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Modelling the Impact of the CAP Reform on Farm Investments

Paolo Sckokai () and Daniele Moro

No 24468, 2005 International Congress, August 23-27, 2005, Copenhagen, Denmark from European Association of Agricultural Economists

Abstract: In this paper we evaluate empirically the impact of policies on farm investment and output decisions, considering risk-averse farmers making inter-temporal choices on current and future profits. We refer specifically to the recent reform of the CAP, while estimation and simulation results are carried out on a FADN sample of Italian arable crop farms. The main message of the paper is that a policy change that shifts resources from price support to direct payments tend to consistently reduce farm investments, mainly as a result of the increased output price volatility, which increases the level of uncertainty faced by farmers. However, this is not clearly reflected in a negative impact on farm output.

Keywords: Agricultural; and; Food; Policy (search for similar items in EconPapers)
Pages: 22
Date: 2005
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Persistent link: https://EconPapers.repec.org/RePEc:ags:eaae05:24468

DOI: 10.22004/ag.econ.24468

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