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THE CENTER FOR AGRICULTURAL ECONOMIC RESEARCH
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WORKING PAPER NO.
8505
AGRICULTURAL GROWTH AND THE
PRICE OF FOOD
by
Yair Mundlak
,tst
GIANNINI FOUNDATION OF
NOMICS
AGRICULTURAL
LI
JN 26 1985
Rehovoth, Israel, P.O.B. 12
12 .1.11
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The working papers in this series are preliminary
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AGRICULTURAL GROWTH AND THE
PRICE OF FOOD
May, 1985
Agricultural Growth and the Price of Food'
Yair Mundlak
INTRODUCTION
In
•
discussing
Price
the
of food in the context of growth food is
problem
usually associated with agriculture. Thus the
determining
food
purchased
by
does
not
reveal
whole
the
consumed
inputs
in
and, their
non-agricultural
The
restaurants.
prices
inputs
affect
of
food
•
quantity
the
consumer
are
not
well
as
food.
price
The
forced on the consumer, but
to
analyze
the -
of the agricultural and non-agricultural inputs of foocl. To
simplify the iliadussion all
aggregated.
story
the non-agricultural ,
of
rather demanded by him. Consequently, it is of interest
determinants
of
the consumer contains non-agricultural inputs
such as procepOng, packaging, transportation, refrigeration,as
food
that
the price of agriculture relative to that of non-agriculture
along the growth path. This however
since
becomes
the
non-agricultural
inputs
of
food
are
The utility function of a representative conSumer is written
as
)
•
Food
u =
u[F(A, •q), N]
This function is weakly separable in
food
(F)
and
non-food
(N)
has an agricultural component, A, and a non-agricultural component,
Q. The ratio q = Q/A can serve as a
expenditure
On
measure
of
quality
of
food.
The
food is decomposed according to the two components, that
Page 2
received by agriculture P A and that
where
P
received' by
NQ,
non-agriculture
price of the non-agricultural product. Thus, the food
the
budget is:
AA'
Q
The ayerage price paid by the consumer for food, p r unit of A, to
wraoh
we refer as the consumer price is:
.g
(3)•
.p
A
pq
and J. s ratio to thP Price received by farmars is
(14) IRA
where p
This
+ Pq
pN/p A.
is
also
equal
to
the
ratio BF/PAA, the reciprocal of the
share of the farmer in the consumr's dollar, The price of fOOd in
terms
of the non-agricultural product is:
(5)
It
is
clear
that RA .and I1N both increase with the quality of food
but are affected differently by the price ratio p. The remaining
analysis
will
examine the behavior of p,
qf
of
the
RA and RN in the process of
Page 3
growth
growth. That requires an analysis Of the product market along the
path.
begin
We
by
some
providing
empirical
evidence,
agriculture in the retail cost of food in the U.S. is
USDA.
value
The
forties
by
the
the
the share was nearly 50 percent."2 A casual review of
when
The
fluctuation.
considerable
indicates
can be attributed, at least in part, to a positive income response
trend
of q which implies that the income elasticity of Q
A.
The
fluctuations
relative
stability
of
Is
covering
to some extent
these marketing costs, despite the trend towards
and
offset
the
cost
manufecturing."3
of
suggest
foods,
information
is
•
services
additional
sample
is
small.
provided
by
Nevertheless
"Nevertheless the data indicate that the
stable.
fairly
A
Mittendorf
and
the
share
Some
Ijertag. for
countries
conclusion is sugestive
of
marketing
costs
in
to the consumer price is higher in the dcveloped countries (due
to considerable higher
packaging
by
provided
developing countries. The information shows wide spread across
relation
that
This conclusion can be interpreted as an
increase in q and a declipe in p, thus leaving
the
"The
in marketing techniques and advances in food technology have
improvement
• scattered
that
concludes
1963-1975
increased consumption of processed and convenience
services
that
than
larger
can be attributed to flp9tuatiops in prices. A
study by Houston for the U.K.
