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Induced Innovation in United States Agriculture, 1880–1990: Time Series Tests and an Error Correction Model

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  • Colin G. Thirtle
  • David E. Schimmelpfennig
  • Robert E Townsend

Abstract

An error correction model (ECM) of induced innovation, based on the two-stage CES production function allows direct tests of the inducement hypothesis, which are applied to U.S. data for 1880–1990. The time series properties of the variables include a structural break in 1920, cointegration is established and an ECM constructed, which allows factor substitution to be separated from technological change. Causality tests show that the factor-price ratios and R&D are Granger-prior to the factor-saving biases of technological change. The inducement hypothesis is corroborated, and identified as one factor in the complex development of U.S. agriculture. Copyright 2002, Oxford University Press.

Suggested Citation

  • Colin G. Thirtle & David E. Schimmelpfennig & Robert E Townsend, 2002. "Induced Innovation in United States Agriculture, 1880–1990: Time Series Tests and an Error Correction Model," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 84(3), pages 598-614.
    • Handle: RePEc:oup:ajagec:v:84:y:2002:i:3:p:598-614
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    File URL: http://hdl.handle.net/10.1111/1467-8276.00322
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    Cited by:

    1. Yucan Liu & C. Richard Shumway, 2009. "Induced Innovation in U.S. Agriculture: Time-series, Direct Econometric, and Nonparametric Tests," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 91(1), pages 224-236.
    2. Yucan Liu & C. Richard Shumway & Robert Rosenman & Virgil Eldon Ball, 2011. "Productivity growth and convergence in US agriculture: new cointegration panel data results," Applied Economics, Taylor & Francis Journals, vol. 43(1), pages 91-102.
    3. Vítor João Pereira Domingues Martinho, 2019. "Testing for Structural Changes in the European Union’s Agricultural Sector," Agriculture, MDPI, vol. 9(5), pages 1-21, May.
    4. Coleman, Jane A. & Shaik, Saleem, 2009. "Time-Varying Estimation of Crop Insurance Program in Altering North Dakota Farm Economic Structure," 2009 Annual Meeting, July 26-28, 2009, Milwaukee, Wisconsin 49516, Agricultural and Applied Economics Association.
    5. MacDonald, James M., 2011. "Why Are Farms Getting Larger? The Case Of The U.S," 51st Annual Conference, Halle, Germany, September 28-30, 2011 115361, German Association of Agricultural Economists (GEWISOLA).
    6. Esposti, Roberto & Pierani, Pierpaolo, 2008. "Price-induced technical progress in Italian agriculture," Review of Agricultural and Environmental Studies - Revue d'Etudes en Agriculture et Environnement (RAEStud), Institut National de la Recherche Agronomique (INRA), vol. 89(4).
    7. Baldi, Lucia & Casati, Dario, 2005. "Induced Innovation in Italy: An Error Correction Model for the Period 1968-2002," 2005 International Congress, August 23-27, 2005, Copenhagen, Denmark 24590, European Association of Agricultural Economists.
    8. Zuzana Smeets Kristkova & Edward Smeets & Hans van Meijl, 2016. "Agricultural R&D investments, biofuel policy and food security – a CGE analysis," EcoMod2016 9966, EcoMod.
    9. Pardey, Philip G. & Alston, Julian M. & Ruttan, Vernon W., 2010. "The Economics of Innovation and Technical Change in Agriculture," Handbook of the Economics of Innovation, in: Bronwyn H. Hall & Nathan Rosenberg (ed.), Handbook of the Economics of Innovation, edition 1, volume 2, chapter 0, pages 939-984, Elsevier.
    10. Clark, J. Stephen & Cechura, Lukas, 2012. "Induced Innovation in Canadian Agriculture," 131st Seminar, September 18-19, 2012, Prague, Czech Republic 135783, European Association of Agricultural Economists.
    11. Shumway, C. Richard & Liu, Yucan, 2006. "Induced Innovation in the Agricultural Sector: Evidence From a State Panel," 2006 Annual meeting, July 23-26, Long Beach, CA 21089, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    12. Qingsong Tian & Lukas Cechura & J. Stephen Clark & Yan Yu, 2023. "Induced innovation and spillover effects of US and Canadian research expenditures in Canadian agriculture," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 71(2), pages 153-169, June.
    13. Orachos Napasintuwong Artachinda, 2011. "Modeling Directions of Technical Change in Agricultural Sector," Working Papers 201101, Kasetsart University, Department of Agricultural and Resource Economics.
    14. Konstantakis, Konstantinos N. & Michaelides, Panayotis G., 2017. "Technology and Business Cycles: A Schumpeterian Investigation for the USA," MPRA Paper 80636, University Library of Munich, Germany.
    15. Benson, Aaron & Shumway, C. Richard, 2005. "Induced Innovation or a Paradox of Environmental Regulation?," 2005 Annual meeting, July 24-27, Providence, RI 19450, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    16. Li, Jianqiang & Shan, Yaowen & Tian, Gary & Hao, Xiangchao, 2020. "Labor cost, government intervention, and corporate innovation: Evidence from China," Journal of Corporate Finance, Elsevier, vol. 64(C).
    17. Esposti, Roberto & Pierani, Pierpaolo, 2005. "Price-Induced Technological Change in Italian Agriculture: An SGM Restricted Cost Function Approach (1951-91)," 2005 International Congress, August 23-27, 2005, Copenhagen, Denmark 24662, European Association of Agricultural Economists.
    18. Sansi Yang & C. Richard Shumway, 2020. "Knowledge accumulation in US agriculture: research and learning by doing," Journal of Productivity Analysis, Springer, vol. 54(2), pages 87-105, December.
    19. Saito, Yoko & Saito, Hisamitsu & Kondo, Takumi & Osanami, Fumio, 2009. "Quality-oriented technical change in Japanese wheat breeding," Research Policy, Elsevier, vol. 38(8), pages 1365-1375, October.

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