Dynamic input demand functions and resource adjustment for US agriculture: state evidence

The paper presents an econometric model of dynamic agricultural input demand functions that include research based technical change and autoregressive disturbances and fits the model to annual data for a set of state aggregates pooled over 1950-1982. The methodological approach is one of developing a theoretical foundation for a dynamic input demand system and accepting state aggreage behavior as approximated by nonlinear adjustment costs and long-term profit maximization. Although other studies have largely ignored autocorrelation in dynamic input demand systems, the results show shorter adjustment lags with autocorrelation than without. Dynamic input demand own-price elasticities for the six input groups are inelastic, and the demand functions possess significant cross-price and research effects.