A Cointegration Analysis of the Long-Run Supply Response of Spanish Agriculture to the Common Agricultural Policy
Jose Mendez (),
Ricardo Mora Villarrubia () and
Carlos San Juan Mesonada ()
International Trade from EconWPA
Using cointegration techniques, we estimate two models that capture the long-term relationship between Spanish prices and agricultural production. The models were estimated over Spanish agricultural data from 1970 to 2000, a period spanning Spain’s implementation of the Common Agricultural Policy in 1986 and the application of the MacSharry Reforms in 1992. The models, as well as plausible counterfactual scenarios constructed to assess the production changes induced by the CAP, lead to three principal results. First, we find that Spanish agricultural output is responsive to agricultural prices. Second, we find that the MacSharry reforms have been instrumental in restraining agricultural production. Third, we find that Spanish agricultural output would have been higher if Spain had not applied the CAP. These results are important and have broad implications. First, they strengthen the position of those reformers both within and outside of Europe that argue for lower price supports as an appropriate policy for stemming European agricultural surpluses. Second, they indicate that recent EU reforms, which have in effect extended the MacSharry reforms, are appropriate measures for curbing European agricultural surpluses.
Keywords: Keywords: Price Support Policy; MacSharry Reforms; Cointegration Techniques; European Economic Integration. (search for similar items in EconPapers)
JEL-codes: Q11 Q18 C32 F02 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-agr and nep-eec
Note: Type of Document - pdf; pages:
References: View references in EconPapers View complete reference list from CitEc
Citations Track citations by RSS feed
Downloads: (external link)
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:wpa:wuwpit:0512014
Access Statistics for this paper
More papers in International Trade from EconWPA
Bibliographic data for series maintained by EconWPA ().