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Induced Innovation in United States Agriculture, 1880–1990: Time Series Tests and an Error Correction Model
Author(s) -
Thirtle Colin G.,
Schimmelpfennig David E.,
Townsend Robert E
Publication year - 2002
Publication title -
american journal of agricultural economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.949
H-Index - 111
eISSN - 1467-8276
pISSN - 0002-9092
DOI - 10.1111/1467-8276.00322
Subject(s) - cointegration , econometrics , economics , granger causality , error correction model , series (stratigraphy) , agriculture , substitution (logic) , causality (physics) , production (economics) , structural break , function (biology) , time series , statistics , mathematics , macroeconomics , computer science , physics , geography , paleontology , archaeology , quantum mechanics , evolutionary biology , biology , programming language
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.