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Induced Innovation in U.S. Agriculture: Time-series, Direct Econometric, and Nonparametric Tests

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Author Info
Yucan Liu
C. Richard Shumway () (School of Economic Sciences, Washington State University)
Abstract

The hypothesis of induced innovation is tested for U.S. agriculture using a high-quality state-level panel data set and three disparate testing techniques – time series, direct econometric, and nonparametric. We find little support for the hypothesis. That conclusion is robust across testing techniques. However, as with all empirical tests of this hypothesis conducted to date, ours focus only on the demand side of the hypothesis. The hypothesis could have been rejected simply because the marginal cost of developing and implementing input-saving technologies for the relatively expensive inputs is greater than for the relatively cheap inputs.

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File URL: http://www.ses.wsu.edu/PDFFiles/WorkingPapers/Shumway/IIH_20080310.pdf
File Format: application/pdf
File Function: First version, 2008
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Publisher Info
Paper provided by School of Economic Sciences, Washington State University in its series Working Papers with number 2008-3.

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Length: 42 pages
Date of creation: May 2008
Date of revision:
Handle: RePEc:wsu:wpaper:shumway-1

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Related research
Keywords: econometric; induced innovation; nonparametric; time series; 2-stage CES;

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Funk, Peter, 2002. "Induced Innovation Revisited," Economica, London School of Economics and Political Science, vol. 69(273), pages 155-71, February. [Downloadable!] (restricted)
  2. Fernando S. Machado, 1995. "Testing The Induced Innovation Hypothesis Using Cointegration Analysis," Journal of Agricultural Economics, Blackwell Publishing, vol. 46(3), pages 349-360. [Downloadable!] (restricted)
  3. 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 964-76, December. [Downloadable!] (restricted)
  4. Qinghua Liu & C. Richard Shumway, 2006. "Geographic aggregation and induced innovation in American agriculture," Applied Economics, Taylor and Francis Journals, vol. 38(6), pages 671-682, April. [Downloadable!] (restricted)
  5. 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 153-71, May. [Downloadable!] (restricted)
  6. Kaddour Hadri, 1999. "Testing For Stationarity In Heterogeneous Panel Data," Research Papers 1999_04, University of Liverpool Management School.
    Other versions:
  7. 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 653-70, Special I. [Downloadable!] (restricted)
  8. Isabelle Armanville & Peter Funk, 2003. "Induced innovation: an empirical test," Applied Economics, Taylor and Francis Journals, vol. 35(15), pages 1627-1647, October. [Downloadable!] (restricted)
  9. 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. [Downloadable!] (restricted)
  10. 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. [Downloadable!] (restricted)
  11. Granger, C. W. J., 1980. "Long memory relationships and the aggregation of dynamic models," Journal of Econometrics, Elsevier, vol. 14(2), pages 227-238, October. [Downloadable!] (restricted)
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Yucan Liu & C. Richard Shumway, 2008. "Induced Innovation and Marginal Cost of New Technology," Working Papers 2008-6, School of Economic Sciences, Washington State University. [Downloadable!]
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