TY - JOUR
T1 - The dynamics of agriculture supply
T2 - A reconsideration
AU - Eckstein, Zvi
N1 - Funding Information:
Partial support from the General Services Foundation, and the David Horowitz Institute for Developing Countries and the Foerder Institute for Economic Research is gratefully acknowledged.
PY - 1985/5
Y1 - 1985/5
N2 - This paper presents a dynamic rational expectations equilibrium model for a given crop. The dynamic supply equation is derived from the farmer optimization problem; and the equilibrium movements of commodity price, production, and land allocations are solved analytically. It is shown that the observed dynamics of agriculture supply, which are usually explained and measured with the Nerlovian supply response model, can be explained and measured at least as well by the rational expectations equilibrium model. However, interpretation of the results is different, and the paper defines explicitly the dynamic supply elasticities and presents an econometric method for consistent estimators for the parameters.
AB - This paper presents a dynamic rational expectations equilibrium model for a given crop. The dynamic supply equation is derived from the farmer optimization problem; and the equilibrium movements of commodity price, production, and land allocations are solved analytically. It is shown that the observed dynamics of agriculture supply, which are usually explained and measured with the Nerlovian supply response model, can be explained and measured at least as well by the rational expectations equilibrium model. However, interpretation of the results is different, and the paper defines explicitly the dynamic supply elasticities and presents an econometric method for consistent estimators for the parameters.
KW - Observational equivalence
KW - Rational expectations
KW - Supply elasticities
KW - Supply response
UR - http://www.scopus.com/inward/record.url?scp=0022178749&partnerID=8YFLogxK
U2 - 10.2307/1240671
DO - 10.2307/1240671
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AN - SCOPUS:0022178749
SN - 0002-9092
VL - 67
SP - 204
EP - 214
JO - American Journal of Agricultural Economics
JF - American Journal of Agricultural Economics
IS - 2
ER -