and
of
since
.was trended down gradually
the time series of this share
of
publistled
share
for 1983 was 33 percent. Dunham places this value in a
perspective by stating that it
mid
The
and
labor
presentation
costs
and
higher
levels
of
processing
of food items)".4 Again, a suggestion of an
Page Li
increase
formulation
analytic
An
of economic development.
reve
p and q with ]
provided
by
Gardner.
of
the
and
Q
The
model
is
terms
in
closed
the
consumer
by
by
our
assuming
producers
ttlp
has to buy the food providgd at the profi,t maximizing
combination of A and Q. This assumption is restrictive and
as
indicated
is . alleviated in the present analysis. Aside of this, we deal
it
above
of
functions for A and Q and imposing the competitive conditions. In
this framework, the composition of food is determined
and
was
is a demand function for (aggregate) food which depends
There
on the price of food and a shifter.
supply
spread
The essense of his model consists of a production
function for food consisting of two inputs, A
notation.
price
farm-retail
with developments along a growth path.
The discussion begins with the derivation of
the
for
two
components
food
of
as
the
determiped
within
a
competItive
functions
well as for non-agriculture. The
supply side is the standard two sector model. The short
is
demand
run
eq0librium
framework of a closed economy. We
deal with a closed economy, although food ip tradable, because the
is
a
closed
economy and this fact determines the major Ovelopments in
the variables of interest. The growth path is then generated' by
individually
and
exogenously
by
technical
change.
This
is
some consequences of removing the assumption of competitive
factor markets. In view of the space limitation, the analysis is
graphical,
treating
some of the major determinants of growth:
capital accumulation and different kinds of
followed
world
based
on
some
largely
general known properties and concentrates on
Page 5
essentials.
DEMAND
The problem of
representative
the
subject to the budget constraint:
Using obvious notations
consumer
B = [P AA
is
to
maximize
(1)
pmQ] + p N 5 BF
the rirst order conditions are:
UN=
The
utility
is weakly separOle, 's9 that the comppsitiop
f4nction
of food is independent of the level of N. This is seen from.
(7) Tr
A
and Q conditional on the food budget are;
Th s the demand for
(8)
5F/PA
Q(PA,
= Q(p, BF/PA)
The expression to the
homogeneity
property
illustrated in Fig. 1
budget
leve3,
BF/pA
right
the
of
Point
E
of
thp
demand
indlcates
equaIity
functions.
he
utilizes
sign
optimal
The
solutiqn
choice
The 1.neWe ConsuMPtIon curve ICU i
at
the
is
the
drawn to
Page 6
illustrate two assumptions: ( ) Both component6, A and Q are normal;
The
income
elasticity, with respect to BF, of A is smaller than one and
that of Q is larger than one. Thus, the
with
food
the
(2)
quality
of
budget, Turning tP (4) and (5) it
is
food
q,
increases
seen that under (I)
increasin
expenditure on food, and (ii) constant prices, looth RA and
increase.
The
RN
increase j.n the price of food, either in terms of A or N,
reflects the consumer preference for qya],ity.
The 4nconditional demand functions can be obtained
optimal
food
budget
and
using
it
by
finding
the
In (8). Alternatively, they can be
obtained directly. Those are presented below
in
the
-liCks
cqmpensated
form with the signs of the partial derivatives attached:
(9).
A PN
= (+
A(-
Since
(p
all
the
three
components
are
normal goods, each of these
functions is monotone increasing in u. Thus we can
and write
(10) Q(p,
N(p, A)
substitut
A
for
q
Page 7
These
funOtions are drawn in Fig. 2. They represent the loci of optimal
point§ achieved at price ratio p and increasing levels of expenditures.
forementioned
It should be noted that the prige effects reflect two
First, the utility function is weakly sep4rable, and second,
assumptl.ons,
the price of Q is the same as the price of N. A decline in
within food of A for Q. However, a decline in
substitution
cheaper relative to N and hence a substitution in
intergroup
strength
of
of
sign
DQ/apA
intr
the
is
food
ambiguous
and
substitution
intergroup
favor
of
will
the
substitutions.
favor
of
food.
