Induced Innovation in United States Agriculture, 1880–1990: Time Series Tests and an Error Correction Model

17 Pages Posted: 1 Apr 2020

See all articles by Colin Thirtle

Colin Thirtle

Imperial College London - TH Huxley School of Environment, Earth Sciences & Engineering; University of Pretoria - Department of Agricultural Economics, Extension and Rural Development

David Schimmelpfennig

Economic Research Service (ERS); Science & Technology PPQ; USDA Economic Research Service

Robert F. Townsend

World Bank

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Date Written: August 2002

Abstract

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.

Keywords: induced innovation, cointegration, error correction, N510, N520, Q160

Suggested Citation

Thirtle, Colin and Schimmelpfennig, David and Schimmelpfennig, David and Townsend, Robert F., Induced Innovation in United States Agriculture, 1880–1990: Time Series Tests and an Error Correction Model (August 2002). American Journal of Agricultural Economics, Vol. 84, Issue 3, pp. 598-614, 2002, Available at SSRN: https://ssrn.com/abstract=3565377 or http://dx.doi.org/10.1111/1467-8276.00322

Colin Thirtle (Contact Author)

Imperial College London - TH Huxley School of Environment, Earth Sciences & Engineering ( email )

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London, SW7 2BP
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University of Pretoria - Department of Agricultural Economics, Extension and Rural Development

Pretoria 0002
South Africa

David Schimmelpfennig

Economic Research Service (ERS) ( email )

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Washington, DC 20024-3221
United States
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Science & Technology PPQ ( email )

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USDA Economic Research Service ( email )

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Robert F. Townsend

World Bank

Eastern & Southern Africa Rural Development Dept.
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Washington, DC 20433
United States

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