Induced Innovation in United States Agriculture, 1880–1990: Time Series Tests and an Error Correction Model

An error correction model (ECM) of induced innovation, based on the two–stage CES production function allows direct tests of the inducement hypothesis, which are applied to U.S. data for 1880–1990. The time series properties of the variables include a structural break in 1920, cointegration is established and an ECM constructed, which allows factor substitution to be separated from technological change. Causality tests show that the factor–price ratios and R&D are Granger–prior to the factor–saving biases of technological change. The inducement hypothesis is corroborated, and identified as one factor in the complex development of U.S. agriculture.     

TESTING THE INDUCED INNOVATION HYPOTHESIS USING COINTEGRATION ANALYSIS

This paper deals with some of the problems involved in testing the hypothesis that factor price movements tend to influence the type of technological innovations which are developed and adopted, known as the Induced Innovation Hypothesis. Previous methods to perform this test are briefly reviewed and their limitations are discussed. A testing procedure which is based on the use of cointegration analysis is proposed and its advantages outlined. Finally, one application of the method is made, providing little support for the Induced Innovation Hypothesis in the case of US Agriculture (1948–83).     

Biased Technological Change and Factor Demand in Postwar Japanese Agriculture, 1958-84

The objective of this study is to gain a better understanding of factor substitutions in postwar Japanese agriculture by shedding special light on biased technological change. Such biased technological change is first measured, then associated with the movements of factor prices, and then tested for the Hicksian induced-innovation hypothesis. In addition, a decomposition analysis is carried out in order to quantitatively examine the importance of the biased effects for determining changes in factor-cost shares and factor proportions during the 1958-84 period. A slightly modified Stevenson-Greene model of the translog cost function is employed. This model has at least two important advantages over ordinary translog cost functions. First, it incorporates time into the model such that all coefficients of the ordinary translog cost function may change over time. This is more realistic than the ordinary translog cost function which assumes that all coefficients are constant over the period of estimation. Another attractive feature is that it enables us to test the induced-innovation hypothesis directly. The model is applied to the 1958-84 period by making use of farm-level data. The results show that technological change was biased towards saving labor and other inputs and using machinery, intermediate inputs, and land. This biased technological change is found to be, in principle, consistent with the induced-innovation hypothesis. Furthermore, it is shown through decomposition analyses that the biased technological change had significant impacts on changes in factor-cost shares and factor proportions during these years. The empirical results of this study imply that technological change in Japanese agriculture has, in general, proceeded in a manner consistent with factor endowments conditions since the late 1950s. An implication of this study for agriculture in less-developed countries is that agricultural policies seeking development through technological progress should be carried out so as to take advantage of peculiar factor endowments conditions in the individual countries.     

An Indigenous Innovation: An Example from Mobile Communication Technology

This paper explores the processes of indigenous (global South) innovation, particularly of the “high-tech” and “radical” kind, which have spurred technological catch-up, using the example of a third-generation (3G) Chinese mobile communications technology standard. Three hypotheses were generated from this study: (a) modularity-in-design opens new windows of opportunity for technological catching-up; (b) the lack of essential intellectual property rights acts as a key inducement, or a factor-saving bias, that influences the rate and direction of indigenous innovation in the global South; and (c) the long tail of an old technology affects the take-off of a new indigenous innovation, essentially by shortening the technological distance to be covered.     

Wholesale Demand for Fish in Greece

Inverse demand systems explain price variations as functions of quantity variations. This article presents a dynamic inverse almost ideal demand system (AIDS) model based on recent developments on cointegration techniques and error correction model. The case of fish landed at Greek seaports appears to suit this model well. The results indicate that the underlying distance function is homothetic whereas the own-quantity flexibilities suggest that the responses of price to own-quantity changes are inelastic. Finally, the results of cross-quantity uncompensated flexibilities suggest that the substitution possibilities among fish grades are rather limited. The Allais interaction intensities verified the substitutability among fish grades as well.     

