UNITED-STATES AGRICULTURE AND THE GENERAL ECONOMY - MODELING THEIR INTERFACE

Models of the US farm business sector typically assume specific trends in the macroeconomy when projecting economic impacts. Implicit in the use of exogenized macroeconomic variables is the assumption that events taking place in agriculture do not affect the macroeconomy. This assumption may not be valid for major shocks to the farm business sector or to the general economy. This article presents an overview of the linkages between the US farm sector and the general economy that underlie AG + GEM, which is a large-scale econometric-simulation model. Estimates of the aggregate economic impacts of banning most agricultural pesticides are presented to illustrate macroeconomic linkages.