Assessing the influence of direct payments on the rental value of agricultural land
Seamus McErlean () and
Food Policy, 2008, vol. 33, issue 5, 397-405
Economic theory suggests that coupled and decoupled direct payments have different impacts on agricultural rental values because of the different production responses associated with these payments. This study investigates the impact of both coupled and decoupled EU CAP direct payments on rental values in Northern Ireland, using panel data taken from the farm business survey for the period from 1994 to 2002. Theoretically, agricultural land rents are a function of expected market returns and expected associated direct payments. The unobservable nature of expected returns means that actual market returns must be used as a proxy for the former in the empirical specification. As a consequence, the problem of bias due to expectation error arises. Using a GMM technique to take account of this problem, the results of this study show that the impact of CAP direct payments on rental values depends on the type of payment and on the nature of the production characteristics of the associated agricultural commodity.
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (71) Track citations by RSS feed
Downloads: (external link)
Full text for ScienceDirect subscribers only
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:eee:jfpoli:v:33:y:2008:i:5:p:397-405
Access Statistics for this article
Food Policy is currently edited by J. Kydd
More articles in Food Policy from Elsevier
Bibliographic data for series maintained by Haili He ().