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Prepared by Juan F. Yépez.
In Uruguay, pulp has also become an important agricultural staple. Paper production has increased eightfold in the last 8 years, and the sector will expand even further when the Montes del Plata pulp mill becomes operational in 2014.
Partial productivity of main staples (i.e. soybeans, barley, and maze) has not shown the same increasing trend. This is partly reflected by the brisk expansion of land used for crop production to land previously used for livestock production, which is of lower nutrient quality (therefore less productive). This reallocation brings down average productivity for crops, as measured by their yield (kilograms per hectare).
The results are qualitatively robust to different orderings.
The counterfactual scenarios are equivalent to estimate the full SVAR dynamics, but with the coefficient corresponding to land prices in the GDP equation set to zero.