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Abstract
A multioutput model is developed within the adjustment cost framework to analyze the structure
of dynamic adjustments in U.S. agriculture during the post-war period. An important feature
of this model is that the econometric model is consistent with dynamic economic theory. Fluctuations
in capital stocks, variable inputs, and outputs are explained by changing opportunity costs.
Empirical results indicated that durable equipment, farm-produced durables, and family labor
exhibited significant rigidity in adjustment as a response to exogenous shocks. Surprisingly, the
hypothesis that real estate was a variable input could not be rejected. The univariate flexible
accelerator hypothesis, which is widely maintained in most agricultural adjustment studies, is
inconsistent with the data.