Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/191502
Year of Publication: 
2017
Series/Report no.: 
IRENE Working Paper No. 17-07
Publisher: 
University of Neuchâtel, Institute of Economic Research (IRENE), Neuchâtel
Abstract: 
We study how stochasticity in the evolution of agricultural productivity interacts with economic and population growth at the global level. We use a two-sector Schumpeterian model of growth, in which a manufacturing sector produces the traditional consumption good and an agricultural sector produces food to sustain contemporaneous population. Agriculture demands land as an input, itself treated as a scarce form of capital. In our model both population and sectoral technological progress are endogenously determined, and key technological parameters of the model are structurally estimated using 1960-2010 data on world GDP, population, cropland and technological progress. Introducing random shocks to the evolution of total factor productivity in agriculture, we show that uncertainty optimally requires more land to be converted into agricultural use as a hedge against production shortages, and that it significantly affects both optimal consumption and population trajectories.
Subjects: 
Agricultural productivity
Economic growth
Endogenous innovations
Environmental constraints
Food security
Global population
Land conversion
Stochastic control
JEL: 
O11
O13
O31
J11
C61
Q16
Q24
Document Type: 
Working Paper

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