Econometric Models of Demand and Supply of Agriculture in Spain, France, Japan and The USA, 1964-99: An Analysis Of Interdependence

We compare two dynamic models for explaining the evolution of Agriculture production and relative prices during the second half of the 20th century in four OECD countries, and we find more support for the recursive system than for the interdependent model. The important increases in production in the USA, promoted by incentives to boost crops, have also influenced the technological diffusion in other countries with similar results of increases in production by territorial unity. This has implied a growth of supply higher than the growth of demand, for a given level of real prices, and thus it has provoked a diminution in this last variable. Agriculture production plays an important role in economic growth, not only through external trade, which favours a diminution of imports and an increase of exports, but also through an increase of production in non-agrarian sectors from demand and supply sides, so we conclude that the sector should continue to receive aids to compensate for the fall in prices and maintain real income from farm and related activities.