The Acreage and Borrowing Effects ok Direct Payments Under Uncertainty: A Simulation

Maria Joana Girante () and Barry Goodwin ()
Additional contact information
Maria Joana Girante: Universidade do Minho - NIPE, http://joana.girante.googlepages.com/home

No 14/2009, NIPE Working Papers from NIPE - Universidade do Minho

Abstract: We use simulation methods in an expected utility maximization framework to analyze a farmer`s optimal resource allocation in the presence of government payments, decoupled and not. This framework is extended to incorporate the optimal choice of investment levels in the presence of credit constraints. Further extensions include a wealth-dependent interest rate and decreasing marginal yields. We find decoupled payments affect the optimal choices of the credit - constrained farmer though a collateral - enhancement effect, so they do distort production. The 2005 proposal by Senators Grasseley, Dorgan, Hagel, and Johnson to tighten limits on commodity payments is not found to affect payments of the typical Kansas farmer.

Keywords: decoupled payments; credit constraints. (search for similar items in EconPapers)
JEL-codes: Q17 Q18 (search for similar items in EconPapers)
Date: 2009
New Economics Papers: this item is included in nep-upt
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://www3.eeg.uminho.pt/economia/nipe/docs/2009/NIPE_WP_14_2009.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:nip:nipewp:14/2009

Ordering information: This working paper can be ordered from

Access Statistics for this paper

More papers in NIPE Working Papers from NIPE - Universidade do Minho Núcleo de Investigação em Políticas Económicas e Empresariais, Escola de Economia e Gestão, Universidade do Minho, P-4710-057 Braga, Portugal. Contact information at EDIRC.
Bibliographic data for series maintained by NIPE ().