Document Type: Original Article

Authors

1 Assistant Professor in Agricultural Economics, Faculty of Agriculture, ShahidBahonar University of Kerman

2 Associate Professor in Agricultural Economics, Faculty of Agriculture, ShahidBahonar University of Kerman

3 Professor in Economics, Faculty of Economics, ShahidBahonar University of Kerman

Abstract

Economic theories show that the direction and magnitude of the fluctuations of economic variables depend on the type and magnitude of the shocks they are faced with. Various reasons are noted for fluctuations in demands for imports, including productivity shocks. Accordingly, this research was aimed at identifying the effects of Total Factor Productivity (TFP) shocks of the agricultural sector on the demand for agricultural imports during the period 1982-2014. These shocks were divided by the Blanchard-Quah technique into two groups: permanent and temporary. Then, the effects of shocks on agricultural imports were studied by the Structural Vector Auto Regression (SVAR) Method. The results showed that, in the short and longrun, temporary and permanent TFP shocks of the agricultural sector have had a significant effect on the demand for agricultural imports, and the effect of temporary shocks was stronger than the effect of permanent ones. Therefore, if the policymakers seek to reduce the demand for agricultural imports, the agricultural TFP must continuously be incremented.

Graphical Abstract

Highlights

  • There is reverse relationship between demand for imports and TFP in the agriculturalsector.
  • The primary downward response of imports to the permanent shock of TFP reached a new level of equilibrium after 19 periods (a little upper than 0).
  • The initial upward response of imports is in relation to the temporary shock of TFP is rapidly reduced to zero after 10 periods and fluctuates around it.
  • Fluctuations in imports are mainly explained by temporary shocks of productivity, and long-run shocks contribution is small.

Keywords

Main Subjects

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