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Capital Use Intensity and Productivity Biases

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  • Andersen, Matthew A.
  • Alston, Julian M.
  • Pardey, Philip G.

Abstract

Measures of productivity growth are often pro-cyclical. This study focuses on measurement errors in capital inputs, associated with unobserved variations in capital utilization rates, as an explanation for the existence of pro-cyclical patterns in measures of agricultural productivity. Recently constructed national and state-specific indexes of inputs, outputs, and productivity in U.S. agriculture for 1949-2002 are used to estimate production functions in growth rate form that include proxy variables for changes in the utilization of durable inputs. The proxy variables include an index of farmers’ terms of trade and an index of local seasonal growing conditions. We find that utilization responses by farmers are significant and bias measures of productivity growth in a pro-cyclical pattern. We quantify the bias, adjust the measures of productivity for the estimated utilization responses, and compare the adjusted and conventional measures.

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Bibliographic Info

Paper provided by University of Minnesota, Department of Applied Economics in its series Staff Papers with number 7314.

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Date of creation: 2007
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Handle: RePEc:ags:umaesp:7314

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Keywords: Productivity Analysis;

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References

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  1. Panos Fousekis & Aspasia Papakonstantinou, 1997. "Economic Capacity Utilisation And Productivity Growth In Greek Agriculture," Journal of Agricultural Economics, Wiley Blackwell, vol. 48(1-3), pages 38-51.
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  3. Songqing Jin & Scott Rozelle & Julian Alston & Jikun Huang, 2005. "Economies Of Scale And Scope And The Economic Efficiency Of China'S Agricultural Research System," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 46(3), pages 1033-1057, 08.
  4. Roberto ESPOSTI, 1998. "Stochastic Technical Change and Procyclical TFP The Italian Agriculture Case," Working Papers 108, Universita' Politecnica delle Marche (I), Dipartimento di Scienze Economiche e Sociali.
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  12. Albert K. A. Acquaye & Julian M. Alston & Philip G. Pardey, 2003. "Post-War Productivity Patterns in U.S. Agriculture: Influences of Aggregation Procedures in a State-Level Analysis," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 85(1), pages 59-80.
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  23. Pope, Rulon D. & Just, Richard E., 1996. "Empirical implementation of ex ante cost functions," Journal of Econometrics, Elsevier, vol. 72(1-2), pages 231-249.
  24. Hayami, Yujiro & Ruttan, Vernon W, 1970. "Agricultural Productivity Differences Among Countries," American Economic Review, American Economic Association, vol. 60(5), pages 895-911, December.
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Citations

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Cited by:
  1. Andersen, Matthew A. & Alston, Julian M. & Pardey, Philip G., 2009. "Capital Service Flows: Concepts and Comparisons of Alternative Measures in U.S. Agriculture," Staff Papers 50098, University of Minnesota, Department of Applied Economics.
  2. Plastina, Alejandro S. & Fulginiti, Lilyan E., 2009. "Rates of Return to Public Agricultural Research in 48 U.S. States," 2009 Conference, August 16-22, 2009, Beijing, China 51709, International Association of Agricultural Economists.
  3. Alston, Julian M. & Pardey, Philip G. & Ruttan, Vernon W., 2008. "Research Lags Revisited: Concepts and Evidence from U.S. Agriculture," Staff Papers 50091, University of Minnesota, Department of Applied Economics.

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