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The macroeconomics of agriculture

In: Handbook of Agricultural Economics


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  • Ardeni, Pier Giorgio
  • Freebairn, John


The existence of linkages between the agricultural sector and the rest of the economy points to the specificity of that sector and justifies why we can conceive of a macroeconomics of agriculture. The primary sector is characterized by product homogeneity, a pre-condition for the absence of imperfect competition. Also, agricultural prices are subject to seasonal variations. Moreover, farming activities are often carried on by large fractions of the population and are very dispersed on the territory. Finally, production of commodities relies on an irreproducible factor of production -- land -- whose availability is finite and whose productivity cannot be individually infinitely increased. Given these features, we expect macroeconomic policy to affect the agricultural sector, and agricultural prices and markets to affect other sectors and the macroeconomy in a specific way (as opposed to the other sectors). In this essay, the transmission mechanisms and linkages -- by which changes in one sector alter economic performance in other sectors -- are described under the sub-headings of backward linkages -- from agriculture to the rest of the economy -- forward linkages -- from the macroeconomy and the international economy to agriculture -- and second-round feed-back interdependent linkages. Models and studies attempting to quantify the linkages are then discussed in terms of theoretical constructs, structural econometric models, computable general-equilibrium models, and time-series models.

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This chapter was published in:

  • B. L. Gardner & G. C. Rausser (ed.), 2002. "Handbook of Agricultural Economics," Handbook of Agricultural Economics, Elsevier, edition 1, volume 2, number 3, 00.
    This item is provided by Elsevier in its series Handbook of Agricultural Economics with number 3-28.

    Handle: RePEc:eee:hagchp:3-28

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    Cited by:
    1. Runge, C. Ford, 2006. "Agricultural Economics: A Brief Intellectual History," Staff Papers 13649, University of Minnesota, Department of Applied Economics.
    2. Bathla, Seema, 2011. "Resilience of Indian agriculture to external shocks: Analyzing through a structural econometric model," IAMO Forum 2011: Will the "BRICs Decade" Continue? – Prospects for Trade and Growth 14, Leib­niz Institute of Agricultural Development in Central and Eastern Europe (IAMO).
    3. Xiaoyun Liu & Wanchun Luo & Xuefeng Mao & Xiuqing Wang & Xian Xin, 2010. "The diminishing influences of agricultural output changes on general price changes in China," China Agricultural Economic Review, Emerald Group Publishing, vol. 2(3), pages 345-355, September.
    4. Bakucs, Lajos Zoltan & Ferto, Imre, 2005. "The Influence of Macroeconomic Variables on the Hungarian Agriculture," 2005 Annual meeting, July 24-27, Providence, RI 19232, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    5. Shifa, Abdulaziz B., 2011. "Does agricultural growth have a causal effect on manufacturing growth?," 2011 International Congress, August 30-September 2, 2011, Zurich, Switzerland 116003, European Association of Agricultural Economists.
    6. Bakucs, Lajos Zoltan & Ferto, Imre, 2005. "Monetary Impacts and Overshooting of Agricultural Prices in a Transition Economy," 2005 International Congress, August 23-27, 2005, Copenhagen, Denmark 24711, European Association of Agricultural Economists.


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