prices and Productivity in Agriculture," The Review of Economics and Statistics, MIT Press, vol. 75(3), pages 471-482, August.
    6. Susan M. Capalbo & Michael Denny, 1985. "Testing Long-Run Productivity Models for the Canadian and U.S. Agricultural Sectors," NBER Working Papers 1764, National Bureau of Economic Research, Inc.
    7. Susanto Basu, 1996. "Procyclical Productivity: Increasing Returns or Cyclical Utilization?," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 111(3), pages 719-751.
    8. Susanto Basu & John Fernald, 2001. "Why Is Productivity Procyclical? Why Do We Care?," NBER Chapters, in: New Developments in Productivity Analysis, pages 225-302, National Bureau of Economic Research, Inc.
    9. Wen Yi, 2004. "What Does It Take to Explain Procyclical Productivity?," The B.E. Journal of Macroeconomics, De Gruyter, vol. 4(1), pages 1-40, June.
    10. Morrison, Catherine J., 1986. "Productivity measurement with non-static expectations and varying capacity utilization : An integrated approach," Journal of Econometrics, Elsevier, vol. 33(1-2), pages 51-74.
    11. D. W. Jorgenson & Z. Griliches, 1967. "The Explanation of Productivity Change," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 34(3), pages 249-283.
    12. Ball, V. Eldon & Butault, Jean-Pierre & Nehring, Richard F., 2001. "U.S. Agriculture, 1960-96 A Multilateral Comparison of Total Factor Productivity," Technical Bulletins 33590, United States Department of Agriculture, Economic Research Service.
    13. Dale W. Jorgenson, 1991. "Productivity and Economic Growth," NBER Chapters, in: Fifty Years of Economic Measurement: The Jubilee of the Conference on Research in Income and Wealth, pages 19-118, National Bureau of Economic Research, Inc.
    14. Berndt, Ernst R. & Fuss, Melvyn A., 1986. "Productivity measurement with adjustments for variations in capacity utilization and other forms of temporary equilibrium," Journal of Econometrics, Elsevier, vol. 33(1-2), pages 7-29.
    15. Paris, Quirino & Caputo, Michael R., 1995. "The Rhetoric Of Duality," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 20(1), pages 1-20, July.
    16. Dale W. Jorgenson & Frank M. Gollop, 1992. "Productivity Growth in U.S. Agriculture: A Postwar Perspective," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 74(3), pages 745-750.
    17. Barbara J. Craig & Philip G. Pardey, 1996. "Productivity Measurement in the Presence of Quality Change," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 78(5), pages 1349-1354.
    18. Rulon D. Pope & Richard E. Just, 2003. "Distinguishing Errors in Measurement from Errors in Optimization," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 85(2), pages 348-358.
    19. Mundlak, Yair, 1996. "Production Function Estimation: Reviving the Primal," Econometrica, Econometric Society, vol. 64(2), pages 431-438, March.
    20. Baxter, Marianne & Farr, Dorsey D., 2005. "Variable capital utilization and international business cycles," Journal of International Economics, Elsevier, vol. 65(2), pages 335-347, March.
    21. Slade, Margaret E., 1986. "Total-factor-productivity measurement when equilibrium is temporary : A Monte Carlo assessment," Journal of Econometrics, Elsevier, vol. 33(1-2), pages 75-95.
    22. Yir-Hueih Luh & Spiro E. Stefanou, 1991. "Productivity Growth in U.S. Agriculture under Dynamic Adjustment," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 73(4), pages 1116-1125.
    23. Catherine J. Morrison, 1985. "On the Economic Interpretation and Measurement of Optimal Capacity Utilization with Anticipatory Expectations," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 52(2), pages 295-309.
    24. Mundlak, Yair & Larson, Don & Butzer, Ritz, 1997. "The determinants of agricultural production : a cross-country analysis," Policy Research Working Paper Series 1827, The World Bank.
    25. Marianne Baxter & Dorsey D. Farr, 2001. "The Effects of Variable Capital Utilization on the Measurement and Properties of Sectoral Productivity: Some International Evidence," NBER Working Papers 8475, National Bureau of Economic Research, Inc.
    26. Berndt, Ernst R. & Fuss, Melvyn A., 1986. "Editors' introduction," Journal of Econometrics, Elsevier, vol. 33(1-2), pages 1-5.
    27. Hayami, Yujiro & Ruttan, Vernon W, 1970. "Agricultural Productivity Differences Among Countries," American Economic Review, American Economic Association, vol. 60(5), pages 895-911, December.
