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Are “Decoupled” Farm Program Payments Really Decoupled? An Empirical Evaluation
Author(s) -
Goodwin Barry K.,
Mishra Ashok K.
Publication year - 2006
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/j.1467-8276.2006.00839.x
Subject(s) - payment , direct payments , economics , negotiation , probit model , econometrics , natural resource economics , finance , political science , law
This analysis utilizes farm‐level data to evaluate the extent to which U.S. farm program benefits, particularly direct payments, bring about distortions in production. The issue is important in WTO negotiations and in the debate over the distortionary effects of decoupled (“green‐box”) payments. Our results suggest that the distortions brought about by AMTA payments, though statistically significant in some cases, are very modest. Larger effects are implied for market loss assistance payments. Probit models suggest that AMTA payments do not influence the likelihood that agents will acquire more land. Our results are reinforced using an aggregate county‐level acreage model.