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Abstract

This paper investigates productivity growth as measured by the Malmquist productivity index (MPI) among a sample of 331 Kansas farms between the years 1993 and 2011. The MPI index is decomposed to explore the main sources of productivity growth. Technical change (TC) is found to be the main driver of productivity growth. Previous literature cites relative prices as influential factors affecting technical change and efficiency. Two-way fixed effect regressions of efficiency and productivity measures on relative prices and lagged productivity are conducted. It is shown that past performance is a significant determinant in productivity, while statistical significance of different input and output prices vary. It is suggested that the direction of influence may be the opposite as cited in previous literature, so that past productivity improvements, and associated farm profitability, results in increased input prices.

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