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EU-wide Distributional Effects of EU Direct Payments Harmonization analyzed with CAPRI

Author

Listed:
  • Gocht, Alexander
  • Britz, Wolfgang
  • Ciaian, Pavel
  • Gomez y Paloma, Sergio

Abstract

We argue in this paper that available econometric estimates of farmers’ risk aversion do not measure true farmers’ preferences towards risky outcomes. Available analyses are mostly of static nature and indeed measure the parameters of the synthetic optimal value function rather than the deep parameters of the utility functions. We derive analytical and empirical results in a simple dynamic and stochastic framework showing that that there is not a simple relationship between utility functions and value functions when agents have many decision variables. In particular we find that the value function does not necessarily exhibit DARA when the instantaneous utility function satisfies DARA and conversely. We recommend performing dynamic econometric estimation with at least farm production and consumption data.

Suggested Citation

  • Gocht, Alexander & Britz, Wolfgang & Ciaian, Pavel & Gomez y Paloma, Sergio, 2011. "EU-wide Distributional Effects of EU Direct Payments Harmonization analyzed with CAPRI," 2011 International Congress, August 30-September 2, 2011, Zurich, Switzerland 114624, European Association of Agricultural Economists.
  • Handle: RePEc:ags:eaae11:114624
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    File URL: http://purl.umn.edu/114624
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    References listed on IDEAS

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    1. Pavel Ciaian & d'Artis Kancs & Jo Swinnen, 2008. "Static and Dynamic Distributional Effects of Decoupled Payments," Journal of Economics and Econometrics, Economics and Econometrics Society, vol. 51(2), pages 20-47.
    2. Baranger, Edouard & Clodic, Melissa & Galko, Elodie & Jayet, Pierre-Alain & Zakharov, Paul, 2008. "Improvement of the AROPAj model covering a large range of agricultural activities at wide (UE) and high resolution (mapping of farm types) scales," 107th Seminar, January 30-February 1, 2008, Sevilla, Spain 6664, European Association of Agricultural Economists.
    3. Gocht, Alexander & Britz, Wolfgang, 2010. "Eu-Wide Farm Types Supply In Capri - How To Consistently Disaggregate Sector Models Into Farm Type Model," 50st Annual Conference, Braunschweig, Germany, September 29-October 1, 2010 93960, German Association of Agricultural Economists (GEWISOLA).
    4. Pavel Ciaian & d’Artis Kancs & Johan Swinnen, 2010. "EU Land Markets and the Common Agricultural Policy," Journal of Economics and Econometrics, Economics and Econometrics Society, vol. 53(3), pages 1-31.
    5. Paul S. Armington, 1969. "A Theory of Demand for Products Distinguished by Place of Production (Une théorie de la demande de produits différenciés d'après leur origine) (Una teoría de la demanda de productos distinguiénd," IMF Staff Papers, Palgrave Macmillan, vol. 16(1), pages 159-178, March.
    6. Velazquez, Beatriz E., 2008. "The Single Payment Scheme In The Impact Assessment Of The Cap "Heath Check"," 109th Seminar, November 20-21, 2008, Viterbo, Italy 44784, European Association of Agricultural Economists.
    7. Kilian, Stefan & Salhofer, Klaus, 2008. "Single Payments of the CAP: Where Do the Rents Go?," Agricultural Economics Review, Greek Association of Agricultural Economists, vol. 9(2), June.
    8. Pavel Ciaian & Johan F.M. Swinnen, 2006. "Land Market Imperfections and Agricultural Policy Impacts in the New EU Member States: A Partial Equilibrium Analysis," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 88(4), pages 799-815.
    9. Alison Burrell & Maria Blanco & Stephan Hubertus Gay & Martin Henseler & Aikaterini Kavallari & Robert M'barek & Ignacio Perez & Axel Tonini, 2010. "Impacts of the EU Biofuel Target on Agricultural Markets and Land Use - A Comparative Modelling Assessment," JRC Working Papers JRC58484, Joint Research Centre (Seville site).
    10. Britz, Wolfgang, 2008. "Automated model linkages: the example of CAPRI," German Journal of Agricultural Economics, Humboldt-Universitaet zu Berlin, Department for Agricultural Economics, vol. 57(8).
    11. Frédéric Courleux & Hervé Guyomard & Fabrice Levert & Laurent Piet, 2008. "How the EU Single Farm Payment should be modelled: lump-sum transfers, area payments or… what else?," Working Papers SMART - LERECO 08-01, INRA UMR SMART-LERECO.
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    Cited by:

    1. Blanco, Maria & Garcia-German, Sol & Bardaji, Isabel, 2011. "El modelo de ayudas directas en la PAC post-2013: análisis de impactos de escenarios potenciales," Economia Agraria y Recursos Naturales, Spanish Association of Agricultural Economists, vol. 11(2).

    More about this item

    Keywords

    distributional effects; SPS; flat-rate payment; CAP reform; farm level model; CAPRI farm type layer; International Relations/Trade; Q11; Q12; Q18;

    JEL classification:

    • Q11 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Aggregate Supply and Demand Analysis; Prices
    • Q12 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Micro Analysis of Farm Firms, Farm Households, and Farm Input Markets
    • Q18 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Policy; Food Policy

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