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Dynamic Adjustment in U.S. Agriculture under Climate Uncertainty

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  • Sansi Yang
  • C. Richard Shumway

Abstract

We construct a stochastic dynamic dual model to investigate the structural adjustment of two aggregate output and three aggregate input categories in U.S. agriculture under climatic change uncertainty. A century of national annual data (1910-2011) is used in the empirical analysis. No constraints on asset fixity are imposed. Results indicate that both output categories as well as all input categories exhibit quasi-fixity in response to market change and stochastic climate change. Crops adjust most rapidly toward equilibrium levels and capital adjusts most slowly.

Suggested Citation

  • Sansi Yang & C. Richard Shumway, 2014. "Dynamic Adjustment in U.S. Agriculture under Climate Uncertainty," 2014 Papers pya413, Job Market Papers.
    • Handle: RePEc:jmp:jm2014:pya413
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    Cited by:

    1. Sansi Yang & C Richard Shumway, 2018. "Asset fixity under state-contingent production uncertainty," European Review of Agricultural Economics, Oxford University Press and the European Agricultural and Applied Economics Publications Foundation, vol. 45(5), pages 831-856.
    2. Michee Arnold Lachaud & Boris E. Bravo-Ureta & Carlos E. Ludena, 2017. "Agricultural productivity in Latin America and the Caribbean in the presence of unobserved heterogeneity and climatic effects," Climatic Change, Springer, vol. 143(3), pages 445-460, August.

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    More about this item

    JEL classification:

    • Q11 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Aggregate Supply and Demand Analysis; Prices
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming

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