IDEAS home Printed from https://ideas.repec.org/p/ags/aaea06/21089.html
   My bibliography  Save this paper

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

Author

Listed:
  • 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.

Suggested Citation

  • 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).
    • Handle: RePEc:ags:aaea06:21089
    DOI: 10.22004/ag.econ.21089
    as

    Download full text from publisher

    File URL: https://ageconsearch.umn.edu/record/21089/files/sp06li03.pdf
    Download Restriction: no
    File URL: https://libkey.io/10.22004/ag.econ.21089?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
    ---><---

    References listed on IDEAS

    as
    1. 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.
    2. Antle, John M., 1986. "Aggregation, expectations, and the explanation of technological change," Journal of Econometrics, Elsevier, vol. 33(1-2), pages 213-236.
    3. Hakkio, Craig S. & Rush, Mark, 1991. "Cointegration: how short is the long run?," Journal of International Money and Finance, Elsevier, vol. 10(4), pages 571-581, December.
    4. Binswanger, Hans P, 1974. "The Measurement of Technical Change Biases with Many Factors of Production," American Economic Review, American Economic Association, vol. 64(6), pages 964-976, December.
    5. Frisvold, George B., 1991. "Endogenous technological change in U.S. agriculture: a direct test of the Induced Innovation Hypothesis," Technical Bulletins 312323, United States Department of Agriculture, Economic Research Service.
    6. Isabelle Armanville & Peter Funk, 2003. "Induced innovation: an empirical test," Applied Economics, Taylor & Francis Journals, vol. 35(15), pages 1627-1647.
    7. 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.
    8. 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 523-544, June.
    9. Philip G. Pardey & Barbara Craig, 1989. "Causal Relationships between Public Sector Agricultural Research Expenditures and Output," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 71(1), pages 9-19.
    10. 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.
    11. Ahearn, Mary Clare, 2003. "Trends in Extension Resources," Amber Waves:The Economics of Food, Farming, Natural Resources, and Rural America, United States Department of Agriculture, Economic Research Service, pages 1-1, April.
    12. 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.
    13. Jean-Paul Chavas & Thomas L. Cox, 1992. "A Nonparametric Analysis of the Influence of Research on Agricultural Productivity," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 74(3), pages 583-591.
    14. Holtz-Eakin, Douglas & Newey, Whitney & Rosen, Harvey S, 1988. "Estimating Vector Autoregressions with Panel Data," Econometrica, Econometric Society, vol. 56(6), pages 1371-1395, November.
    15. C. Thirtle & R. Townsend & J. van Zyl, 1998. "Testing the induced innovation hypothesis: an error correction model of South African agriculture," Agricultural Economics, International Association of Agricultural Economists, vol. 19(1-2), pages 145-157, September.
    16. 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.
    17. 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.
    18. 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.
    19. 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).
    20. Shunji Oniki, 2000. "Testing the Induced Innovation Hypothesis in a Cointegrating Regression Model," The Japanese Economic Review, Japanese Economic Association, vol. 51(4), pages 544-554, December.
    21. 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.
    22. Peter Pedroni, 1999. "Critical Values for Cointegration Tests in Heterogeneous Panels with Multiple Regressors," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 61(S1), pages 653-670, November.
    23. Hsiao, Cheng & Mountain, Dean C. & Chan, M. W. Luke & Tsui, Kai Y., 1989. "Modeling Ontario regional electricity system demand using a mixed fixed and random coefficients approach," Regional Science and Urban Economics, Elsevier, vol. 19(4), pages 565-587, December.
    24. 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 153-171, May.
    25. 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.
    26. 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.
    27. 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.
    28. 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.
    29. Fernando S. Machado, 1995. "Testing The Induced Innovation Hypothesis Using Cointegration Analysis," Journal of Agricultural Economics, Wiley Blackwell, vol. 46(3), pages 349-360, September.
    30. David K. Lambert & J.S. Shonkwiler, 1995. "Factor Bias under Stochastic Technical Change," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 77(3), pages 578-590.
    31. Pedroni, Peter, 1999. "Critical Values for Cointegration Tests in Heterogeneous Panels with Multiple Regressors," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 61(0), pages 653-670, Special I.
    32. 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.
    Full references (including those not matched with items on IDEAS)

