We investigate the effect of crop price and climate variables on rainfed corn and soybean yields and acreage in the United States using a large panel dataset for the 1977-2007 period. Instrumental variables are used to control for endogeneity of prices in yield and acreage regressions, while allowing for spatially auto-correlated errors. We find that an increase in corn price has a statistically significant positive impact on corn yield, but the effect of soybean price on soybean yields is not statistically significant. The estimated price elasticities of corn yield and acreage are 0.23 and 0.45, respectively. Of the increase in corn supply caused by an increase in corn price, we find that 33.8% is due to price-induced yield enhancement and 66.2% is due to price-induced acreage expansion. We also find that the impact of climate change on corn production ranges from $-$7% to $-$41% and on soybean ranges from $-$8% to $-$45%, depending on the climate change scenarios, time horizon, and global climate models used to predict climate change. We show that the aggregate net impact of omitting price variables is an overestimation of the effect of climate change on corn yield by up to 9% and on soybean yield by up to 15%.

Original languageEnglish (US)
Pages (from-to)191-211
Number of pages21
JournalAmerican Journal of Agricultural Economics
Issue number1
StatePublished - Jan 1 2016


  • Climate change
  • crop acreage
  • crop yield
  • prices
  • spatial correlation

ASJC Scopus subject areas

  • Agricultural and Biological Sciences (miscellaneous)
  • Economics and Econometrics


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