Labor productivity measurement in Japanese agriculture, 1956–90

This paper investigates the factors responsible for a drastic decline in the growth rate of labor productivity of the agricultural sector for the 1956–90 period. This investigation is carried out by a newly devised procedure which decomposes the growth rate of labor productivity into (1) the total substitution effect which consists of the effects due to factor price changes and biased technological change, and (2) the TFP effect composed of the effects due to scale economies and technological progress. Based on empirical estimation of the translog cost function, it was found that the total substitution effect contributed to the growth of labor productivity much more than the TFP effect did for the period under question.     

Vertical price transmission in timber and lumber markets

Timber and lumber markets are linked and integrated through prices at several stages along timber supply chain. In this study, the degree of vertical integration and the presence of asymmetric price transmission are investigated for sawtimber and lumber products in the southern and western United States. The data utilized are quarterly stumpage price, delivered timber price, and lumber price of softwood between 1977 and 2011. Linear and threshold cointegration models are used for long-term price analyses, and symmetric and asymmetric error correction models are used for short-term price analyses. The integration in the early stage (i.e., stumpage/delivered timber price pair) is found to be stronger than that in the latter stage (i.e., delivered/lumber price pair). The South shows slightly stronger market cointegration than the West. Asymmetric price transmission is found along the timber supply chain. In the long term, prices are more responsive when the price margin is increased than decreased.     

ESTIMATING SOCIAL COSTS OF ALTERNATIVE SUGAR POLICIES IN SOUTH AFRICA

Social costs of a single-price policy, a two-tier price scheme and of ethanol production in the South African Sugar Industry are estimated. Results indicate that lower social costs are associated with the recently introduced two-tier price scheme compared with the single-price scheme which it replaced. Making quotas transferable under the two-tier price scheme would reduce social costs even further. Ethanol production at present would add to social costs as its replacement value as fuel is less than the cost of production including opportunity costs. Results are obtained from a regional linear programming model that incorporates negative sloping demand functions for products, positive labour supply functions and variance-covariance risk matrices. A limited substitution in the demand specification is also included.     

Variation of federal cost-share programs in the United States and the inducement effects on tree planting

A long existing question associated with federal cost-share programs in the United States has been whether these public subsidies have induced or substituted for landowners’ private investment in tree planting. This study reexamined the relationship between public funding and private investment behavior in the past 50 years by employing a state space model with time-varying parameters. Three regions, i.e., the South, North, and West were formed and compared. The analysis revealed that the relationship has changed over time and across regions and both inducement and substitution effects have occurred. The inducement effect occurred in the South from 1960 to 1972 and in the West from 1961 to 2002 while the substitution effect was present for all other years in the South and West. In the North, there has been a strong substitution effect from 1951 to 2002.     

Use of composite forest commodity price indices for cointegration analysis

Time series data on forest product prices used in research is frequently the product of temporal, spatial as well as product aggregation. This paper analyzes the implications of the use of composite commodity price indices in cointegration analysis and tests the validity of the assumptions underlying it. It tests for the presence of a common stochastic trend in disaggregated softwood lumber product price series in multiple US markets, a validity condition supported by the Generalized Composite Commodity Theorem (Lewbel, 1996. Aggregation without separability: a generalized composite commodity theorem. The American Economic Review 86(3), 524–543.). The presence of a common stochastic trend in softwood lumber product price series tested is consistently rejected by Johansen's (1988. Statistical analysis of cointegration vectors. Journal of Economic Dynamics and Control 12(2–3), 231–254.) multivariate cointegration analysis. Together with rejection of non-stationarity property for a significantly large number of price series tested, the results highlight the significance of the assumptions underlying the use of composite forest commodity price indices for cointegration analysis.     

The transmission of world maize price to South African maize market: a threshold cointegration approach

This article seeks to provide an explanation for the relationship between domestic maize price in South Africa and world maize prices in order to evaluate comovement and transmission of world prices to domestic prices in sub‐Sahara African countries. This is done by comparing nested and nonnested models that capture different forms of nonlinearity in the price spread. Adopting a Bayesian approach that allows for comparison of models using Bayes factor, we found that the relationship between South African price and world price for maize indicates the presence of nonlinearity in price transmission with three regimes that is triggered by the price spread in previous period.     

