General equilibrium and open economy trade theory are used along with time series data on the U.S. agricultural sector to provide insights into the structure of agricultural supply, factor returns and linkages to the rest of the economy. Output expansion and factor returns are found to vary depending on relative factor intensities, which we refer to as Rybczynski and Stolper-Samuelson like effects. The effect of the rest of the economy, particularly the increase in price of services, is found to have relatively large negative impacts on agriculture. The short-run effects of prices and factor endowments on growth in agricultural supply and factor returns are dominated by the long-run effects of technological change.
Bibliographical noteFunding Information:
Comments and suggestions from Vernon Ruttan, Mathew Shane and Lloyd Teigen are gratefully acknowledged. The research was conducted in collaboration with MTED/ERS, U.S. Department of Agriculture with the support of a NRI grant.