Agriculture’s inter-industry linkages, aggregation bias and rural policy reforms

Gunnar Lindberg, Peter Midmore and Yves R. Surry

No 99358, 122nd Seminar, February 17-18, 2011, Ancona, Italy from European Association of Agricultural Economists

Abstract: As agricultural policy reform and its effects have become increasingly territorialised, analyses which attempt to explain or predict impacts need to be more localised but also identify spillover effects. In addition to the predictions of policy shocks predicted by sectoral partial equilibrium models, local and regional general equilibrium approaches which establish the wider effects of such policy shocks have become popular. However, these neglect a major, underexplored difficulty: agriculture is usually described as a single sector in input-output accounts, whereas policy shocks with differential impacts have effects on other industries which are different to those implied by average input-output coefficients. Regionalisation of aggregated input-output tables adds further to these difficulties. The objective of this paper is to develop a relatively simple method for dealing with these problems. It establishes the theoretical basis for aggregation bias and shows how it can be measured, in two contrasting case study regions in the United Kingdom and Sweden. Having established that this is a significant problem, a simple but effective procedure is demonstrated, based on additional information on variable costs, which transforms policy shocks from a direct change in agricultural output to that transmitted to the suppliers of inputs. This method provides an impact close to that which could be calculated if the general equilibrium system had indeed been disaggregated, and supports use of this approach in impact studies where the researcher does not have the time or funding available for completely disaggregating the agricultural sector’s regional accounts.

Keywords: Agricultural; and; Food; Policy (search for similar items in EconPapers)
Pages: 21
Date: 2011-02-10
New Economics Papers: this item is included in nep-agr
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://ageconsearch.umn.edu/record/99358/files/lindbergmidmoresurry.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ags:eaa122:99358

DOI: 10.22004/ag.econ.99358

Access Statistics for this paper

More papers in 122nd Seminar, February 17-18, 2011, Ancona, Italy from European Association of Agricultural Economists Contact information at EDIRC.
Bibliographic data for series maintained by AgEcon Search ().