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Aggregate Supply Responses in Indian Agriculture: Some Empirical Evidence and Policy Implications


  • T. Palanivel

    (Institute of Economic Growth)


To what extent the current adjustment programs can rely on price instruments for bringing about structural change in the agricultural sector depends on how large aggregate agricultural supply response is to changes in agricultural terms of trade. While this paper shows that the elasticity of aggregate agricultural output with respect to the agricultural terms of trade is positive and statistically significant, it also brings out the fact that non-price factors are equally if not more important. Thus, it appears necessary that price incentives need to be substantially supplemented by a well balanced package of government instruments including promotion of technology and infrastructural investments.

Suggested Citation

  • T. Palanivel, 1995. "Aggregate Supply Responses in Indian Agriculture: Some Empirical Evidence and Policy Implications," Indian Economic Review, Department of Economics, Delhi School of Economics, vol. 30(2), pages 251-263, July.
  • Handle: RePEc:dse:indecr:v:30:y:1995:i:2:p:251-263

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    References listed on IDEAS

    1. Olivier J. Blanchard & Lawrence H. Summers, 1986. "Hysteresis and the European Unemployment Problem," NBER Chapters,in: NBER Macroeconomics Annual 1986, Volume 1, pages 15-90 National Bureau of Economic Research, Inc.
    2. Blanchard, Olivier Jean & Quah, Danny, 1989. "The Dynamic Effects of Aggregate Demand and Supply Disturbances," American Economic Review, American Economic Association, vol. 79(4), pages 655-673, September.
    3. Ashima Goyal, 1994. "Industrial Pricing and Growth Fluctuations in India," Indian Economic Review, Department of Economics, Delhi School of Economics, vol. 29(1), pages 13-32, January.
    4. Julio J. Rotemberg & Michael Woodford, 1993. "Dynamic General Equilibrium Models with Imperfectly Competitive Product Markets," NBER Working Papers 4502, National Bureau of Economic Research, Inc.
    5. Stiglitz, Joseph E., 1992. "Capital markets and economic fluctuations in capitalist economies," European Economic Review, Elsevier, vol. 36(2-3), pages 269-306, April.
    6. Olivier Jean Blanchard & Stanley Fischer, 1989. "Lectures on Macroeconomics," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262022834, January.
    7. Matthew D. Shapiro, 1989. "Assessing the Federal Reserve's Measures of Capacity and Utilization," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 20(1), pages 181-242.
    8. Robert G. King, 1993. "Will the New Keynesian Macroeconomics Resurrect the IS-LM Model?," Journal of Economic Perspectives, American Economic Association, vol. 7(1), pages 67-82, Winter.
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    Cited by:

    1. Ndayitwayeko, W-M. & Odhiambo, M.O. & Nyangweso, P.M. & Korir, M.K., 2012. "Determinants of Beef Meat Supply in Burundi: A Vector Error Correction Model Approach Applied to structural Nerlov Paradign," 2012 Eighth AFMA Congress, November 25-29, 2012, Nairobi, Kenya 159414, African Farm Management Association (AFMA).
    2. Rao, N. Chandrasekhara, 2004. "Aggregate Agricultural Supply Response in Andhra Pradesh," Indian Journal of Agricultural Economics, Indian Society of Agricultural Economics, vol. 59(1).
    3. Surajit Deb, 2002. "The Debate on Agriculture-Industry Terms of Trade in India," Working papers 109, Centre for Development Economics, Delhi School of Economics.
    4. Ranjan Paltasingh, Kirtti & Goyari, Phanindra, 2013. "Supply Response in Rainfed Agriculture of Odisha, Eastern India: A Vector Error Correction Approach," Agricultural Economics Review, Greek Association of Agricultural Economists, vol. 14(2), June.

    More about this item

    JEL classification:

    • Q1 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture
    • Q2 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation


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