Linkages of the Agricultural Sector: Models and Precautions

Because of the agricultural sector's economic linkages, the proper use and application of economic models to estimate economic, employment, and household income impacts from changes in agricultural sector's activity due to droughts, disasters, expansion of export sales, or changes in public policies is of interest. This article provides an overview of economic impact model metrics, the importance of study area designation, and the different types of economic models used to derive these impacts. Advantages and disadvantages of these economic models are discussed and how these models could be properly used to derive agricultural sector's linkages and impacts. Although the examples used in this discussion are drawn from the US experience, the underlying theory, methods, and modeling issues apply in any market-based agricultural economy.