Econometrica: Oct 1964, Volume 32, Issue 4
Agriculture and the Secular Position of the U.S. Economy
G. S. Tolley, S. SmidtA two-sector model explains output, relative prices, factor employment and factor rewards in agriculture and non-agriculture. The exogenous variables include total factor supplies available to the economy, production function shifters and the proportion of agricultural inputs purchased from non-agriculture. Effects of agricultural changes on U.S. economic growth are estimated, with sensitivity tests based on measures of the variables for recent decades. Estimates are made of the contribution of each exogenous variable to annual decline of 2 to 3 percent in the farm labor force. A critical rate of technical advance in agriculture, below which there would be Malthusianism, is compared with observed rates of technical advance in U.S. agriculture. Alternative future values of the exogenous variables lead to projections to 1980 of the endogenous variables.
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