A
Q
Consequently,
F.
be in favor of N hence aNnpN <0.To
food.
A
substitution
causes a decline 41 A so that the inter and intra group
effecs supplement each other and 3A/3pN > 0. On
DQ/3p
on
is
reduces the price of food and of N but the price of food
PN
the decline in food we now add the changes within
in
This
food.
depending
intergrOuP
degreases less because Q constitutes only one input in
the
f
favor
DN/aPA > 0 because of the intergroup substitution in
decline
makes food
causes an increase inQ an.A. Hence, 3A/ap
substitution
clearly negative whereas
relative
causes
the
other
hand,
sign
is ambiguous because the two effects qre contradicting.
It
is
possible
to
put
some
boundries on the effects. Since the
price of Q and N is the same, we pan view Q
N
N as a composite
good,
.and write the utility function as U(A, R), resulting in dOmand functions
01)
A(P, u),
+ +
N P,
Page 8
• and those are clearly signed.
THE ECONOMY IN THE SHORT RUN
Under
it
4.imita“on,
space
the
is most efficient to analyze the
proces within a neoclassIcal framework of a two sector model of a
economy
and
thereby
closed
build on some known relsults. The model consists of
constant returns to scal.e sectoral production functions:
Y
F
where
Ki
= 1, 2
Ki,
and
respectively
Li
and
employment
sectoral
are
apital
o
their
simplifies
supply
the
This
assumptions,
value
production
the
the transformation curve
price
and
are
conditions
competitive
production are paid their
(s4pPlY)
gA.ven,
exogenously
is
employed
latter assumption only
marginal
is
in that factors of
produqtivities.
possilgiilities
Fig.
met
3,a. The relationship
(R)
non-agriculture
between
the
points on the transformation curve is summarized by
that
when the economy specializes in agrj.cul,ture (y1
minimum level
these
Under
of the economy are given by
the supply function for agriculture in Fig. 3,b. Noe
hence,
fully
but does not modify the qualitative result,P. Finally,
that
assumed
labor
Ti is a measure of technology. Sector 1 is agriculture
and 2 is non-agriculture. It is assumed that factors are
and
and
and
conversely,
'Y2)
when
the. price
the
is
at
economy
PNIPA,
yi) p is at its
specializes
its maximum, p.
in
N,SQ, p
Page 9
increases with y
and declines with y
Next we turn to the 'demand functions. combining
in
the
two
equations
11), the demand can be sumarized by:
(12)
where
xl
is
percapita demand of A, and x
is assumed that P(p, 0) = 0, as p
Under
these
.equilibrium.
0, D
is
there
assumptions
is percapita demand of N. It
a
unique
price
t points [• , Y2(01
p.
At
5,
2(5)
where y2(p)
y2(p)
aYi(P)/313 < 0,
declines
Having
with
0
=ST-2
but
> 0
y1()
and
therefore
(12,
The
position,
of
Oetermination
t
0, hence xi G, y2(5)] occurs
opposite
at
) = 0, hence excess supply. As
p,
and
P,
is
qpIlieved where the excess demand is zero.
'and
the
demand
functions
facilitate
of N into N and Q and thus the determination of food, F(Q,
A). This outline of a graphical proof can be
following
The
Y2(p)/31) > 0, Dx l /ap > 0,'x 1/x2 >0, the excess demand
determined
decomposition
run
the percapita production
y 1 03) > 0 implying an excess demand for ?c
where
short
be demontrated in Fig. 3.b. For this, we evaluate
q n
equilibrium
xl only
stable
co.
