ABSTRACT
The relationships among the agricultural terms of trade, income distribution and growth have always been central to the economic-development literature, with the contributions of Arthur Lewis standing out. And in the more specifically Latin American tradition of the structuralist school, food supply rigidities are paramount among the root causes of inflation in the long run. This chapter attempts to integrate and clarify these two strands of analysis, by extending a recently proposed short-run model for the terms of trade to deal with questions of accumulation and growth.' The model treats agricultural output as being strictly limited by resources (capital and land) in the short run, while there is excess capacity and mark-up pricing in the nonagricultural sector. The conjunctural story revolves around responses of the agricultural price and nonagricultural output to shocks to the system. Since both sectors are treated on the same footing (though with different behavioral rules), the model best refers to a semi-industrialized country where a mixture of overall labor surplus and Keynesian behavior in the nonagricultural economy may reasonably be expected to obtain.
