On The Optimal Implementation Of Agricultural Policy Reforms
Economic analyses of farm policies generally focus on the long run, steady state impacts while the transition dynamics are often overlooked. In this paper we develop a determinist dynamic computable general equilibrium analysis allowing agents to form imperfect versus pefect expectations. Using an illustrative CAP reform scenario, we simulate an abrupt versus a gradual implementation of this reform. Our results show that if economic agents are able to perfectly anticipate the impacts of the reform, then delaying its implementation is never optimal. On the other hand, if agents gradually learn from market developments, then we find some cases where a gradual implementation of this reform is welfare improving. Such gradual implementation allows minimizing adjustment costs.
|Date of creation:||2010|
|Contact details of provider:|| Web page: http://iatrcweb.org/|
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.:
- Devarajan, Shantayanan & Go, Delfin S., 1998. "The Simplest Dynamic General-Equilibrium Model of an Open Economy," Journal of Policy Modeling, Elsevier, vol. 20(6), pages 677-714, December.
- Hommes, Cars H., 1994. "Dynamics of the cobweb model with adaptive expectations and nonlinear supply and demand," Journal of Economic Behavior & Organization, Elsevier, vol. 24(3), pages 315-335, August.
- Psaltopoulos, Demetris & Balamou, Eudokia & Skuras, Dimitris & Ratinger, Tomas & Sieber, Stefan, 2011. "Modelling the impacts of CAP Pillar 1 and 2 measures on local economies in Europe: Testing a case study-based CGE-model approach," Journal of Policy Modeling, Elsevier, vol. 33(1), pages 53-69, January.
- Ballard, Charles L, 1987. "Tax Policy and Consumer Foresight: A General Equilibrium Simulation Study," Economic Inquiry, Western Economic Association International, vol. 25(2), pages 267-84, April.
- Hector Calvo Pardo, 2005.
"Are the antiglobalists right? Gains-from-trade without a walrasian auctioneer,"
PSE Working Papers
- Hector Calvo-Pardo, 2009. "Are the antiglobalists right? Gains-from-trade without a Walrasian auctioneer," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 38(3), pages 561-592, March.
- Nerlove, Marc & Bessler, David A., 2001. "Expectations, information and dynamics," Handbook of Agricultural Economics, in: B. L. Gardner & G. C. Rausser (ed.), Handbook of Agricultural Economics, edition 1, volume 1, chapter 3, pages 155-206 Elsevier.
- Levy, Santiago & van Wijnbergen, Sweder, 1995. "Transition Problems in Economic Reform: Agriculture in the North American Free Trade Agreement," American Economic Review, American Economic Association, vol. 85(4), pages 738-754, September.
- Diao, Xinshen & Somwaru, Agapi, 2000. "An Inquiry on General Equilibrium Effects of MERCOSUR--An Intertemporal World Model," Journal of Policy Modeling, Elsevier, vol. 22(5), pages 557-588, September.
- Keen, Michael, 1990. "Welfare analysis and intertemporal substitution," Journal of Public Economics, Elsevier, vol. 42(1), pages 47-66, June.
- Haggard, Stephan & Webb, Steven B, 1993. "What Do We Know about the Political Economy of Economic Policy Reform?," World Bank Research Observer, World Bank Group, vol. 8(2), pages 143-168, July.
- Perali, Federico & Pieroni, Luca & Standardi, Gabriele, 2012. "World tariff liberalization in agriculture: An assessment using a global CGE trade model for EU15 regions," Journal of Policy Modeling, Elsevier, vol. 34(2), pages 155-180.
- Pereira, Alfredo M. & Shoven, John B., 1988. "Survey of dynamic computational general equilibrium models for tax policy evaluation," Journal of Policy Modeling, Elsevier, vol. 10(3), pages 401-436.
- Yanagida, John F. & Azzam, Azzeddine & Linsenmeyer, Dean, 1987. "Two alternative methods of removing price supports: Implications to the U.S. corn and livestock industries," Journal of Policy Modeling, Elsevier, vol. 9(2), pages 311-320.
- Grandmont, Jean-Michel, 1993.
"Temporary general equilibrium theory,"
Handbook of Mathematical Economics,
in: K. J. Arrow & M.D. Intriligator (ed.), Handbook of Mathematical Economics, edition 4, volume 2, chapter 19, pages 879-922
- Keeney, Roman & Thomas Hertel, 2005. "GTAP-AGR : A Framework for Assessing the Implications of Multilateral Changes in Agricultural Policies," GTAP Technical Papers 1869, Center for Global Trade Analysis, Department of Agricultural Economics, Purdue University.
When requesting a correction, please mention this item's handle: RePEc:ags:iatr10:91285. 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: (AgEcon Search)
If references are entirely missing, you can add them using this form.