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Assessing The Market Impacts Of The Common Agricultural Policy: Does Farmers' Risk Attitude Matter?

Yu Zheng and Alexandre Gohin

No 260903, 2017 International Congress, August 28-September 1, 2017, Parma, Italy from European Association of Agricultural Economists

Abstract: Recent models assessing the market impacts of Common Agricultural Policy (CAP) reforms are mostly static, non-stochastic and do not account for risks. This paper is a first attempt to fill this gap. We develop a stochastic version of GTAP-AGR model in which we introduce productivity risk and farmers' attitude towards risks. In addition to the price expectation, the expectation on price volatility becomes a key factor for the farmers' decisions. We show that under the endogenous modeling of the CAP instruments, risk aversion leads to larger production and price effects. The impacts are even larger if wealth effect is considered.

Keywords: Production; Economics (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-agr
Date: 2017-08-29
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Persistent link: https://EconPapers.repec.org/RePEc:ags:eaae17:260903

DOI: 10.22004/ag.econ.260903

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