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Does Agriculture Generate Local Economic Spillovers? Short-run and Long-run Evidence from the Ogallala Aquifer

  • Richard Hornbeck
  • Pinar Keskin

Agricultural development may support broader economic development, though agricultural expansion may also crowd-out local non-agricultural activity. On the United States Plains, areas over the Ogallala aquifer experienced windfall agricultural gains when post-WWII technologies increased farmers' access to groundwater. Comparing counties over the Ogallala with nearby similar counties, local non-agricultural sectors experienced only short-run benefits. Despite substantial persistent agricultural gains, there was no long-run expansion of local non-agricultural sectors and there are some indications of crowd-out. With the benefit of long-run historical perspective, supporting local agricultural production does not appear to generate local economic spillovers that might justify its distortionary impacts.

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File URL: http://www.nber.org/papers/w18416.pdf
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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 18416.

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Date of creation: Sep 2012
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Publication status: published as Richard Hornbeck & Pinar Keskin, 2015. "Does Agriculture Generate Local Economic Spillovers? Short-Run and Long-Run Evidence from the Ogallala Aquifer," American Economic Journal: Economic Policy, American Economic Association, vol. 7(2), pages 192-213, May.
Handle: RePEc:nbr:nberwo:18416
Note: DAE EEE EFG
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