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Risk behavior in the presence of government programs

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  • Serra, Teresa
  • Goodwin, Barry K.
  • Featherstone, Allen M.

Abstract

Our paper assesses the impacts of the 1996 US Farm Bill on production decisions. We apply the expected utility model to analyze farmers' behavior under risk and assess how farmers' production decisions change in the presence of government programs. Specifically, we empirically evaluate the relative price and the risk-related effects of farm policy changes at the intensive margin of production, as well as the extra value that these policies add to farmers' certainty equivalent. We use farm-level data collected in Kansas to estimate the model. We find evidence that decoupled government programs have only negligible impacts on production decisions.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Econometrics.

Volume (Year): 162 (2011)
Issue (Month): 1 (May)
Pages: 18-24

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Handle: RePEc:eee:econom:v:162:y:2011:i:1:p:18-24

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Web page: http://www.elsevier.com/locate/jeconom

Related research

Keywords: Policy Risk Risk preferences Intensive margin Extensive margin;

References

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Cited by:
  1. Moro, Daniele & Sckokai, Paolo, 2013. "The impact of decoupled payments on farm choices: Conceptual and methodological challenges," Food Policy, Elsevier, vol. 41(C), pages 28-38.
  2. George Yungchih Wang, 2012. "Evaluating an Investment Project in an Incomplete Market," The Review of Finance and Banking, Academia de Studii Economice din Bucuresti, Romania / Facultatea de Finante, Asigurari, Banci si Burse de Valori / Catedra de Finante, vol. 4(1), pages 055-073, June.

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