Public inputs and dynamic producer behavior: endogenous growth in U.S. agriculture

This paper is an attempt to understand the impact of public RD (2) positive effect of additional units of public inputs on the long-run demand for private capital; and (3) negative impact of public inputs on cost. They are tested using two estimation procedures on two data sets for U.S. agriculture. One, covering the period 1948–1994, developed by USDA, the other, covering the period 1926–1990, from Thirtle et al. Maximum likelihood estimates do not conform to the regularity and behavioral properties of the economic model rendering them unusable for testing these hypotheses. Bayesian estimates, although not totally satisfactory, do not reject the hypotheses after prior imposition of some of the regularity conditions. This supports the notion of an important role for public inputs on the rapid and sustained growth of the sector. We calculate that, on average, one additional dollar spent on public R&D stock reduces private cost by $6.5, implying a return on these public expenses of 190%.Facultad de Ciencias Económica

Essays on growth of the agriculture and food industry sectors

This dissertation combines elements of the endogenous growth, industrial organization, and international trade theories to study the productivity growth of the agriculture and food industries. The objective of the study is to determine appropriate roles for government intervention in those sectors. In particular, this thesis tries to shed light on the role of public investments in infrastructure and research (R&D) and the importance of trade liberalization for productivity and, consequently, welfare growth. The effects of public investments and trade policies are rationalized within the context of the endogenous growth theory. In particular, Chapters 2 and 4 adopt ‘AK’ models of growth. While Chapter 2 studies the effects of public investment in infrastructure and research (public inputs) on productivity, Chapter 4 studies the effects of commercial policies and trade liberalization on productivity. In both cases, there are external effects that imply increasing returns to scale (i.e., nonconvexities), increasing incentives to capital accumulation and growth. Chapter 3, in contrast, adopts a patent race (Shumpeterian) model to study the evolution of market structure and incentives to innovate. The intensity of R&D competition affects the rate at which innovations arrive and, consequently, the productivity growth rate of the economy or sector under consideration. Again, external effects are present when innovations are publicly provided. The empirical findings provide little evidence about the contribution of public inputs and trade liberalization to productivity of US agriculture and the Argentine food industry, respectively. In the first case, the results are non-consistent with the theory of the firm. In the second, while the ‘openness’ variable impacts positively on capital accumulation, it does not affect productivity. Nevertheless, theoretical findings highlight a potential role for government investment in R&D by affecting the pricing of new technologies and, consequently, increasing the incentives to R&D investments by private firms

Rejoinder

We thank the reviewers for a number of thoughtful and useful comments on the papers in this session. The instructions and data set received from the organizers were common to the three papers developed for this special session on modeling. Nevertheless, each study reflects the particular idiosyncrasies of the researchers and results on a very different approach to modeling a productive enterprise. The task for reviewers, therefore, is demanding. Reviewers’ suggestions span a broad range of topics. Most comments have to do with modeling issues, some emphasize issues related to the theoretical model, others emphasize issues related to the empirical model, and yet others have suggestions that touch both theory and empirics. In trying to respond to their concerns we find it useful to group our responses accordingly.Facultad de Ciencias Económica