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Abstract Previous analyses of trade and development problems of U. S. agriculture have neglected the role of exchange rate policy. An attempt is made to understand the role of the exchange rate on these problems in a non‐parametric fashion by means of a model of induced technical change. It is argued that the overvaluation of the dollar and the policy measures to combat it aggravated the adjustment problems of U. S. agriculture, especially during the 1950's, and resulted in shifting an important share of the benefits of technical change to the consumer. Moreover the recent devaluation of the dollar constitutes an important structural change for U. S. agriculture.
G. Edward Schuh (Fri,) studied this question.