Evidence from panel unit root and cointegration tests that the Environmental Kuznets Curve does not exist

The Environmental Kuznets Curve (EKC) hypothesis – an inverted U-shape relation between various indicators of environmental degradation and income per capita – has become one of the 'stylised facts' of environmental and resource economics. This is despite considerable criticism on both theoretical and empirical grounds. Cointegration analysis can be used to test the validity of such stylised facts when the data involved contain stochastic trends. In the present paper, we use cointegration analysis to test the EKC hypothesis using a panel dataset of sulfur emissions and GDP data for 74 countries over a span of 31 years. We find that the data is stochastically trending in the time-series dimension. Given this, and interpreting the EKC as a long run equilibrium relationship, support for the hypothesis requires that an appropriate model cointegrates and that sulfur emissions are a concave function of income. Individual and panel cointegration tests cast doubt on the general applicability of the hypothesised relationship. Even when we find cointegration, many of the relationships for individual countries are not concave. The results show that the EKC is a problematic concept, at least in the case of sulfur emissions.     

Simultaneous Estimation of Cost and Distance Function Share Equations

The study considers the simultaneous estimation of share equations using cost and distance functions. Simultaneous rather than single system estimation utilizes full as opposed to limited information. Econometric results exploit the nonstationary nature of the data and that variables are cointegrated. Under cointegration all variables are endogenous and so it is not necessary to undertake the somewhat ad hoc exercise of choosing instruments to achieve parameter consistency. Johansen's maximum likelihood estimator is applied to data from Central Canada and Western Canada (1935–2006). Symmetry and homogeneity restrictions are not rejected for either region. Monotonicity held for all data points and concavity held at 92% of the data points. Long‐run constant returns and Hicks neutral technological change are rejected for both regions. Morishima elasticity estimates coming from the cost function in Western Canada indicate highly elastic long‐run substitution between the land/fertilizer input pair and mildly elastic long‐run substitution between land and both machinery and labor. In contrast, substitution for land and other inputs is inelastic for the land/machinery pair and the land/labor pair, with only the land/fertilizer pair being mildly elastic. The results indicate the limiting nature of land as a fundamental constraint on long‐term agricultural production is a real possibility in Central Canada because other inputs are inelastic, or at best only mildly elastic, substitutes for land. In Western Canada, fertilizer is the only factor that is highly substitutable for land and, therefore, could mitigate the limiting nature of land in that region. However, given that fertilizer applications are often considered to be environmentally unfriendly, the long‐run substitution of fertilizer for land as a fundamental mitigating factor to land scarcity in Western Canada is at a cost to the environment.     

INDUCED INNOVATION IN UNITED STATES FIELD CROPS, 1939-78

During the past four decades, United States field crop production has been transformed by the mechanical and fertiliser revolutions. In this study crop-specific estimates of the technical progress parameters that represent these changes are used to test the microeconomic theory of induced innovation. Tests based on the land/labour ratio, derived from a reformulation of the Hayami and Ruttan model, entirely support the inducement hypothesis and suggest that the partial failure of previous empirical investigations resulted from specification problems.     

Are Kansas farms profit maximizers? A stochastic additive error approach

Profit maximization is widely assumed as a behavioral objective in agricultural economics research. This paper applies deterministic and stochastic tests to examine adherence of a sample of Kansas farms to the profit maximization hypothesis. A modification of Varian's stochastic method is developed to account for farms that have zero netput. Results indicate that none of the farms satisfy the joint hypothesis of profit maximization and nonregressive monotonic technological change under the deterministic case. Results support the existence of nonregressive technological change during the study period for the sample of Kansas farms. Using a rejection criterion of 10% for measurement error in quantity data, most of the sample of Kansas farms (81% based on the additive error model and 92% based on the proportional error model) adheres to joint hypothesis of profit maximization and nonregressive monotonic technological change. The consistency with profit maximization is stronger for those farms that do not enter and exit in the production of an output.     

Threshold Cointegration in the Greek Milk Market

This article investigates the nonlinear adjustment between consumer and producer prices in the Greek milk sector using a threshold error correction autoregressive model. The results reject the null hypothesis of linear cointegration in favor of a 2-regime threshold cointegration model. A cointegrating relationship is expected only when equilibrium consumer price is decreased more than 24.12% or the equilibrium relative markup is squeezed more than 62.74%. In this case consumer prices have to increase faster than producer prices to restore the long-run equilibrium between consumer-producer milk prices.     

Government intervention and market integration in Indonesian rice markets

Long-run spatial price relationships in Indonesian rice markets and factors affecting the degree of market integration are evaluated using multivariate cointegration tests with weekly price data for the 1982-1993 period. The analysis includes evaluation of pre-self-sufficiency and post-self-sufficiency periods as well as Cot the entire period. The cointegration tests for entire Indonesian rice market, represented by the nine most relevant price series, indicate that relative to the pre-self-sufficiency period, the post-self-sufficiency period has a smaller degree of market integration. The change of the degree of market integration over time indicates that rationalizing of the Indonesian rice price policy beyond 1984 rice self-sufficiency has resulted in a less integrated market. This suggests that the policy shift has allowed the government to decrease its intervention without significantly decreasing market integration, indicating that the private sector is responding to price signals appropriately. It is possible that further reduction in intervention through widening the band between the floor and ceiling price could be accomplished without greatly affecting market integration. Regression results show that government intervention in terms of rice procurement significantly influenced market integration during the period of post-self-sufficiency (1985-1993) and the entire period of 1982-1993. This indicates that this aspect of government intervention has had positive influences on market integration, in contrast to distribution efforts, which were not found to be statistically significant, Procurement prices may be high, and could perhaps be lowered, reducing program costs. Regional per capita income is also found to be positively related to highei levels of market integration, suggesting that in periods of economic growth, government intervention may be decreased, thereby reducing program costs.     

湖南省稻谷生产收益及其影响因素的实证研究

基于稻谷生产实际收益的视角,依据1993—2017年湖南省统计数据,对稻谷生产收益与其主要影响因素之间的关系进行了协整检验,并考察分析了各因素对于稻谷生产收益的影响方向及其程度.结果表明:影响每亩减税实际纯收益变动的首要因素是每50 kg主产品实际平均出售价格,且为正向影响;次要因素是每亩实际总生产成本,为反向影响;而...     

Modeling price transmission between farm and retail prices: a soft switches approach

Vector error correction models (VECM) are used to model price transmission when farm and retail prices are cointegrated. To allow for nonlinearity in the cointegration process, researchers may specify thresholds to break the error correction process into regimes according to whether the retail price is above, below, or close to its equilibrium value given farm prices.  However, because the coefficients in a VECM can change when there is movement from one regime to another, the model can be discontinuous.  This implies sudden, “hard” regime changes. In this study, we extend the threshold VECM to include features of smooth transition autoregression (STAR) models. Our approach allows for gradual, soft regime changes.  An empirical application to retail cheese and farm milk prices is presented.     

美元汇率对中国天然橡胶现货价格影响的实证

2009年以来天然橡胶价格的大涨大落无法用天然橡胶的基本供求解释;在2009年1月至2015年5月美元指数和中国全乳胶价格的周度数据,在单位根和协整检验基础上,构建向量自回归(VAR)模型,利用脉冲响应函数和Granger因果检验对全乳胶价格与美元指数之间的关系进行分析;结果表明:美元指数与全乳胶价格之间存在负相关关系,且在Granger意义上因果单向相关,即美元指数的变化会影响全乳胶价格,但全乳胶价格的变化不会影响美元指数;该结果能较好地解释2009年至今天然橡胶价格大涨大落现象。基于研究从微观和宏观提出政府应鼓励企业加强套期保值交易、利用关税、国家收储等政策应对美元汇率对中国天然橡胶市场的影响。