International Journal of Finance & Managerial Accounting

International Journal of Finance & Managerial Accounting

The Production Diversity effect on Real and Nomial Income with VAR Model

Document Type : Original Article

Authors
Sima mohammadi amidabadi 1
Saeed Yazdani 2
Amir Mohammadi-Nejad 3
1 PhD Student of Agricultural Economics, Department of Agricultural Economics, science and Research branch, Islamic Azad University, Tehran, Iran.
2 Professor of Agricultural Economics, Faculty of Agricultural Economics and Development, University of Tehran, Karaj, Iran.
3 Assistant professor, Department of Agricultural Economics, science and Research branch, Islamic Azad University, Tehran, Iran.
10.30495/ijfma.2024.77964.2181
Abstract
Diversifying in agriculture production helps to ensure the intake of essential nutrients needed for good health, and it is particularly important for households in diffrent areas. Diversification of farm production is recommended as a potential strategy to improve the diet diversity and nutrition of households. Risk management in the agricultural sector must therefore be taken into account during policy formulation and planning. The present study spanned the years 1990 to 2022. The assessment of the degree to which crop diversity mitigates risk was conducted utilizing the Herfindahl index. Using the Hodrick–Prescott filter, the income fluctuations were subsequently computed. The income risk associated with five crops was assessed by calculating the discrepancy between the Hodrick-Prescott and the generated income in nominal and foxed modes. Finally, the vector autoregression (VAR) was utilized to estimate the effect of crop diversity on two modes of risk to farmer income. The results indicate that there is a long-term correlation between crop diversity and decreased income risk. Additionally, the results indicated that agricultural income was temporarily impacted by the fluctuation shock. To achieve nominal and real shock equilibrium, 4 and 3 cycles were required, correspondingly.
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