    28. Albert K. A. Acquaye & Julian M. Alston & Philip G. Pardey, 2003. "Post-War Productivity Patterns in U.S. Agriculture: Influences of Aggregation Procedures in a State-Level Analysis," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 85(1), pages 59-80.
    29. Susanto Basu & Miles S. Kimball, 1997. "Cyclical Productivity with Unobserved Input Variation," NBER Working Papers 5915, National Bureau of Economic Research, Inc.
    30. Lau, Lawrence J & Yotopoulos, Pan A, 1971. "A Test for Relative Efficiency and Application to Indian Agriculture," American Economic Review, American Economic Association, vol. 61(1), pages 94-109, March.
    31. J. R. Hicks, 1963. "The Theory of Wages," Palgrave Macmillan Books, Palgrave Macmillan, number 978-1-349-00189-7.
    32. Roberto ESPOSTI, 1998. "Stochastic Technical Change and Procyclical TFP The Italian Agriculture Case," Working Papers 108, Universita' Politecnica delle Marche (I), Dipartimento di Scienze Economiche e Sociali.
    33. Pope, Rulon D. & Just, Richard E., 1996. "Empirical implementation of ex ante cost functions," Journal of Econometrics, Elsevier, vol. 72(1-2), pages 231-249.
    34. Roberto Esposti, 2000. "Stochastic Technical Change and Procyclical TFP The Case of Italian Agriculture," Journal of Productivity Analysis, Springer, vol. 14(2), pages 119-141, September.
    35. Helliwell, John F. & Chung, Alan, 1986. "Aggregate output with variable rates of utilization of employed factors," Journal of Econometrics, Elsevier, vol. 33(1-2), pages 285-310.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Youngjune Kim & Ji Yong Lee, 2020. "Effects of Government Payments on Agricultural Productivity: The Case of South Korea," Sustainability, MDPI, vol. 12(9), pages 1-11, April.
    2. Alejandro Plastina & Lilyan Fulginiti, 2012. "Rates of return to public agricultural research in 48 US states," Journal of Productivity Analysis, Springer, vol. 37(2), pages 95-113, April.
    3. Lin, Boqiang & Xie, Yongjing, 2023. "Does digital transformation improve the operational efficiency of Chinese power enterprises?," Utilities Policy, Elsevier, vol. 82(C).
    4. Zheng, Yu & Alexandre, Gohin, 2018. "Agricultural productivity and price volatility in France: a dynamic stochastic partial equilibrium approach," 2018 Annual Meeting, August 5-7, Washington, D.C. 274354, Agricultural and Applied Economics Association.
    5. Yu Sheng & Tom Jackson & Shiji Zhao & Dandan Zhang, 2017. "Measuring Output, Input and Total Factor Productivity in Australian Agriculture: An Industry-Level Analysis," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 63, pages 169-193, February.
    6. Andersen, Matthew A. & Alston, Julian M. & Pardey, Philip G., 2009. "Capital Service Flows: Concepts and Comparisons of Alternative Measures in U.S. Agriculture," Staff Papers 50098, University of Minnesota, Department of Applied Economics.
    7. Alston, Julian M. & Pardey, Philip G. & Ruttan, Vernon W., 2008. "Research Lags Revisited: Concepts and Evidence from U.S. Agriculture," Staff Papers 50091, University of Minnesota, Department of Applied Economics.
    8. Lence, Sergio H. & Plastina, Alejandro, 2020. "An Empirical Investigation of Productivity Spillovers along the Agricultural Supply Chain," ISU General Staff Papers 202001010800001066, Iowa State University, Department of Economics.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Alston, Julian M. & Andersen, Matthew A. & Pardey, Philip G., 2006. "Asset Utilization and Bias in Measures of U.S. Agricultural Productivity," 2006 Annual meeting, July 23-26, Long Beach, CA 21220, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    2. Berndt, Ernst R. & Fuss, Melvyn A., 1989. "Economic capacity utilization and productivity measurement for multiproduct firms with multiple quasi-fixed inputs," Working papers 3001-89., Massachusetts Institute of Technology (MIT), Sloan School of Management.
    3. Munechika Katayama, 2013. "Declining Effects of Oil Price Shocks," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 45(6), pages 977-1016, September.
    4. Susanto Basu & John Fernald, 2001. "Why Is Productivity Procyclical? Why Do We Care?," NBER Chapters, in: New Developments in Productivity Analysis, pages 225-302, National Bureau of Economic Research, Inc.
