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To match, not to match, how to match: Estimating the farm-level impact of the CAP-first pillar reform (or: How to Apply Treatment-Effect Econometrics when the Real World is;a Mess)

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  • Roberto ESPOSTI

    (Universit… Politecnica delle Marche, Dipartimento di Scienze Economiche e Sociali)

Abstract

This paper aims at evaluating the impact of the 2003/2005 CAP reform on farm production choices. The outcome of "market orientation" is measured by considering both the short-term production choices and the long-term investment decisions. The Treatment Effect (TE) is estimated through alternative approaches due to the difficulties encountered in finding appropriate counterfactuals. Different versions of the Propensity Score Matching (PSM) estimators, the Difference-In-Difference (DID) estimate, and alternative multiple/continuous TEs estimates, based on the Generalized Propensity Score (GPS), are performed, their statistical robustness assessed and results compared. Results show that the 2003/2005 reform of the first pillar of the CAP actually had an impact more in (re)orienting short-term farm production choices then investment decisions and this effect is significantly more evident for farms with a limited contribution of the CAP on their own Gross Production Value.

Suggested Citation

  • Roberto ESPOSTI, 2014. "To match, not to match, how to match: Estimating the farm-level impact of the CAP-first pillar reform (or: How to Apply Treatment-Effect Econometrics when the Real World is;a Mess)," Working Papers 403, Universita' Politecnica delle Marche (I), Dipartimento di Scienze Economiche e Sociali.
    • Handle: RePEc:anc:wpaper:403
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    1. Esposti, Roberto, 2014. "The Impact of the 2005 CAP First Pillar Reform as a Multivalued Treatment Effect: Alternative Estimation Approaches," 2014 International Congress, August 26-29, 2014, Ljubljana, Slovenia 183067, European Association of Agricultural Economists.
    2. Emiliano Magrini & Pierluigi Montalbano & Silvia Nenci & Luca Salvatici, 2017. "Agricultural (Dis)Incentives and Food Security: Is There a Link?," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 99(4), pages 847-871.
    3. Magrini, Emiliano & Montalbano, Pierluigi & Nenci, Silvia & Salvatici, Luca, 2014. "Agricultural trade distortions during recent international price spikes: what implications for food security?," 2014 International Congress, August 26-29, 2014, Ljubljana, Slovenia 182726, European Association of Agricultural Economists.

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    Keywords

    common agricultural policy; farm production choices; matching; treatment effects;
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