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Agriculture and the rest of the economy: macroconnections and policy restraints


  • Chichilnisky, Graciela
  • Taylor, Lance


The first two sections of the paper are devoted to a combination of Kuznets and structuralist stories, where we ask how the agricultural/nonagricultural terms of trade and income distribution must adjust to permit both savings and investment and commodity market balance to be assured. It will be shown that inflationary processes can easily be kicked off by terms of trade movements in the short run. In the next two sections we follow Chichilnisky in working out a longer run, Lewis-style model in which economic dualism plus an elastic labor supply can lead to severe problems with realization of the marketed surplus and agricultural exports abroad. A brief final section summarizes the major implications of the models for policy choice.

Suggested Citation

  • Chichilnisky, Graciela & Taylor, Lance, 1980. "Agriculture and the rest of the economy: macroconnections and policy restraints," MPRA Paper 8022, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:8022

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    References listed on IDEAS

    1. Wolfgang F. Stolper & Paul A. Samuelson, 1941. "Protection and Real Wages," Review of Economic Studies, Oxford University Press, vol. 9(1), pages 58-73.
    2. Chichilnisky, Graciela, 1981. "Terms of trade and domestic distribution : Export-led growth with abundant labour," Journal of Development Economics, Elsevier, vol. 8(2), pages 163-192, April.
    3. Cardoso, Eliana A., 1981. "Food supply and inflation," Journal of Development Economics, Elsevier, vol. 8(3), pages 269-284, June.
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    Cited by:

    1. Juan Luis Londoño, 1985. "Ahorro y gasto en una economía heterogénea: El rol macroeconómico del mercado de alimentos," COYUNTURA ECONÓMICA, FEDESARROLLO, vol. 15(4), pages 129-179, December.
    2. Leonardo Vera, 2013. "Structural Inflation Redux," Ensayos Económicos, Central Bank of Argentina, Economic Research Department, vol. 1(69), pages 37-99, December.
    3. Andrews, Margaret S. & Janvry, Alain de, 1983. "Intersectoral Terms Of Trade In Three Political Economic Structures," Occasional Paper Series No. 3 191013, International Association of Agricultural Economists.
    4. Yeldan, A. Erinc, 1987. "Structural Adjustment and Trade in Turkey: A General Equilibrium Analysis of the Export-Led Versus Domestic Demand-Led Strategies of Development," Bulletins 7464, University of Minnesota, Economic Development Center.
    5. Taylor, Lance, 2016. "CGE applications in development economics," Journal of Policy Modeling, Elsevier, vol. 38(3), pages 495-514.

    More about this item


    agricultural sector; nonagricultural sector; policy; Keynesian; post-keynesian; Ricardo; Kuznets; Lewis; terms of trade; investment; savings; labor supply; elastic labor supply; exports; economic dualism; comparative statics; marketed surplus; policy change; income distribution;

    JEL classification:

    • Q11 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Aggregate Supply and Demand Analysis; Prices
    • Q17 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agriculture in International Trade
    • Q18 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Policy; Food Policy


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