    5. Just, Richard E., 2000. "Some Guiding Principles For Empirical Production Research In Agriculture," Agricultural and Resource Economics Review, Northeastern Agricultural and Resource Economics Association, vol. 29(2), pages 1-21, October.
    6. Miles S. Kimball & John G. Fernald & Susanto Basu, 2006. "Are Technology Improvements Contractionary?," American Economic Review, American Economic Association, vol. 96(5), pages 1418-1448, December.
    7. Giannis Karagiannis & George Mergos, 2000. "Total Factor Productivity Growth and Technical Change in a Profit Function Framework," Journal of Productivity Analysis, Springer, vol. 14(1), pages 31-51, July.
    8. M. Ishaq Nadiri & Ingmar Prucha, 2001. "Dynamic Factor Demand Models and Productivity Analysis," NBER Chapters, in: New Developments in Productivity Analysis, pages 103-172, National Bureau of Economic Research, Inc.
    9. Bittencourt, Maurício Vaz Lobo, 2003. "Presence Of Stochastic Errors In The Input Demands: Are Dual And Primal Estimations Equivalent?," 2003 Annual meeting, July 27-30, Montreal, Canada 22096, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    10. Sarbapriya, Ray & Mihir, Kumar Pal, 2011. "An Application of Economic Capacity Utilization to the Measurement of Total Factor Productivity Growth: Empirical Evidence from Indian Fertilizer Industry," Journal for Economic Forecasting, Institute for Economic Forecasting, vol. 0(1), pages 125-142, March.
    11. Carlsson, M., 2000. "Measures of Technology and the Short-Run Responses to Technology Shocks - Is the RBC-Model Consistent with Swedish Manufacturing Data?," Papers 2000-20, Uppsala - Working Paper Series.
    12. Just, Richard E., 2003. "Risk research in agricultural economics: opportunities and challenges for the next twenty-five years," Agricultural Systems, Elsevier, vol. 75(2-3), pages 123-159.
    13. Marianne Baxter & Dorsey D. Farr, 2001. "The Effects of Variable Capital Utilization on the Measurement and Properties of Sectoral Productivity: Some International Evidence," NBER Working Papers 8475, National Bureau of Economic Research, Inc.
    14. Bittencourt, Mauricio Vaz Lobo & Sampaio, Armando Vaz, 2011. "Are Dual and Primal Estimations Equivalent in the Presence of Stochastic Errors in Input Demand?," Brazilian Review of Econometrics, Sociedade Brasileira de Econometria - SBE, vol. 31(2), December.
    15. Ernst R. Berndt & Melvyn A. Fuss, 1989. "Economic Capacity Utilization and Productivity Measurement for Multi-product firms with multiple quasi-fixed inputs," NBER Working Papers 2932, National Bureau of Economic Research, Inc.
    16. Basu, Susanto & Fernald, John G. & Shapiro, Matthew D., 2001. "Productivity growth in the 1990s: technology, utilization, or adjustment?," Carnegie-Rochester Conference Series on Public Policy, Elsevier, vol. 55(1), pages 117-165, December.
    17. Craig Burnside & Martin Eichenbaum & Sergio Rebelo, 1995. "Capital Utilization and Returns to Scale," NBER Chapters, in: NBER Macroeconomics Annual 1995, Volume 10, pages 67-124, National Bureau of Economic Research, Inc.
    18. Maarten Dossche & Andrea Gavazzi & Vivien Lewis, 2023. "Labor Adjustment and Productivity in the OECD," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 47, pages 111-130, January.
    19. Guyomard, H. & Tavéra, C., 1990. "Technical change and agricultural supply-demand analysis problems of measurement and problems of interpretation," Proceedings “Schriften der Gesellschaft für Wirtschafts- und Sozialwissenschaften des Landbaues e.V.”, German Association of Agricultural Economists (GEWISOLA), vol. 26.
    20. Jordi Galí & Thijs van Rens, 2021. "The Vanishing Procyclicality of Labour Productivity [Why have business cycle fluctuations become less volatile?]," The Economic Journal, Royal Economic Society, vol. 131(633), pages 302-326.

    More about this item

    Keywords

    U.S. agriculture; Pro-cyclical productivity; Capital utilization; Primal productivity bias; D24; C51; Q1; O4; O47;
    All these keywords.

    JEL classification:

    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • C51 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Construction and Estimation
    • Q1 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture
    • O4 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:kap:jproda:v:37:y:2012:i:1:p:59-71. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.