Draft coming soon.


A major assumption in many standard macroeconomic models is that markets clear: that is, that the equilibrium price level reflects the demand and supply for goods, capital, and labor such that there is no slack or surplus in the economy. Anecdotal evidence suggests that a large amount of slack exists in agriculture due to fluctuations in prices. Prices are in turn impacted by supply and demand shocks. I compute estimates of wheat crop slack and using a structural VAR analysis and show a historical decomposition of shocks to identify their relative model-implied importance. I run a robustness check using Jordà local projections to identify shocks to agricultural supply, demand, and prices.