Agricultural Risk, Intermediate Inputs, and Cross-Country Productivity Differences

Author(s):  
Kevin Donovan
Author(s):  
Kevin Donovan

Abstract I consider the aggregate impact of low intermediate input intensity in the agricultural sector of developing countries. In a dynamic general equilibrium model with idiosyncratic shocks, incomplete markets, and subsistence requirements, farmers in developing countries use fewer intermediate inputs because it limits their exposure to uninsurable shocks. The calibrated model implies that Indian agricultural productivity would increase by 16 percent if markets were complete, driven by quantitatively important increases in both the average real intermediate share and measured TFP through lower misallocation. I then extend the results to consider the importance of risk in other contexts. First, the introduction of insurance decreases cross-country differences in agricultural labor productivity by 14 percent. Second, scaling the introduction of improved seeds to decrease downside risk reduces inequality by reallocating resources from rich to poor farmers via equilibrium effects. This reallocation substantially increases aggregate productivity relative to what would be expected from extrapolating the partial equilibrium impact.


2019 ◽  
Vol 176 ◽  
pp. 64-67
Author(s):  
Junmin Liao ◽  
Wei Wang

2010 ◽  
Vol 2 (2) ◽  
pp. 95-124 ◽  
Author(s):  
Julian di Giovanni ◽  
Andrei A Levchenko

Countries that trade more with each other exhibit higher business cycle correlation. This paper examines the mechanisms underlying this relationship using a large cross-country, industry-level panel dataset of manufacturing production and trade. We show that sector pairs that experience more bilateral trade exhibit stronger comovement. Vertical linkages in production are an important explanation behind this effect: bilateral international trade increases comovement significantly more in cross-border industry pairs that use each other as intermediate inputs. Our estimates imply that these vertical production linkages account for some 30 percent of the total impact of bilateral trade on the business cycle correlation. (JEL E32, F14, F43)


2011 ◽  
Author(s):  
Alexander Patterson ◽  
William A. Gentry ◽  
Sarah A. Stawiski ◽  
David C. Gilmore

2013 ◽  
Author(s):  
Marit Skivenes ◽  
Jill Berrick ◽  
Tarja Poso ◽  
Sue Peckover

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