That 'is', there exist a prl,ce pe such that xl(pe, y2(pe))
3.
Y l(Pe)* This is •illustrated Iv Point E in Fig.
the
D
0, and as p
cases
to
determine
the
repeated
displacement
in
in
each - f
the
the
equilibrium
Page 10
The analysis can
extension
an
to
generalized
case
the
the
where
factor
economy are increasing functions of their prices. Such
the
in
supplies
be
will
add
technical
not
will
but
details
affect
the
qualitative results.
CAPITAL ACCUMULATION
By
capital
accumulation
meant
it
of
the
production
facilitates
accumulation
labor ratio for the economy as a whole. An
expansion
an increase in the capital
possibilities
an
of the economy and thereby
causes a positive income effect for all the commodities.
The evaluation
f the price
is the labor intensive sector. That is, at
Under
•
this
price
any
accumulation
leads
accumulation
causes
an
increase
in
at the initial
the demand x
1
new
to
equilibrium
is
achieved
a
higher
prices
demand.
price for yl , that is a
decline in p. Consequently the equilibrium output of yl will increase
the
an
due to the
increase in income, and a decline in the supply y1 , hence excess
A
1 <k 2,
of the output of the capital intensive sector and to a decline
of the output of the labor intensive sector. Thus
capital
regime,
the Rybczyncki proposition
assumption
indicates that under constant prices capital
expansion
an
on the capital intensity. It is assumed here that agriculture
assumption
where
requires
accumulation
of
effects
income
effect
is
stronger
than
if
the substitution effect and will
decrease if the converse holds. The decline in p supplements
the
income
Page 11
N and its equilibrium output will increase. Finally, in view
for
effect
food,
quality
of the price change, the
q
=
increases.
Q/A
This
two effects, a stronger income elasticity for Q than for A, and
reflects
a substitution in favor of Q due to the decline in p
total
Q depends on the equilibrium consumption of food. If A does
of
quantity
However, the
not decline, then Q will increase. If A declines,
it
possible
is
that
food consumption will decline even though its quality will improve.
foregoing
The
capital intensive product. How does
food?
it
affect
(4) the change in RA, the price of food in
p.
the
p, the price of the
relative
declines
increases,
and
the
terms
of
outcome
A,
is
will
price
in
will
dominate
and
RA
It
is
however
likely
that
the
will decline. The change in p
depends on the supply and demand elasticities and will not
here.
ambiguous.
depend on the
relative changes. If the income effect is weak, it is possible
change
price
the,.price of'fôodinterms:of N, increaseb.,.HoWeyer,.'by
By (5)
Since
in
decline
shows
analysis
be
discussed
that the income effect an q is strong and
dominant and
TECHNICAL CHANGE
Technical change (TC) is basically the engine of growth. However
is
not
simple concept.
takes various forms and at least in part is
endogenous in the economic system. The best we can do under
space
illuminate the
illustrate
importance
the
limited
some leading cases. Such cases are
of
the
income
and
price
elasticities
of
Page 12
demand.
two
the
with Hicks neutral technical (HNTC) of equal _rates in
begin
We
4a
Fig.
sectors.
0 and t. Point E is the initial equilibrium. Under HNTC of
technologies
H,
equal rates in the two sectors, the supply price at
at
possibilities
E.
at
However,
the
and
price
this
production
new
is given by point C. Thus, there is an excess
demand
the
supply of A and p increases until a new equilibrium point El is
It
the
at
located
outer transformation curve and a ray through E, is
the
of
intersection
the same as
. two
for
curves
transformation
presents
reached.
located between H and C. The location
can be shown that this point
the
reflects
of C, and therefore El to the right of
the
that
fact
income elasticity of A is less than 1.
The
in
increase
p
cheaper relative to N. Hence, the
food
makes
effects.
