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Output and input bias effects of U.S. direct payments

Author

Listed:
  • Samiul Haque
  • Kenneth A. Foster
  • Roman Keeney
  • Kathryn A. Boys
  • Badri G. Narayanan

Abstract

This study examines the national effect of U.S. direct payments on the extent and direction of biased technical change on U.S. agriculture. We also assess the economic significance of the estimated bias effects for economic policy modeling endeavors involving a reduction of domestic support payments. A two outputs (livestock and crops) and four inputs (labor, capital, land, and material) translog cost function was estimated from national time series (1948–2011) data. Results indicate that payments do not induce output‐biased technical change. We do find evidence of Hicksian bias that is land using and material input saving attributable to support payments. Global computable general equilibrium simulations suggest that price and output effects of discontinuing direct payments are 1/4 to 1/3 the size once the bias effects are incorporated.

Suggested Citation

  • Samiul Haque & Kenneth A. Foster & Roman Keeney & Kathryn A. Boys & Badri G. Narayanan, 2019. "Output and input bias effects of U.S. direct payments," Agricultural Economics, International Association of Agricultural Economists, vol. 50(2), pages 229-236, March.
    • Handle: RePEc:bla:agecon:v:50:y:2019:i:2:p:229-236
    DOI: 10.1111/agec.12479
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