The Efficiency of Direct Payments versus Tax Reductions under Uncertainty
AbstractThis paper analyzes the optimal behavior of farmers in the presence of direct payments and uncertainty. With the help of an empirical analysis for Switzerland, it confirms previously obtained theoretical results and determines the magnitude of the theoretically predicted effects. The results show that direct payments increase agricultural production by between 3.7% to 4.8%. At the same time, the effect of tax reductions on production is evaluated in order to determine its magnitude. The empirical analysis corroborates the theoretical results of the literature and demonstrates that tax reductions are also distorting, but to a substantially lesser degree if losses are not offset. However, tax reductions, independently of whether losses are offset or not, lead to higher government spending than pure direct payments.
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Bibliographic InfoArticle provided by Swiss Society of Economics and Statistics (SSES) in its journal Swiss Journal of Economics and Statistics.
Volume (Year): 141 (2005)
Issue (Month): I (March)
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More information through EDIRC
Uncertainty; Direct Payments; Income Tax Reductions; Agriculture;
Other versions of this item:
- Goetz, Renan U. & Keusch, Alois & Ribas-Tur, Joan, 2003. "The Efficiency of Direct Payments versus Tax Reductions under Uncertainty," Working Papers of the Department of Economics, University of Girona 8, Department of Economics, University of Girona.
- H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
- H42 - Public Economics - - Publicly Provided Goods - - - Publicly Provided Private Goods
- Q18 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Policy; Food Policy
- Q20 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - General
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