Stochastic Technical Change and Procyclical TFP The Italian Agriculture Case
AbstractTFP comparisons across nations, sectors and time have been frequently used to represent the relative technological levels of the production systems. In this paper the use of the TFP as a proxy of the technological level in Italian agriculture is questioned. The cyclical behaviour seems to be the most important shortcoming of the TFP measure. It clearly reveals a short-run component due to shocks on the supply side. To separate these business cycle effects from real long-run technological change, we use a stochastic process for the generation of technical change induced by R&D and Extension expenditure and a Kalman filter procedure is applied. Doing this, it is possible to separate the short-run and long-run components of the traditional TFP measure. The empirical evidence clearly reveals that supply-side shocks enter the traditional measure of productivity therefore, it represents an erroneous indicator of technological progress. A better indicator can be obtained estimating the longrun component of productivity that seems to be close to a linear trend and significantly induced by R&D and Extension public expenditure.
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Bibliographic InfoPaper provided by Universita' Politecnica delle Marche (I), Dipartimento di Scienze Economiche e Sociali in its series Working Papers with number 108.
Date of creation: Oct 1998
Date of revision:
Cost Function; Italian Agriculture; Latent Variable; Stochastic Technical Change;
Find related papers by JEL classification:
- D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
- O30 - Economic Development, Technological Change, and Growth - - Technological Change; Research and Development; Intellectual Property Rights - - - General
- Q16 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - R&D; Agricultural Technology; Biofuels; Agricultural Extension Services
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