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Ethanol, the Agricultural Economy, and Rural Incomes in the United States: A Bivariate Econometric Approach

Published online by Cambridge University Press:  15 September 2016

Samson O. Akinfenwa  and
Bashir A. Qasmi
Samson O. Akinfenwa*
Affiliation:
Department of Economics at South Dakota State University Brookings
Bashir A. Qasmi
Affiliation:
Department of Economics at South Dakota State University Brookings
*
Correspondence: 312 Scobey Hall, Department of Economics, South Dakota State University, Brookings, SD 57007, Phone +1.605.651.9688, Email samson.akinfenwa@sdstate.edu.
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Abstract

We examine the causal relationships between ethanol production and the agricultural economy and rural incomes in the United States for 1981 through 2010. We use bivariate cointegration and Granger causality procedures and account for two structural breaks in ethanol production in the analysis, which shows that ethanol production Granger-caused agricultural net value added, agriculture's share of U.S. employment, net returns to operators, and rural income per capita in the short run. These causal relationships generally persisted in the long run. However, the causality between ethanol and rural incomes diminished in the long run.

Keywords

agricultural economybivariate analysescointegrationethanol productionGranger causalityrural income
Type
Research Article
Information
Agricultural and Resource Economics Review , Volume 43 , Issue 2 , August 2014 , pp. 319 - 333
Copyright
Copyright © 2014 Northeastern Agricultural and Resource Economics Association 

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