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Do direct payments have intertemporal effects on U.S. agriculture?

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Author Info
Roe, Terry
Somwaru, Agapi
Diao, Xinshen

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Abstract

The question whether production flexibility payments to farmers are likely to be minimally trade distorting is considered in an inter-temporal and economy wide context. Our contribution lies in showing the circumstances, over time, under which a minimally trade distorting result is likely to obtain. If agricultural capital markets are complete, we find that payments have long run effects on land values and land rental rates, but they have no effect on production. If capital markets are not complete, we find production effects, but they are small (0.2 percent) in the short run and disappear in the long-run. The only permanent effects are on land rental rates and land values that increase by about 10 percent in the short run tapering off to slightly above 8 percent in the long run.

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Paper provided by International Food Policy Research Institute (IFPRI) in its series TMD discussion papers with number 104.

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Date of creation: 2002
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Handle: RePEc:fpr:tmddps:104

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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.:

  1. Stiglitz, Joseph E, 1985. "Information and Economic Analysis: A Perspective," Economic Journal, Royal Economic Society, vol. 95(380a), pages 21-41, Supplemen. [Downloadable!] (restricted)
  2. Antonovitz, Frances & Roe, Terry, 1986. "A Theoretical and Empirical Approach to the Value of Information in Risky Markets," The Review of Economics and Statistics, MIT Press, vol. 68(1), pages 105-14, February. [Downloadable!] (restricted)
  3. Hirshleifer, David, 1988. "Risk, Futures Pricing, and the Organization of Production in Commodity Markets," Journal of Political Economy, University of Chicago Press, vol. 96(6), pages 1206-20, December. [Downloadable!] (restricted)
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  1. Bhaskar, Arathi & Beghin, John C., 2008. "Decoupled farm payments and the Role of Base Updating under uncertainty," 2008 Annual Meeting, July 27-29, 2008, Orlando, Florida 6339, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association). [Downloadable!]
  2. Key, Nigel & Roberts, Robert J., 2008. "Do Decoupled Payments Stimulate Production? Estimating the Effect on Program Crop Acreage Using Matching," 2008 Annual Meeting, July 27-29, 2008, Orlando, Florida 6072, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association). [Downloadable!]
  3. Bhaskar, Arathi & Beghin, John C., 2009. "How coupled are decoupled farm payments? A review of the evidence," Staff General Research Papers 13032, Iowa State University, Department of Economics. [Downloadable!]
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  4. Roe, Terry, 2003. "Markets, Trade And The Role Of Institutions In African Development," Conference Papers 28069, University of the Free State, Department of Agricultural Economics. [Downloadable!]
  5. Bhaskar, Arathi & Beghin, John C., 2007. "Decoupled Farm Payments and the Role of Base Acreage and Yield Updating Under Uncertainty," Staff General Research Papers 12851, Iowa State University, Department of Economics. [Downloadable!]
  6. Li, Naichia & Roe, Terry L., 2006. "Validating Dynamic General Equilibrium Model Forecasts," 2006 Annual meeting, July 23-26, Long Beach, CA 21325, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association). [Downloadable!]
  7. Goodwin, Barry K. & Mishra, Ashok K., 2003. "Acreage Effects Of Decoupled Programs At The Extensive Margin," 2003 Annual meeting, July 27-30, Montreal, Canada 22254, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association). [Downloadable!]
  8. O'Donoghue, Erik J. & Whitaker, James, 2006. "How distorting are direct payments?," 2006 Annual meeting, July 23-26, Long Beach, CA 21247, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association). [Downloadable!]
  9. Bakhshi, Samira & Kerr, William A., 2009. "Is There Supply Distortion In The Green Box? An Acreage Response Approach," Working Papers 51093, Canadian Agricultural Trade Policy Research Network. [Downloadable!]
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