Yet, both effects are not sufficient to increase consumption of
A at the rate
•increases
price
and
income
the
t
due
percapita consumption of food increases
by
of
the
more
TC.
than
Consequently,
rate
the
of
the
the
consumption
TC
and
of
N
the income effect
dominates the price effects. This is also true for the two components,
. and
Q,
individually, implying an increase in q. The final outcome is an
increase in pq and therefore an increase in RA. On
sign
of
N'
the
change
in
RN
is
ambiguous.
the
other
hand
the
But again, the increase in
quality may dominate the change in price and thus leading to an
increase
in RN.
Another
extreme
case
is
that
of
TC
in one sector onJ.y, say in
agriculture. Fig. 5 illustrates HNTC in agriculture
alone.
At
point
B
Page 13
the
is the same .as at the initial point because it
allocation
resource
produces the same quantity y
the
relative
the
TO
However, due
2 under constant technology.
price
agriculture declines (p increases) and
of
the
under
The
is to the left of B.
hence point H representing the initial price p
demand
to
initial price is at C. The new equilibrium point will
•
,
be in the segment BC when the price elasticity of demand for
- than
to
agriculture_ alone.. leads
the
in
consumption
resources
resources
fewer
can be diverted to non-food production. Note,
saved
the
on
however, that this result depends crucially
demand
elasticity,
demand for A were elastic, such a change would have reduced
the
if
non-agriculture
of
with
to the T . It can produce a larger output of food
the
in
income effect, since the economy becomes more affluent due
the
reflects
HNTC
case
an increase in p and in the consumption of -
both commodities. The increase
for
less
1; It will be in the segment BH if the elasticity is larger than 1.
Empirically, such elasticity is smaller than one. In this
and
is
A
the equilibrium consumption of non-agriculture.
depends
The effect of this change on
substitution
intrafood
A
between
and
substitution reduces q. However, this may
q.
Q.
on
the
Since
p
increases, such a
by
dominated
on
rise R
declines. The other possibilities are ambiguous.
foregoing
To
the
income
If q does not decline then R A increases and if q does not
effect
analysis.
the
strength
show
two
cases
this,
of
let T
1
HNTC
facilitates
more
a
general
and T2 be the rates of the HNTC in the
two sectors, then the consequences of such a change can
be
analyzed
in
Page
then analyze first the
steps: (1) Equal rates: Assume that
two
system under the assumption of
Over
Now
rate:
Differential
the
not
a long swing, it is likely that even if the rates are
the
same,
2. (2)
the assumpltion of TC in agriculture alone at a rate Tl
under
analyze
T1
part is dominating and therefore the results obtained
common
for equal rates of HNTC are more relevant.
DISEQUILIBRIUM ANALYSIS
equilibrium
The foregoing analysis dealt exclusively .with
.s
with
dealing
When
of
growth
the
agriculture,
pertinent.
The
flow
empirically
be
For reasons
discussed
not
here,
particularly in the labor market, is not fast enough in order
to equate wages across sectors and 'consequently the agricultural wage
lower
than
of
that
not
on
the
is
6
non-agriculture. In this sense the economy is not
point
operating efficiently. This is illustrated in Fig. 6 by
is
of
low income elasticity for A forces resources to flow out
f agriculture as the economy expands
this
assumption
the
equilibrium might be too restrictive for the analysis to
points.
frontier.
The
demand
curve
that
passes
H,
which
through
H
determines the price which clears the product market at H.
Assuming that labor migrates to the sector
there
will
be
a
flow
of
with
the
higher
labor out of agriculture. This will cause a
- as shown by the arrows in Fig. 6
decline of A and an increase of 0
illustrates
a process of
wage,
which
convergence to E on the transformation curve. Note that such
convergence
the
rontier
increases
the
consumption
Page 15
possibilities
and as such has a positive income effect on A, Q and N. In
addition to the income effect there is also a price effect.
effect
of
the
that
production
in
A
and
a
decline
in
p
facilitates
production in non-agriculture.
efficiency
to
decrease
in
it
N.
competition prevails within each sector, the average cost
is equal to the product price (zero profit)
Such
partial
off-farm migration is to narrow the wage gap and thereby
to increase the cost of
Assuming
The
frontier
shows
Note
the
that
negative
and
therefore
absorbtion
such
a
of
p
declines.
the
expanding
convergence
relationships
between
to
the
sectoral
outputs and their prices.