    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. 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. Liu, Qinghua & Shumway, C. Richard, 2003. "Induced Innovation Tests On Western American Agriculture: A Cointegration Analysis," 2003 Annual meeting, July 27-30, Montreal, Canada 22237, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    4. 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.
    5. Orachos Napasintuwong Artachinda, 2011. "Modeling Directions of Technical Change in Agricultural Sector," Working Papers 201101, Kasetsart University, Department of Agricultural and Resource Economics.
    6. Roberto Esposti & Pierpaolo Pierani, 2008. "Price-induced technical progress in Italian agriculture," Review of Agricultural and Environmental Studies - Revue d'Etudes en Agriculture et Environnement, INRA Department of Economics, vol. 89(4), pages 5-28.
    7. Liu, Yucan & Shumway, C. Richard, 2005. "Indirect Utility Maximization under Risk: A Heterogeneous Panel Application," 2005 Annual Meeting, July 6-8, 2005, San Francisco, California 36307, Western Agricultural Economics Association.
    8. 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).
    9. Uslu, Çağrı Levent & Aydoğan, Ebru Tomris & Ketenci, Natalya, 2015. "Economic Growth, Financial Development, and Trade Openness in Emerging Markets: Panel Approach," MPRA Paper 64722, University Library of Munich, Germany.
    10. Edward M Feasel & Nobuyuki Kanazawa, 2013. "Sentiment toward Trading Partners and International Trade," Eastern Economic Journal, Palgrave Macmillan;Eastern Economic Association, vol. 39(3), pages 309-327.
    11. Asta Ndongo & Ibrahima Thione Diop, 2021. "Economic and Monetary Integration in ECOWAS Countries: A Panel VAR Approach to Identify Macroeconomic Shocks," World Journal of Applied Economics, WERI-World Economic Research Institute, vol. 7(2), pages 61-87, December.
    12. Igor Petruška & Eva Litavcová & Jana Chovancová, 2022. "Impact of Renewable Energy Sources and Nuclear Energy on CO 2 Emissions Reductions—The Case of the EU Countries," Energies, MDPI, vol. 15(24), pages 1-23, December.
    13. George Halkos & Iacovos Psarianos, 2016. "Exploring the effect of including the environment in the neoclassical growth model," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 18(3), pages 339-358, July.
    14. Shahbaz, Muhammad & Nasreen, Samia & Ling, Chong Hui & Sbia, Rashid, 2014. "Causality between trade openness and energy consumption: What causes what in high, middle and low income countries," Energy Policy, Elsevier, vol. 70(C), pages 126-143.
    15. Nagmi Moftah Aimer, 2020. "Renewable energy consumption, financial development and economic growth: Evidence from panel data for the Middle East and North African countries," Economics Bulletin, AccessEcon, vol. 40(3), pages 2058-2072.
    16. Campo, Jacobo & Mendoza, Henry, 2018. "Gasto público y crecimiento económico: un análisis regional para Colombia, 1984-2012," Revista Lecturas de Economía, Universidad de Antioquia, CIE, issue 88, pages 77-108, January.
    17. Dierk Herzer & Sebastian Vollmer, 2012. "Inequality and growth: evidence from panel cointegration," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 10(4), pages 489-503, December.
    18. Joakim Westerlund, 2007. "Testing for Error Correction in Panel Data," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 69(6), pages 709-748, December.
    19. Hamit-Haggar, Mahamat, 2012. "Greenhouse gas emissions, energy consumption and economic growth: A panel cointegration analysis from Canadian industrial sector perspective," Energy Economics, Elsevier, vol. 34(1), pages 358-364.
    20. Yongfu Huang, 2011. "Private investment and financial development in a globalized world," Empirical Economics, Springer, vol. 41(1), pages 43-56, August.

    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:ags:aaea06:21089. 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: AgEcon Search (email available below). General contact details of provider: https://edirc.repec.org/data/aaeaaea.html .

    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.