Agriculture’s inter-industry linkages, aggregation bias and rural policy reforms
AbstractAs agricultural policy reform and its effects have become increasingly territorialised, analyses which attempt to explain or predict impacts need to be more localised but also identify spillover effects. In addition to the predictions of policy shocks predicted by sectoral partial equilibrium models, local and regional general equilibrium approaches which establish the wider effects of such policy shocks have become popular. However, these neglect a major, underexplored difficulty: agriculture is usually described as a single sector in input-output accounts, whereas policy shocks with differential impacts have effects on other industries which are different to those implied by average input-output coefficients. Regionalisation of aggregated input-output tables adds further to these difficulties. The objective of this paper is to develop a relatively simple method for dealing with these problems. It establishes the theoretical basis for aggregation bias and shows how it can be measured, in two contrasting case study regions in the United Kingdom and Sweden. Having established that this is a significant problem, a simple but effective procedure is demonstrated, based on additional information on variable costs, which transforms policy shocks from a direct change in agricultural output to that transmitted to the suppliers of inputs. This method provides an impact close to that which could be calculated if the general equilibrium system had indeed been disaggregated, and supports use of this approach in impact studies where the researcher does not have the time or funding available for completely disaggregating the agricultural sector’s regional accounts.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by European Association of Agricultural Economists in its series 122nd Seminar, February 17-18, 2011, Ancona, Italy with number 99358.
Date of creation: 10 Feb 2011
Date of revision:
agricultural and rural development policy evaluation; CAP; input-output analysis; aggregation bias; Agricultural and Food Policy;
This paper has been announced in the following NEP Reports:
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- L. Harrison-Mayfield & J. Dwyer & G. Brookes, 1998. "The Socio-Economic Effects of the Countryside Stewardship Scheme," Journal of Agricultural Economics, Wiley Blackwell, vol. 49(2), pages 157-170.
- Yves Léony & Ludo Peeters & Maurice Quinqu & Yves Surry, 1999. "The Use of Maximum Entropy to Estimate Input-Output Coefficients From Regional Farm Accounting Data," Journal of Agricultural Economics, Wiley Blackwell, vol. 50(3), pages 425-439.
- Choi, Jun-Ki & Bakshi, Bhavik R. & Haab, Timothy, 2010. "Effects of a carbon price in the U.S. on economic sectors, resource use, and emissions: An input-output approach," Energy Policy, Elsevier, vol. 38(7), pages 3527-3536, July.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (AgEcon Search).
If references are entirely missing, you can add them using this form.