The Efficiency of Direct Payments versus Tax Reductions under Uncertainty
This 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.
Volume (Year): 141 (2005)
Issue (Month): I (March)
|Contact details of provider:|| Postal: c/o SNB/BNS, Börsenstrasse 15, PO Box 2800, CH-8022 Zürich|
Phone: +41 (0)44 631 32 34
Fax: +41 (0)44 631 39 01
Web page: http://www.sjes.ch
More information through EDIRC
References listed on IDEAS
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.:
- Jean-Paul Chavas & Matthew T. Holt, 1990. "Acreage Decisions Under Risk: The Case of Corn and Soybeans," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 72(3), pages 529-538.
- Uri Regev & Nikolaus Gotsch & Peter Rieder, 1997. "Are Fungicides, Nitrogen And Plant Growth Regulators Risk-Reducing? Empirical Evidence From Swiss Wheat Production," Journal of Agricultural Economics, Wiley Blackwell, vol. 48(1-3), pages 167-178.
- Goetz, R U, 1993. "Land Allocation under Consideration of Weather-Induced Crop Yield Variations: Decision Support by a Crop Yield Simulation and Risk Analysis Model (ERM)," European Review of Agricultural Economics, Foundation for the European Review of Agricultural Economics, vol. 20(2), pages 199-221.
- Binswanger, Hans P, 1981.
"Attitudes toward Risk: Theoretical Implications of an Experiment in Rural India,"
Royal Economic Society, vol. 91(364), pages 867-90, December.
- Hans Binswanger, 1981. "Attitudes toward risk: Theoretical implications of an experiment in rural india," Artefactual Field Experiments 00010, The Field Experiments Website.
- Hennessy, David A., 1998.
"The Production Effects of Agricultural Income Support Policies Under Uncertainty,"
Staff General Research Papers Archive
1207, Iowa State University, Department of Economics.
- David A. Hennessy, 1998. "The Production Effects of Agricultural Income Support Policies under Uncertainty," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 80(1), pages 46-57.
- Rulon D. Pope & Richard E. Just, 1991. "On Testing the Structure of Risk Preferences in Agricultural Supply Analysis," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 73(3), pages 743-748.
- Sandmo, Agnar, 1971. "On the Theory of the Competitive Firm under Price Uncertainty," American Economic Review, American Economic Association, vol. 61(1), pages 65-73, March.
When requesting a correction, please mention this item's handle: RePEc:ses:arsjes:2005-i-4. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Peter Steiner)
If references are entirely missing, you can add them using this form.