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Impacts of agricultural public spending on Chinese food economy: A general equilibrium approach

  • Shiwei Xu
  • Yumei Zhang
  • Xinshen Diao
  • Kevin Z. Chen

Purpose – The purpose of this paper is to develop a dynamic computable general equilibrium (DCGE) model to analyze economy-wide impacts of different types of public spending in China. A particular focus is placed on their impacts on food economy. Design/methodology/approach – In this paper, DCGE model is developed to analyze economy-wide impacts of different types of public spending in China. The effects of increased agricultural subsidies, agricultural R&D, and irrigation are simulated by using China DCGE model. Findings – The results show that public spending has significant impact on food production, price, and trade. The increased public spending on agricultural R&D, irrigation, and agricultural subsidy also has modest impacts on other sectors such as industry, service, and GDP growth. Originality/value – The paper constructs the China dynamic CGE model and analyzes economy-wide impacts of different types of public spending in China, especially for the food economy.

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Article provided by Emerald Group Publishing in its journal China Agricultural Economic Review.

Volume (Year): 3 (2011)
Issue (Month): 4 (November)
Pages: 518-534

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Handle: RePEc:eme:caerpp:v:3:y:2011:i:4:p:518-534
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  1. Breisinger, Clemens & Diao, Xinshen & Thurlow, James, 2009. "Modeling growth options and structural change to reach middle income country status: The case of Ghana," Economic Modelling, Elsevier, vol. 26(2), pages 514-525, March.
  2. Mark Horridge & Glyn Wittwer, 2007. "The economic impacts of a construction project, using SinoTERM, a multi-regional CGE model of China," Centre of Policy Studies/IMPACT Centre Working Papers g-164, Victoria University, Centre of Policy Studies/IMPACT Centre.
  3. Diao, Xinshen & Hazell, P.B.R. & Resnick, Danielle & Thurlow, James, 2007. "The role of agriculture in development: Implications for Sub-Saharan Africa," Research reports 153, International Food Policy Research Institute (IFPRI).
  4. Klaus Conrad & Stefan Heng, 2002. "Financing road infrastructure by savings in congestion costs: A CGE analysis," The Annals of Regional Science, Springer, vol. 36(1), pages 107-122.
  5. Horridge, Mark & Wittwer, Glyn, 2008. "SinoTERM, a multi-regional CGE model of China," China Economic Review, Elsevier, vol. 19(4), pages 628-634, December.
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