parAntonia López Villavicenciodu même auteur  . Second, we test for cointegration between the real effective exchange rate One approach that allows us to do that is the error correction pooled mean-group (PMG) estimators by Pesaran et al. Hence, if? i is significantly negative, there exists a long-run relationship. En utilisant le modèle ARDL proposé en particulier par Pesaran et al. (), cointegration. In order to test such an hypothesis, the paper implements two different types of tests . De même le modèle apparaît stable dans le For a long run relationship to exist we require two properties: first, its error'correction coeffi cient. Testing for the existence of a long-run relationship. M. H. Pesaran ; Y. Shin ; R. J. Smith Bounds testing approaches to the analysis of level relationships.
This estimator, however, does not consider that certain parameters may be the same across groups. To that purpose, Pesaran et al. The authors underline the fact that there are good reasons to believe that long-run relationships between variables are similar the presence of common technologies affecting all groups in a similar way ; on the contrary, it can be reasonably expected that regions react differently to domestic and external shocks, fiscal adjustment mechanisms, local market imperfections, thereby making short-run adjustment group specific and hence function of group characteristics.
By comparing the difference between the two estimation methods through a standard Hausman test, one can test the validity of the long-run parameter homogeneity restriction and therefore choose the estimator most conformable to its own data. The advantages of implementing the above estimation methodologies rely on few considerations; first, as already mentioned, they allow for a better representation of reality relaxing the assumption of parameter homogeneity; second, since both methods are based on a general ARDL model, they exploit the advantages of this specification, namely the mitigation of contemporaneous causation from the dependent to independent variables which might bias the estimates Banerjee et al.
Third, provided that there exists a stable long-run relationship between the variables involved, both MG and PMG estimators yield consistent estimates of that relationship independently from the stationarity properties of the series under investigation, since they are valid whether the variables are I 1 or I 0. Additionally, the ARDL approach allows to obtain both the short-run and the long-run parameters.
As far as our analysis is concerned, we proceed with the empirical investigation adapting to our original production function the ARDL approach; in choosing the lag structure of our model we rely on the Bayesian Information Criterion BIC obtained by comparing models with different lag structures on a country-by-country basis; we find that, for most of the cross- sections, the ARDL 1,1,…,1 is the preferred model.
The result of the Hausman test provides evidence in favor of the homogeneity assumption of long-run coefficients, thus making the PMG estimator more suitable to our purpose.
The model excluded the labor force variable which was suspected to be endogenous. Concentrating on the variables of interest, the existence of a meaningful long-run relationship between biodiversity and cereal production is confirmed by a significantly negative error correction term, leading to the conclusion that the result is robust even in the presence of potential non stationary series.
The long-run coefficient of biodiversity is significant and negative, thereby providing sufficient evidence of a positive elasticity between crop biodiversity and production as already mentioned, the negative sign reflects the fact that the index is inversely proportional to species diversity.
Compared to previous estimation models, the magnitude of biodiversity coefficient has substantially increased from Albeit small in magnitude, the coefficient capturing the effect of the policy variable is now significant, with a negative sign. As already mentioned, the existence of a negative elasticity between an increase in subsidization and the change in cereal production can originate from the structural shift occurred in CAP income support measures after ; as the variable 11 As outlined in Loayza and Ranciereit is recommended to impose a common lag structure for the whole panel whenever the interest is also in analyzing the short-run parameters; moreover, given our panel reduced temporal dimension, limiting the lag structure to the first lag seems plausible.
Discussion and Conclusion Following a recent line of research, this paper analyses the role played by crop intra-species diversity in sustaining physical production within the cereal sector; compared to previous studies in the literature, we allow for a different time span of the variables under analysis, in order to try to control for the important policy shift which started in with the McSharry PAC reform.
The empirical investigation has been carried out on the whole set of Italian regions; as far as the geographical extension is concerned, cereal production is not uniformly distributed among regions reflecting different weather conditions, in fact middle and southern regions are specialized in wheat production while rise production is more concentrated in northern regions; as a consequence, cereal supply is composed differently across regions.
