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EU-wide Distributional Effects of EU Direct Payments Harmonization analyzed with CAPRI

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  • Gocht, Alexander
  • Britz, Wolfgang
  • Ciaian, Pavel
  • Gomez y Paloma, Sergio

Abstract

We argue in this paper that available econometric estimates of farmers’ risk aversion do not measure true farmers’ preferences towards risky outcomes. Available analyses are mostly of static nature and indeed measure the parameters of the synthetic optimal value function rather than the deep parameters of the utility functions. We derive analytical and empirical results in a simple dynamic and stochastic framework showing that that there is not a simple relationship between utility functions and value functions when agents have many decision variables. In particular we find that the value function does not necessarily exhibit DARA when the instantaneous utility function satisfies DARA and conversely. We recommend performing dynamic econometric estimation with at least farm production and consumption data.

Suggested Citation

  • Gocht, Alexander & Britz, Wolfgang & Ciaian, Pavel & Gomez y Paloma, Sergio, 2011. "EU-wide Distributional Effects of EU Direct Payments Harmonization analyzed with CAPRI," 2011 International Congress, August 30-September 2, 2011, Zurich, Switzerland 114624, European Association of Agricultural Economists.
    • Handle: RePEc:ags:eaae11:114624
    DOI: 10.22004/ag.econ.114624
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    6. Alison Burrell & Maria Blanco & Stephan Hubertus Gay & Martin Henseler & Aikaterini Kavallari & Robert M'barek & Ignacio Perez & Axel Tonini, 2010. "Impacts of the EU Biofuel Target on Agricultural Markets and Land Use - A Comparative Modelling Assessment," JRC Research Reports JRC58484, Joint Research Centre.
    7. Pavel Ciaian & d'Artis Kancs & Jo Swinnen, 2008. "Static and Dynamic Distributional Effects of Decoupled Payments," Journal of Economics and Econometrics, Economics and Econometrics Society, vol. 51(2), pages 20-47.
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    9. Gocht, Alexander & Britz, Wolfgang, 2011. "EU-wide farm type supply models in CAPRI--How to consistently disaggregate sector models into farm type models," Journal of Policy Modeling, Elsevier, vol. 33(1), pages 146-167, January.
    10. Gocht, Alexander & Britz, Wolfgang, 2010. "Eu-Wide Farm Types Supply In Capri - How To Consistently Disaggregate Sector Models Into Farm Type Model," 50th Annual Conference, Braunschweig, Germany, September 29-October 1, 2010 93960, German Association of Agricultural Economists (GEWISOLA).
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    13. Pavel Ciaian & Johan F.M. Swinnen, 2006. "Land Market Imperfections and Agricultural Policy Impacts in the New EU Member States: A Partial Equilibrium Analysis," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 88(4), pages 799-815.
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    Cited by:

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