A two‐equation aggregate demand and supply simulation model with Koyck‐type geometrically distributed lags is used to examine the impacts of alternative demand and supply shifts on aggregate farm output, prices, and income. Impacts of inflation on important farm sector indicators are also examined. Projected solutions to 1985 indicate that strong demand shifts are needed to maintain a favorable level of prices and farm incomes. Results further suggest that the U.S. farm sector is particularly sensitive to unexpected changes or shifts in demand, and supply and prolonged inflation in the general economy.
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Chung J. Yeh (1976) studied this question.