Inflation and agriculture in the EEC

S. Tangermann and T. Heidhues

European Review of Agricultural Economics, 1973, vol. 1, issue 2, 127-149

Abstract: The effects of inflation on the position of agriculture are investigated from two points of view: The relationship between overall price level increase and adjustment needs for the agricultural sector and the importance of different inflation rates in member countries of the EEC for the operation of the common agricultural price policy. A simple model for the quantitative investigation of the relative influence of inflation and economic growth on the adjustment requirements of German agriculture indicates comparatively stronger effects for increasing rates of inflation as compared to changes in rates of growth. The agricultural price adjustment mechanism in cases of parity changes between EEC member countries leads to an exact compensation of preceding inflationary gains and losses only for a specific set of conditions. According to an empirical test for France and Germany it is doubtful whether these conditions are met in reality. This leads to a discussion of alternative political measures.

Date: 1973
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