The positive income effect and the price effect increase
Q
whereas
declines and therefore q increases. However, the sign of the change in
is ambiguous whereas RN increases.
The foregoing analysis assumed constant
Once
this
assumption
is
resources
and
technology.
removed, we will have a simultaneous movement
toward the transformation curve and a movement of the curve itself.
is the reason that the process takes so long to complete.
SUMMARY
The discussion can be summarized with Table 1.
AN EMPIRICAL ANALYSIS
This
Page 16
•••
positive relationship between q,
suggests
analysis
foregoing
The
definite
N and between income and it is somewhat less
effect
p.
of
Thus,
empirical
the
net
the
on
can test the qualitative
analysis
the
data
for
It
would
be
The analysis consists of computing regressions of ln q and in RA
on
period
1946-82.
Such
data
were
the
of
results and supplement them. The analysis is
US
available'.
readily
interesting to repeat the analysis on other data
my
in p(Lp),
y is percapita disposable income deflated by
where
(Ly)
the consumer price index, and an interaction term (Lp) (Ly). The
rates
'compounded
of
change
.00295, Y = .021 and pAA/BF
deteriorated
agriculture
of
variables
these
-.0035.
Thus,
the
are
terms
p =
0116,
of
trade
at an annual rate of about 1 percent whereas q
increased at the rate of about .3 percent. In terms of Table 1
the
that
it
means
effect of the TC dominated that of capital accumulation and of
flow of resources in its effect on the terms
should
average
of
trade.
This
statement
qualified to allow for the role of the U.S. as an exporter of
be
food. However, this qualification is not that simple and conspicuous
is
and
avoided here. In terms of q we see that its growth is consistent with
the HNTC of equal rates and not inconsistant with the others.
The regressions are summarized
presented
for
interaction
particularly
in 'Table
2.
Two
regressions
are
each of the two dependent variables, with and without the
term
The
important
contribution
for
of
the
interaction
term
is
the Lq regression where it improves the fit
Page 17
correlation.
were
elasticities
gradually declined, become
The
sample.
the
negative at about the mid point of
price
The
they
level,
income
low
the
at
possitive
serial
the
and eliminates
average
the
for
period was -.047 whereas the extreme values were -.30 and .24.
that an increase in p reduces the relative price of food and
Recall
is
thereby affects positively Q and A. This is the intergroup effect. It
to the income elasticities of Q and A and therefore, by our
proportional
assumption it increases q. The intrafood substitution due to an
in
p
a
to
leads
in
decline
q.
Since
elasticities for the low income years it
levels
the
obtain
we
implies
that
increase
price
positive
at
such
income
intergroup effect dominates the intrafood substitution. That
for
is, the main effect of an increase in p, which implies a lower price
food,
to increase food consumption. The change in the quality due to
is
intrafood substitution is less important. The situation
is
as
reversed
income increases.
The
•
elasticity
income
of quality was stronger at the early period
and declined gradually and become negative in the last three years.
trend
reflects
the
increasing
price
This
of quality(p) and indirectly the
increase in income. Thus, at high income and high price of
quality,
the
intra food substitution dominated and that called for a decline in q.
The
in
p
second set of regressions reports the response of RA to changes
and
contributes
y.
In
less
this
set,
the
the
simpler
interaction,
regression
though
significant,
(3), but still as in the
Page 18
serial
previous case reduces the
difference
little
the
in
Nevertheless,
correlation
average
is
the
two
between
elasticities
respect
regressions. Thus, the elasticity of RA is about .55 with
.075 with respect to income. That indicates that R
and
there
increased with
and y. Recall that R A is the receiprocal of the share of
in
agriculture
food budget, and this declines with p and y. This of course reflects
the
the changes in q.
