Sectoral Growth in Chile, 1962-82

Intl Food Policy Res Inst, 1993 - Business & Economics - 152 pages
The model. Productivity. Labor. Capital. Product prices. Simulations of changes in relative prices. Simulations of growth.

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Page 103 - The change in the real price of services needed to keep the PC constant is lower than that observed in the previous simulation. The cost structure of each sector and the changes in sectoral product prices determine the changes in the value-added prices. The value-added prices of agriculture and mining increase more than the price of manufacturing, but the relative differences diminish with time. Inputs. The changes in value-added prices have an immediate effect on the rates of return; the rates in...
Page 79 - The log of the domestic prices is then regressed on the log of the price of tradables. The elasticity of the tradable price was not significantly different from zero for the period 1962-74, nor was it significant for the whole study period of 1962-82.
Page 93 - They depend on the implemented technology, the capital-labor ratio, the value-added price, and the price of the capital stock. In this simulation, the agricultural rate of return increases with respect to the historical levels by about 0.2 percentage points.18 This increase is caused by the rise in the value-added price and the decline in the sectoral capital-labor ratio.19 Similar reasons account for the declines in the rates of return in manufacturing and services. The results indicate an expansion...
Page 28 - ... slope and one for the intercept. Also, and more important, the state variables may not be independent. A change in one state variable may affect the values of the others as well as the value of the capital-labor ratio. All this should be taken into account in evaluating the impact of the state variables on output. This is illustrated by evaluating the elasticity of average labor productivity with respect to a given state variable (say sj): d In y/ds, = ^{[dr/dsh + In xdE^/ds^ h (13.20) + [(Bj(-)...
Page 90 - ... the Model The foregoing equations are part of the larger five-sector model. By way of summary, it is useful to review the working of the model in response to a change in relative prices, holding total resources and, to a large extent, technology constant. In the simulation we change product prices. This change immediately affects the price of intermediate inputs, and as a result the price of value added changes in accordance with the inputoutput relationships. This in turn changes the ratios...
Page 94 - When dealing with policy, we should consider only price changes of a permanent nature. Second, the slow response is related to the behavior of labor and capital whose sectoral allocation is based on intertemporal considerations and whose adjustment is subject to costs. In general, policies that tax agriculture are not transitory...
Page 22 - For equation (53) to be a production function in the usual sense, x should be disjoint from s. Such a separation requires a discrepancy between x and x* that will allow the observed output to be written as pv - F(x,s).
Page 105 - ... output and exports for longer periods. We conclude, therefore, that the policy produces a substantial reallocation of employment from nonagriculture to agriculture. As in the previous exercises, the overall labor share increases, indicating that the increase in the real exchange rate is capital saving. Output The strongest output response is observed in agriculture, even though its value-added price increases less than that of mining. The strength of the response can be quantified by computing...
Page 27 - ... measure affecting agriculture is the land reform introduced in 1965 by the incoming Frei administration (1964-1969). Until 1969, the criterion used for expropriation of land was inefficiency in farm operation. As the reform progressed under the Allende administration (1969-1973), the procedures followed had less to do with efficiency considerations and more with the sole objective of land redistribution. The landowners in the commercial farm sector began to lose interest in improving productivity...
Page 26 - The value of /ZT depends on MT, ST, and &T and thus is subject to error that has to be eliminated. The fluctuations in u are by far larger than those in the capital stock and they can be reduced by taking a moving average for y and assuming away the effect of this term. The effect of JtT and ST can be eliminated by introducing these variables explicitly into the analysis.

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