Using a General Dynamic Econometric Framework to Specify the Appropriate Model in Studying Agricultural Production Structure: A Case Study of Crop Production in Iran

Abstract

This paper shows the role of the general dynamic model in empirical research of production technology in agriculture. The model is a first order autoregressive multivariate specification, first developed by Anderson and Blundell. This model is general enough to nest several simpler dynamic as well as static models within it. Therefore, it provides a framework for applying classical testing procedures and identifying the appropriate specification in the empirical econometric model of production. The usefulness of the general dynamic model is shown by estimating the production structure in the Iranian crop sector. The results indicate that the Iranian crop production is best characterized by a long-run static model derived from a non-homothetic translog specification which incorporates non-neutral technological change and allows for structural change after the Islamic Revolution of 1979.