Modelling the effects of agricultural and rural policy
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Modelling the Effects of Agricultural and Rural Policy.


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Psaltopoulos 1 D., Balamou 1 E., Roberts 2 D. and Pouliakas 2 K. 1. Department of Economics, University of Patras, Greece 2. University of Aberdeen Business School, Scotland TERA Final Conference
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Slide 1

Psaltopoulos 1 D., Balamou 1 E., Roberts 2 D. also, Pouliakas 2 K. 1. Division of Economics, University of Patras, Greece 2. College of Aberdeen Business School, Scotland TERA Final Conference As a pre-Congress Symposium of the European Association of Agricultural Economists - XIIth Congress, Gent (B), August 26-29, 2008 Modeling the Effects of Agricultural and Rural Policy

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Introduction CAP has experienced a “fundamental reform” inside of the 2003/04 “Mid-Term Review” CAP and its changes are affecting the improvement of country regions in EU (positive and negative impacts) Concerns are raised on the financial impacts of the new CAP, and all the more particularly on the danger (in particular ranges) of generation disturbance and surrender because of decoupling. A few studies have managed this issue. In any case, studies have not expressly tended to the rustic urban impacts of the late CAP change. So the issue here is “how are these impacts disseminated in the middle of rustic and urban space?”

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Introduction Objective: Assess the nature and size of (both provincial and urban) monetary impacts connected with an adjustment in the levels and nature of agrarian arrangement (likely future approach bearings) in each of the study districts Four Policy Scenarios: 30% decline in coupled backing for farming Full Decoupling: coupled bolster turns out to be full decoupled Switch of Pillar 1 stores into Pillar 2 Increased Modulation: decoupled SFP backing to horticultural HHS is  by 20% and exchanged to Pillar2

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The Modeling Framework The Modeling Framework The Modeling Framework The Bi-Regional CGE Model IFPRI CGE model (Lofgren et al., 2002) altered to permit particular qualities of the study ranges and besides RURAL-URBAN INTERACTIONS The Bi-Regional SAM Rural/Urban Regions Spatial unmistakable for: Activities, Factors, HHS Non-spatial things

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The Modeling Framework The Modeling Framework The Modeling Framework The Bi-Regional CGE Model Production – (situated in country or urban part) augment benefits Consumers – augment their prosperity (have interest bends) Model Closure rules – suspicions on how markets work: 1. Work  Neoclassical: fragment by work ability levels 2. Government parity  GSAV.Flx and DirTax.Fx 3. Outer equalization  FSAV.Flx and Exch.Rate.Fx 4. Reserve funds Investment Balance  Savings Driven

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The Study Areas Scottish Study Area Rural East Highlands: Population: 69.386 1991-2001:  2.3% Agriculture: Mixed (in addition to ranger service) Secondary: Construction, Food Manufacturing Tertiary: Trade-Tourism Urban: Inverness Population: 43.340 1991-2001: 8.6% pull in new parts (pharmaceuticals-learning based exercises ) Greek Study Area Rural : Archanes  Population: 4.548 1991 – 2001 :  6 .3 % Agriculture: Vine/Olive Secondary: SMEs (proc. of agric. items) Tertiary: Trade - Tourism Urban: Heraklion Population: 137.711 1991 – 2001 : 14.2 % Large number of commercial enterprises and cutting edge tertiary part

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Table: GDP of the two study zones

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Agricultural Policy Scenarios and Causal Mechanisms Scenario 1:- 30% in coupled backing for farming  Net Indirect Activity Tax of Agricultural Sector  Value Added of Agricultural Sector  Activity of the Agricultural Sector  Domestic Production of Agricultural Products Labor is free from horticulture   PCap.& PLand  Agricultural is connected with the other Rural/Urban Sectors  Second-arrange Production, