Resource adjustments, dynamic price responses, and research impacts in US agriculture, 1950-1982
A multioutput model is developed within the dynamic duality of the adjustment cost theory to analyze resource adjustments, dynamic price responses, and research impacts in U.S. agriculture during the post-war period. The model is rich enough to incorporate both the slow adjustment nature of some farm resources and the role of public and private research in U.S. agriculture. The resource adjustments are investigated for automobiles/trucks, tractors, equipment, service structure, land, and labor. Using state-level data from 1950-1982, the results show that these inputs are best characterized as quasi-fixed inputs. The dynamic price responses and research impacts are analyzed for capital, land, labor, intermediate inputs, crop output, and livestock product. Price and research elasticities are classified into short-run or long-run and direct or indirect. The indirect effects are due to the slow adjustments of capital, land, and labor. The long-run elasticities measure the ultimate impacts of price and research changes when the adjustments of these quasi-fixed inputs have been completed. Differential effects of the existing and new technology from agricultural research are also analyzed. The robustness of the results to the specifications about price expectations and error autocorrelations is investigated.