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Measuring The Components Of Agricultural Productivity

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  • Capalbo, Susan M.

Abstract

A method of decomposing the growth in TFP as conventionally measured (nonparametrically) into effects due to departures from competitive pricing rules, nonconstant returns to scale, and technical change has been applied to the U.S. agricultural sector. The empirical results for decomposing the growth rate are based upon a two-output, three-input translog cost model. Total factor productivity as conventionally measured grew at an average annual rate of 1.56 percent from 1950-1982. This growth rate, however, misrepresented the rate of technical change in U.S. agriculture, primarily due to scale effects. The nonmarginal cost pricing component does not appear to be a source of distortion in TFP growth. Parametrically measured TFP growth (TFP*) is, in general, lower than the conventionally measured index of TFP reflecting the decreasing returns to scale characterization of U.S. agriculture up through the late 1970s. Interpretation of these results should be done with due recognition of the econometric difficulties encountered in separating scale and technical change components.

Suggested Citation

  • Capalbo, Susan M., 1986. "Measuring The Components Of Agricultural Productivity," 1986 Annual Meeting, July 27-30, Reno, Nevada 278076, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    • Handle: RePEc:ags:aaea86:278076
    DOI: 10.22004/ag.econ.278076
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    References listed on IDEAS

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    3. Diewert, W. E., 1976. "Exact and superlative index numbers," Journal of Econometrics, Elsevier, vol. 4(2), pages 115-145, May.
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