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Induced Innovation in the Agricultural Sector: Evidence From a State Panel

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  • Shumway, C. Richard
  • Liu, Yucan

Abstract

This paper uses recently developed panel cointegration techniques and error correction modeling to test the hypothesis of induced innovation in a state-level panel of U.S. agricultural production. These methods provide greatly improved power compared to conventional approaches. A 5-step testing procedure is used to test the induced innovation hypothesis based on a 2-stage CES production function with aggregate output and four input categories. For both pairs of inputs, the test fails to support the hypothesis of induced innovation at one or more of the critical steps.

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Bibliographic Info

Paper provided by American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association) in its series 2006 Annual meeting, July 23-26, Long Beach, CA with number 21089.

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Date of creation: 2006
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Handle: RePEc:ags:aaea06:21089

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Keywords: Research and Development/Tech Change/Emerging Technologies;

References

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  2. Holtz-Eakin, Douglas & Newey, Whitney & Rosen, Harvey S, 1988. "Estimating Vector Autoregressions with Panel Data," Econometrica, Econometric Society, vol. 56(6), pages 1371-95, November.
  3. Qinghua Liu & C. Richard Shumway, 2006. "Geographic aggregation and induced innovation in American agriculture," Applied Economics, Taylor & Francis Journals, vol. 38(6), pages 671-682.
  4. Levin, Andrew & Lin, Chien-Fu & James Chu, Chia-Shang, 2002. "Unit root tests in panel data: asymptotic and finite-sample properties," Journal of Econometrics, Elsevier, vol. 108(1), pages 1-24, May.
  5. Olmstead, Alan L & Rhode, Paul, 1993. "Induced Innovation in American Agriculture: A Reconsideration," Journal of Political Economy, University of Chicago Press, vol. 101(1), pages 100-118, February.
  6. Alston, Julian M. & Craig, Barbara J. & Pardey, Philip G., 1998. "Dynamics in the creation and depreciation of knowledge, and the returns to research:," EPTD discussion papers 35, International Food Policy Research Institute (IFPRI).
  7. Fernando S. Machado, 1995. "Testing The Induced Innovation Hypothesis Using Cointegration Analysis," Journal of Agricultural Economics, Wiley Blackwell, vol. 46(3), pages 349-360.
  8. Nair-Reichert, Usha & Weinhold, Diana, 2001. " Causality Tests for Cross-Country Panels: A New Look at FDI and Economic Growth in Developing Countries," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 63(2), pages 153-71, May.
  9. Peter Pedroni, 1999. "Critical Values for Cointegration Tests in Heterogeneous Panels with Multiple Regressors," Department of Economics Working Papers 2000-02, Department of Economics, Williams College.
  10. Jean-Paul Chavas & Michael Aliber & Thomas L. Cox, 2000. "An Analysis Of The Source And Nature Of Technical Change: The Case Of U.S. Agriculture," The Review of Economics and Statistics, MIT Press, vol. 79(3), pages 482-492, August.
  11. V. Eldon Ball & Charles Hallahan & Richard Nehring, 2004. "Convergence of Productivity: An Analysis of the Catch-up Hypothesis within a Panel of States," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 86(5), pages 1315-1321.
  12. Kawagoe, Toshihiko & Otsuka, Keijiro & Hayami, Yujiro, 1986. "Induced Bias of Technical Change in Agriculture: The United States and Japan, 1880-1980," Journal of Political Economy, University of Chicago Press, vol. 94(3), pages 523-44, June.
  13. 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.
  14. Im, Kyung So & Pesaran, M. Hashem & Shin, Yongcheol, 2003. "Testing for unit roots in heterogeneous panels," Journal of Econometrics, Elsevier, vol. 115(1), pages 53-74, July.
  15. Ahearn, Mary Clare, 2003. "Trends in Extension Resources," Amber Waves, United States Department of Agriculture, Economic Research Service, April.
  16. Craig S. Hakkio & Mark Rush, 1990. "Cointegration: how short is the long run?," Research Working Paper 90-08, Federal Reserve Bank of Kansas City.
  17. Thirtle, C. & Townsend, R. & van Zyl, J., 1998. "Testing the induced innovation hypothesis: an error correction model of South African agriculture," Agricultural Economics, Blackwell, vol. 19(1-2), pages 145-157, September.
  18. Harris, Richard D. F. & Tzavalis, Elias, 1999. "Inference for unit roots in dynamic panels where the time dimension is fixed," Journal of Econometrics, Elsevier, vol. 91(2), pages 201-226, August.
  19. Thirtle, C. & Townsend, R. & Zyl, J. van, 1998. "Testing the induced innovation hypothesis: an error correction model of South African agriculture," Agricultural Economics: The Journal of the International Association of Agricultural Economists, International Association of Agricultural Economists, vol. 19(1-2), September.
  20. Y. Khatri & C. Thirtle & R. Townsend, 1998. "Testing The Induced Innovation Hypothesis: An Application to UK Agriculture, 1953-90," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 6(1), pages 1-28.
  21. V. Eldon Ball & Frank M. Gollop & Alison Kelly-Hawke & Gregory P. Swinand, 1999. "Patterns of State Productivity Growth in the U.S. Farm Sector: Linking State and Aggregate Models," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 81(1), pages 164-179.
  22. Isabelle Armanville & Peter Funk, 2003. "Induced innovation: an empirical test," Applied Economics, Taylor & Francis Journals, vol. 35(15), pages 1627-1647.
  23. Antle, John M., 1986. "Aggregation, expectations, and the explanation of technological change," Journal of Econometrics, Elsevier, vol. 33(1-2), pages 213-236.
  24. Hongil Lim & C. Richard Shumway, 1997. "Technical Change and Model Specification: U.S. Agricultural Production," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 79(2), pages 543-554.
  25. Ahearn, Mary Clare & Yee, Jet & Bottum, John S., 2003. "Regional Trends In Extension System Resources," Agricultural Information Bulletins 33787, United States Department of Agriculture, Economic Research Service.
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