Modeling the welfare impacts of agricultural policies in developing countries |
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Authors: | Erik Jonasson Mateusz Filipski Jonathan Brooks J Edward Taylor |
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Institution: | 1. Lund University and National Institute of Economic Research, Sweden;2. University of California, Davis and IFPRI, United States;3. OECD, Paris, France;4. Johns Hopkins University, SAIS-Bologna, Italy;5. University of California, Davis, United States |
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Abstract: | This paper presents a new model incorporating features of developing country agriculture likely to shape the welfare outcomes of alternative agricultural policies. The model features heterogeneous households linked through markets in a rural economy-wide structure, with endogenous market participation for farmers facing transactions costs. We use it to simulate the impacts on rural welfare of market price supports, production subsidies, input subsidies, and the removal of transaction costs. Applications to six countries demonstrate the diversity of potential impacts, exhibit some systemic differences compared with impacts in developed countries, and identify specific circumstances under which market interventions may be only slightly less efficient than direct payments at transferring incomes to rural households. |
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