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Abstract

The effects of a world oil price shock on U.S. agriculture are analyzed in an economywide environment. We use an input-output model to analyze the direct and indirect cost linkages between energy and other sectors of the economy. Then, to allow sectoral output adjustment and the effects on the U.S. current account, we use the U.S. Department of Agricultural/Economic Research Service Computable General Equilibrium (CGE) model to analyze the sectoral effects under three different macro adjustment scenarios. The effects on agriculture are not limited to the direct and indirect energy costs and government support programs for agricultural also matter.

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