••
Footnotes
••
An invited paper to
be
read'at
International
the
Conference
of
Agricultural. Economists, August 26-Sept. 4, Malaga, Spain. I am indebted
to Bruce Gardner, Dennis Dunham and
locating
the
empirical
evidence.
Ulrich
The
Koester
study
was
for
supported
International Food Policy Research Institute and by Grant
BARD
-
The. United
States-Israel
assistance
No
in
the
by
from
Binational Agricultural Research and
Development Fund".
-Dunham, p. 10.
Houston, p
59.
Mittendorf and Hert4, p. 31.
n this case, the slope at the transformation curve is not
the
supply
price.
However,
the
supply
function
equal
is still positively
Page 19
3 b
- sloped and the equilibrium determination according to Fig
is
still
valid. (Mundlak, 198)4).
. Mundlak, 1979.
Sources
of data: R
from Dunham. The remaining variables
A was derived
are obtained from USDA, Agricultural Statistics, different volumes.
••
REFERENCES
Gardner
'
B.L. "The Farm-Retail Price
Spread
in
Competitive
Food
Industry"
American Journal of Agricultural Economics, 57: 399-409, 1975.
Houston
George "The Behavior of Prices and Margins of Selected Food Products
in the United Kingdom", Paris
OECD, July- 1979 (mimeograph).
Mittendorf, H.J. and Herta'g, 0. "Marketing Costs and Margins
Items in Developing Countries", FAQ
Dunham,
D.
"Food
Cost
Review
1983",
for
Food and Nutrition, 8
Washington
D.C.
Major
Food
27-31, 1982.
USDA, Agricultura
Economic Report Number 514.
Mundlak,
Y.
"Lectures
on
Agriculture
and
Economic
Growth,
Theory
and
Page 20
Measurement"
1984) mimeograph .
Intersectoral
Factor. Mibility
and
Agricultural Growth, Washington
D.C.: International Food Policy Research Institute (1979).
Agriculture
non Agriculture
Fig:
• Unconditional Income
Consumption Curves
Fig: 1. The Composition of Food
Agriculture
Excess demand
nan Agriculture
Price
Fig: 3.b
Fig:3.a
The Economy in the Short Run
Table
Page 22
: The Response to the Various Growth
Determinants
Sources of Growth
HNTC
IINTC
K-ACC
Single
Variable
•
• ?
T
T =T,
1
1
Resource'
Flow
0
.
9
Note:
K-ACC
= Capital Accumulation
UN F(
= Hicks Neutral Technical Change
T
1 2
T,
Resource flow
= the rates of the HNTC
= out of agriculture
Table 2
Dependent
Variable
2
R
Litt„
-LE'
A
.66
.966
.976
1.46
1.02 .
Lq
Lq
.38
DW
.78
.Constant
.70
LP
-.014
Ly
.15
(Ly)(LP)
EP:
average
(3.7)
•.
(7,,2)
1.09
(11.6)
(18.4)
(.2)
2.25
(5:7)
.56
(3.5)
.35
(7.6)
.088
-.80
(5.8)
-.047
1.59
(4.0)
.56
.19
SD
Ey:
1,44)
)
Regression No
average
SD
.12
.088
.13
0
Notes to Table 2
left.
Numbers in parentheses are t ratios of coefficients to the.
statistic
-Watson
DW: Durbin
to price.
EP: Elasticity of the dependent variable with respect
to income.
respect
with
Ey: Elasticity of the dependent variable
Average: Average for the period.
ies.
SD! Standard deviations of the computed elasticit
•
:254
1.55
(3.7)
(7.0
.173
(6.7)
-.350
(4.5)
.544
.08
.074
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