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Abstract
Limiting fertilizer use is becoming an important policy objective world-wide. However, the debate on appropriate policy measures is far
from settled and evidence on fertilizer demand elasticities is still insufficient. Past studies on fertilizer demand leave several methodological
and empirical issues open. This paper aims to contribute to the debate on the methodology of estimating fertilizer demand using
single-equation methods. Dynamic aspects are also considered using error-correction modelling methodology and cointegration techniques.
The model is applied using data from Greece. Short-run and long-run price elasticities of fertilizer demand with respect to own price and to
output prices show significant response to price changes and the adjustment coefficient of fertilizer use to the error-correction term was
found to be fairly rapid. The main policy conclusion of the paper is that reducing agricultural support may be an alternative and, perhaps,
more effective way of reducing fertilizer demand than increasing fertilizer prices. © 1997 Elsevier Science B. V.