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The Transfer Efficiency and Trade Effects of Direct Payments
Author(s) -
Dewbre Joe,
Antón Jesús,
Thompton Wyatt
Publication year - 2001
Publication title -
american journal of agricultural economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.949
H-Index - 111
eISSN - 1467-8276
pISSN - 0002-9092
DOI - 10.1111/0002-9092.00268
Subject(s) - principal (computer security) , session (web analytics) , payment , agriculture , library science , political science , direct payments , management , operations research , economics , business , history , engineering , computer science , finance , archaeology , advertising , operating system
All the different ways governments use to provide financialsupport to farmers can potentially distort trade and reduce net economic welfare. However, there are some types of support that are less trade distorting and more efficient than others. This article reports the results of an analysis that examined different policy measures providing support to crop producers to rank them in terms of their effects on a selection of indicators, with a particular focus on trade distortion and income transfer efficiency. 1 We begin with an analysis of the differences in policy impacts among the three main categories of support provided to crop producers in OECD countries: market price support, payments based on land use, and payments based on use of purchased inputs (OECD 2001c). That analysis is based on a two-region model of equilibrium in the world market for a representative crop. Analytical solutions to this modelare devel oped to compare the production, trade, and income effects of the different support measures. Following procedures used in Cahill and in Moro and Sckokai, comparisons are of “impact ratios” using market price support as the reference category. These ratios measure the effect on production, trade or farm income of a given Joe Dewbre, Jesus Anton, and Wyatt Thompson are economists in the Agricultural Directorate of the Organization for Economic Cooperation and Development, where the underlying analysis was undertaken. The views expressed are our own and not necessarily those of the OECD Secretariat or its Member countries. We thank our Secretariat colleagues Ken Ash, Carmel Cahill, Wilfrid Legg, and Michele Patterson for helpful comments on an earlier draft and Stephane Guillot for computer programming assistance. This article was presented in a principal paper session at the AAEA annualmeeting (Chicago, IL, August 2001). The articl es in these sessions are not subjected to the Journal’s standard refereeing process. 1