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The Economics Of Generic Income Stabilization Schemes

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  • Chen, Kevin
  • Meilke, Karl
  • Turvey, Calum

Abstract

Generic income stabilization schemes, which resemble an actual NISA policy adopted recently in Canada, encourage farmers to set aside funds in high income year for use in low income years through a formal procedure. Their economic effects are investigated using the prudent farm household model. The effects of generic income stabilization schemes are hinged on the interaction between generic stabilization schemes and precautionary saving. It is also found that the designs of generic income stabilization schemes are fundamentally important for their potential supply effects. Conditions for characterizing various generic income stabilization schemes as either production neutral or decoupled are derived. Generic income stabilization scheme operated as a pure stabilization program has little stabilizing value for the optimal prudent farm household.
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Suggested Citation

  • Chen, Kevin & Meilke, Karl & Turvey, Calum, 1996. "The Economics Of Generic Income Stabilization Schemes," Working Papers 244797, University of Guelph, Department of Food, Agricultural and Resource Economics.
    • Handle: RePEc:ags:uguewp:244797
    DOI: 10.22004/ag.econ.244797
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    References listed on IDEAS

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    1. Marcel Fafchamps, 1992. "Cash Crop Production, Food Price Volatility, and Rural Market Integration in the Third World," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 74(1), pages 90-99.
    2. Hayne E. Leland, 1968. "Saving and Uncertainty: The Precautionary Demand for Saving," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 82(3), pages 465-473.
    3. Kimball, Miles S, 1990. "Precautionary Saving in the Small and in the Large," Econometrica, Econometric Society, vol. 58(1), pages 53-73, January.
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    Cited by:

    1. Coble, Keith H. & Barnett, Barry J., 1999. "The Role Of Research In Producer Risk Management," Professional Papers 15803, Mississippi State University, Department of Agricultural Economics.

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