GTAP Resources: Resource Display
| GTAP Resource #1061 |
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"Analyzing Direct Payments to U.S. Farm Households: Addressing the 'Distribution Gap'" by Hopkins, Jeffrey, Mitchell Morehart and Mary Bohman Abstract Agricultural policies are often targeted towards improving a facet of sectoral performance associated with the well-being of agriculture within the general economy. In the U.S., from the 1996 farm bill onwards, direct subsidy payments were put in place to reform the previous target price and defficiency payment support provided to farmers. The Production Flexibility Contracts (PFC) payments of the new farm policy, received by producers as a lump sum, are determined by historical production and yields rather than current production and commodity prices. The new policy reform and the `decoupled' approach are considered by the World Trade Organization to have minimal effects on commodity prices and therefore trade. Although decoupled programs don't intervene in the commodity price received by producers directly as previous programs did, they have been criticized for having non-price effects that can indirectly influence production and trade. Taking this claim seriously requires issues of distribution that have traditionally been ignored by representative agent and other macro-based models of aggregate effects to be addressed. Using data on U.S. farm households, we develop a distributionally-based analysis of the impacts of decoupled payments on farm household well-being, considering both the unequal distribution of direct payments across the recipient population as well as the unequal pass-through from producer recipients to landowners. Because these results only attain through explicit recognition of heterogeneity, we argue that the `representative agent' framework adopted by the macroeconomic and general equilibrium literature for policy evaluation becomes increasingly misleading when considering the non-price effects of policies. |
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- Agricultural policies - North America |
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Public Access  Final version (267.4 KB) Replicated: 0 time(s) Presentation (209.3 KB) Replicated: 0 time(s)Restricted Access No documents have been attached. Special Instructions Acrobat Reader version 5.0 |
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Last Modified: 9/15/2023 2:05:45 PM