We explicitly take into account the dynamic structural properties of cereal production function and, relying on the ARDL approach based on Mean Group and Pooled Mean Group estimation methods Pesaran and Smith, ; Pesaran et al.
As expected, in line with other contributions, we find that biodiversity has a positive impact on production levels. However, unlike previous studies, the policy variable capturing the effect of crop subsidization turns out to be negative, witnessing potential effect of a shift in crop composition by farmers after the occurred policy changes.
Testing for the 'Existence of a Long-run Relationship'
Additionally, the existence of a long-run equilibrium relationship between biodiversity and production, reinforces the diversity-stability hypothesis suggested by the literature, whereby, a part from external short- term shocks, production returns to its long-run equilibrium fostered by species diversity.
Future extension of the present study will be directed to cover the above mentioned aspects.
The ecological role of biodiversity in agroecosystems. Agriculture, Ecosystems and Environment 74, Oxford University Press, New York. Some tests of specification for panel data: Monte Carlo evidence and an application to employment equations.
Review of Economic Studies 58, Econometric Analysis of Panel Data. Co-integration, error correction and the econometric analysis of non-stationary data. Oxford University Press, Oxford.
Testing for the 'Existence of a Long-run Relationship'
Managing increasing environmental risks through agrobiodiversity and agrienvironmental policies. Agricultural Economics 41 5 Political Analysis 6, Questioning crop diversification as a response to agricultural deregulation in Saskatchewan, Canada.
Journal of Rural Studies 20, Valuing biodiversity from an economic perspective: American Economic Review 93 5 Estimation and inference in dynamic unbalanced panel-data models with a small number of individuals. The Stata Journal 5 4 On the diminishing returns of higher order terms in asymptotic expansions of bias.
Economics Letters 79, Modeling dynamic agricultural production response: American Journal of Agricultural Economics 67 3 Entry on Ecosystem Services.
Farmer management of production risk on degraded lands: Agricultural Economics 36 2 Rainfall shocks, crop biodiversity, and agroecosystem productivity. Land Economics 84 1 On crop biodiversity, risk exposure, and food security in the highlands of Ethiopia.
American Journal of Agricultural Economics 91 3 Crop genetic diversity, productivity and stability of agroecosystems.
Testing for the existence of a long-run relationship - EconBiz
A theoretical and empirical investigation. Scottish Journal of Political Economy 50 2 Crop biodiversity, risk management and the implications of agricultural assistance. Ecological Economics 55, Diversity effects on production in different light and fertility environments: Journal of Ecology 91, On the Power of Panel Cointegration Tests: A Monte Carlo Comparison.
Economics Letters 80, The effects of plants composition and diversity on ecosystem processes. Indicatori del sistema agro- alimentare italiano. Estimating dynamic panel data models: Economics Letters 65, Economics Letters 66, Journal of Agricultural and applied economics 30 1 Financial Development, Financial Fragility and Growth.
Journal of Money, Credit and Banking 38, Ecosystems and human well-being: Agriculture, Ecosystems and Environment Income smoothing and consumption smoothing. The Journal of Economic Perspectives 9 3 Modelling the CAP arable crop regime in Italy: Biases in dynamic models with fixed effects, Econometrica 49, The asymptotic distributions of these statistics are non-standard under the null hypothesis that there exists no long-run relationship between the levels of the included variables.
Two sets of asymptotic critical values are provided: These provide a band covering all possible classifications of the regressors into I 0I 1 or mutually cointegrated. Suggested Citation Pesaran, M. To find whether it is available, there are three options: Check below whether another version of this item is available online.
Check on the provider's web page whether it is in fact available. Perform a search for a similarly titled item that would be available. More about this item Access and download statistics Corrections All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions.
When requesting a correction, please mention this item's handle: See general information about how to correct material in RePEc.