Dynamic effect of agricultural product price on farmers’income: based on the state space model

The dynamic effect of agricultural product price on farmer’ income was studied from the perspective of structural breaks. State space model was applied to establish a time-varying parameter model of agricultural product price and farmer’ income growth under the multivariable framework of Cobb-Douglas production function， including price of agricultural product，human capital of peasants，financial expenditure in agriculture，rural fixed asset investment and farmers' income. Kalman filter method was used to estimate the parameter of time-varying parameter model. The results showed that the influences of price fluctuation of agricultural product on farmer’ income were time-varying. Price elasticity of income for farmers between 1985 and 2013 has experienced four stages of volatility in general，changing between -0.069 and 0.265，with a mean of 0.121. Price's influence on income had close relationship with national agricultural policies.