Impacts of Governmental Credits on Total Factor Productivity of Agriculture Sector in Iran

Abstract
Considering the effective role of productivity in production growth, identifying the factors influencing productivity growth can help to accelerate the growth of agricultural sector. This study has investigated the effects of governmental credits on total factor productivity (TFP) of agriculture sector in Iran by using Bounds test and ARDL approach over the period of 1973-2010. The results of Bounds test confirm the existence of long-run relationships between variables at 1% significance level. The results indicate that the government's agricultural credits have a positive and significant effect on the TFP of agriculture sector in the long-run, but, the short run effect of government's agricultural credits on the TFP of agriculture sector isn’t confirmable. The error correction coefficient has been estimated about -0.92 that is totally significant and as expected. Error correction coefficient indicates that, in each year, 92 percent of short-run disequilibrium of productivity of agriculture sector adjusts to reach long-run equilibrium. According to the results, increasing of agricultural credits, planning for using susceptible land, familiarizing farmers with advanced equipment and mechanized agriculture, can improve productivity and increase the value added of the agricultural sector.
JEL Classification: G21, G19, O16
Keywords:
Governmental Credits, Productivity, Agriculture Sector, ARDL