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The Role of Productivity Growth and Farmers' Income Protection Policies in the Decline of Relative Farm Prices in the United States

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  • Miljkovic, Dragan
  • Jin, Hyun Joung
  • Paul, Rodney

Abstract

The paper emphasizes three interrelated questions about the decline in relative farm to non-farm prices in the United States since 1973; 1) Is it unusual, 2) What caused it, and 3) Is it likely to continue? We find that based on historical and international evidence this phenomenon may be considered unusual. Separating farm price and income support in 1973 and growing relative productivity in agriculture has been the major contributor to changing the trend of the relative farm goods inflation. This trend is likely to continue based on predicted steady growth of relative agricultural productivity and continuation of direct payments and other forms of farm income support policies.

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Bibliographic Info

Paper provided by North Dakota State University, Department of Agribusiness and Applied Economics in its series Agribusiness & Applied Economics Report with number 9368.

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Date of creation: 2007
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Handle: RePEc:ags:nddaae:9368

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Keywords: Government transfers; Productivity growth; Relative farm prices; Agricultural and Food Policy; Agricultural Finance; Productivity Analysis;

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  1. Jose De Gregorio & Alberto Giovannini & Holger C. Wolf, 1993. "International Evidence on Tradables and Nontradables Inflation," Working Papers 93-17, New York University, Leonard N. Stern School of Business, Department of Economics.
  2. Martin Neil Baily, 2001. "Macroeconomic Implications of the New Economy," Working Paper Series WP01-9, Peterson Institute for International Economics.
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  6. Kenneth S. Rogoff, 2003. "Globalization and global disinflation," Proceedings - Economic Policy Symposium - Jackson Hole, Federal Reserve Bank of Kansas City, pages 77-112.
  7. Dale W. Jorgenson & Kevin J. Stiroh, 2000. "Raising the Speed Limit: U.S. Economic Growth in the Information Age," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 31(1), pages 125-236.
  8. Perron, P, 1988. "The Great Crash, The Oil Price Shock And The Unit Root Hypothesis," Papers 338, Princeton, Department of Economics - Econometric Research Program.
  9. Rutstrom, E. Elisabet & Redmond, Willie J., 1997. "A quantification of lobbying benefits with an application to the common agricultural policy," Journal of Policy Modeling, Elsevier, vol. 19(6), pages 635-659, December.
  10. Dragan Miljkovic & Rodney Paul, 2003. "Agricultural trade in North America: Trade creation, regionalism and regionalisation," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 47(3), pages 349-366, 09.
  11. Tweeten, Luther G., 1998. "Anticipating a Tighter Global Food Supply-Demand Balance in the Twenty-first Century," Choices, Agricultural and Applied Economics Association, vol. 13(3).
  12. Gary Adams & Patrick Westhoff & Brian Willott & Robert E. Young, 2001. "Do “Decoupled” Payments Affect U.S. Crop Area? Preliminary Evidence from 1997–2000," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 83(5), pages 1190-1195.
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  17. Todd E. Clark, 2004. "An evaluation of the decline in goods inflation," Economic Review, Federal Reserve Bank of Kansas City, issue Q II, pages 19-51.
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Cited by:
  1. Andaleeb Rahman, 2012. "Characterizing food prices in India," Indira Gandhi Institute of Development Research, Mumbai Working Papers 2012-022, Indira Gandhi Institute of Development Research, Mumbai, India.
  2. El Benni, Nadja & Finger, Robert, 2013. "The effect of agricultural policy reforms on income inequality in Swiss agriculture - An analysis for valley, hill and mountain regions," Journal of Policy Modeling, Elsevier, vol. 35(4), pages 638-651.
  3. Miljkovic, Dragan & Shaik, Saleem, 2010. "The Impact of Trade Openness on Technical Efficiency in U.S. Agriculture," 2010 Annual Meeting, February 6-9, 2010, Orlando, Florida 56334, Southern Agricultural Economics Association.

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