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The capitalization of CAP payments into land rental prices: a grouped fixed-effects estimator

Author

Listed:
  • Daniele Valenti
  • Danilo Bertoni
  • Daniele Cavicchioli
  • Alessandro Olper

Abstract

This article investigates the capitalization of farm subsidies in Italy by relying on a novel approach based on the Grouped Fixed Effect (GFE) estimator. This methodology allows us to account for the regional unobserved time-varying determinants of the Italian land values. Results show that the elasticity of land price with respect to coupled and decoupled subsidies is below one. Particularly, for the latter payments, the degree of capitalization declines with decreasing competition in farmland markets.

Suggested Citation

  • Daniele Valenti & Danilo Bertoni & Daniele Cavicchioli & Alessandro Olper, 2021. "The capitalization of CAP payments into land rental prices: a grouped fixed-effects estimator," Applied Economics Letters, Taylor & Francis Journals, vol. 28(3), pages 231-236, February.
    • Handle: RePEc:taf:apeclt:v:28:y:2021:i:3:p:231-236
    DOI: 10.1080/13504851.2020.1749227
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    Cited by:

    1. Isabel Dinis, 2023. "Exploring the Drivers of Microregional Agricultural Labor Productivity: Empirical Insights from Portugal," Agriculture, MDPI, vol. 13(11), pages 1-19, November.
    2. Cord-Friedrich von Hobe & Marius Michels & Oliver Musshoff, 2021. "German Farmers’ Perspectives on Price Drivers in Agricultural Land Rental Markets—A Combination of a Systematic Literature Review and Survey Results," Land, MDPI, vol. 10(2), pages 1-22, February.
    3. Luigi Biagini & Federico Antonioli & Simone Severini, 2020. "The Role of the Common Agricultural Policy in Enhancing Farm Income: A Dynamic Panel Analysis Accounting for Farm Size in Italy," Journal of Agricultural Economics, Wiley Blackwell, vol. 71(3), pages 652-675, September.
    4. Baldoni, Edoardo & Ciaian, Pavel, 2023. "The capitalization of CAP subsidies into land prices in the EU," Land Use Policy, Elsevier, vol. 134(C).
    5. Aleksander Grzelak, 2022. "The income-assets relationship for farms operating under selected models in Poland," Agricultural Economics, Czech Academy of Agricultural Sciences, vol. 68(2), pages 59-67.

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