U.S. Agriculture in a General Equilibrium Framework: Analysis with a Social Accounting Matrix

Traditionally, the analysis of U.S. agricultural policy has been carried out in a partial equilibrium framework. It has thus ignored the linkages of the agricultural sector with the rest of the economy. It is only recently that the importance of various economic linkages has started being recognized in work on U.S. agriculture. The importance to the agricultural sector of exchange rates and other instruments of monetary and fiscal policies was first emphasized by Schuh. His seminal work sparked other studies of the interaction between agricultural production and incomes and traditional instruments of macroeconomic policy. See also Shei; Chambers and Just; Freebairn, Rausser, and de Gorter. The partial equilibrium analysis of U.S. agriculture stands in sharp contrast to traditional approaches to the formulation of agricultural policy in developing countries. Development economists have long been sensitive to the importance of leakages from policies aimed at the agricultural sector to the rest of the economy and vice versa. In this paper, we discuss how multisectoral models of the sort often used in developing countries can be used to analyze such issues in the United States. We construct a U.S. social accounting matrix (SAM) for 1982 and use a variety of multiplier models to analyze the impact of different exogenous shocks on agriculture, focusing on the links between the agricultural and nonagricultural sectors. A longer version of this article is provided by Adelman and Robinson. Soci Accounting Matrices