Modelling the Impact of the CAP Reform on Farm Investments

In this paper we evaluate empirically the impact of policies on farm investment and output decisions, considering risk-averse farmers making inter-temporal choices on current and future profits. We refer specifically to the recent reform of the CAP, while estimation and simulation results are carried out on a FADN sample of Italian arable crop farms. The main message of the paper is that a policy change that shifts resources from price support to direct payments tend to consistently reduce farm investments, mainly as a result of the increased output price volatility, which increases the level of uncertainty faced by farmers. However, this is not clearly reflected in a negative impact on farm output.


Issue Date:
2005
Publication Type:
Conference Paper/ Presentation
PURL Identifier:
http://purl.umn.edu/24468
Total Pages:
22
JEL Codes:
Q18
Series Statement:
Contributed Paper




 Record created 2017-04-01, last modified 2017-04-26

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