Assessing the impacts of stochastic trend in crop acreage supply response model

Abstract

This paper demonstrates the need to revisit the way a technical change has been incorporated in a crop acreage supply response model. Three different versions of technological change were introduced and compared: no trend, deterministic trend, and stochastic trend. The results confirm the need to treat a technology variable as a stochastic trend for better results in crop acreage supply response model specifications.