A Survey of Agricultural Household Models: Recent Findings and Policy Implications

Semicommercial farms that produce multiple crops make up a large part of the agricultural sector in developing economies. These farms or agricultural households combine two fundamental units of microeconomic analysis : the household and the firm. Traditional economic theory has dealt with these units seperately. But in developing economies in which peasant farms dominate, their interdependence is of crucial importance. Researchers have developed models of agricultural households that combine producer and consumer behavior in a theoretically consistent fashion. Recent empirical applications of these models have extended them and expanded the range of policy issues which can be investigated using this general framework. This article reports the results of empirical applications of this model in India, Indonesia, Japan, the Republic of Korea, Malaysia, Nigeria, Senegal, Sierra Leone, Taiwan, and Thailand. It provides a comparative analysis of the policy implications of the approach for such matters as the welfare of farm households, the size of marketed surplus, the demand for nonagricultural goods and services, and for hired labor, and the availability of budget revenues and foreign exchange.