Varying-Parameter Supply Functions and the Sources of Economic Distress in American Agriculture, 1866-1914
The agrarian unrest in the United States at the end of the nineteenth century is examined. This unrest is often viewed as stemming from the inability of farmers to adapt to changing conditions in world agriculture. This hypothesis is tested in the context of a distributed lag supply function. Varying parameter estimation methods are used to trace the history of the parameters in the supply function and to decompose observed prices into permanent and transitory components over time. The patterns of variation are tested for conformity with a model of rational price-expectation formation. The conclusion is that farmers behaved as economic theory would predict, but that neither theory nor practice gave them relief from the troubles which plagued them.
We wish to acknowledge the helpful criticisms and comments which have been offered by William Parker, Merton J. Peck, Peter Temin, Stanley Engerman, Joel Mokyr, Matthew Berman, and others with whom we have discussed these findings. Responsibility for errors remains ours. This research was supported in part by National Science Foundation Grant GJ-ll54X3 to the National Bureau of Economic Research, Inc.
Cooley, Thomas F. and DeCanio, Steven J. "Varying-Parameter Supply Functions and the Sources of Economic Distresss in American Agriculture, 1866-1914." The Review of Economics and Statistics, Vol. LIX, No. 1, (February 1977).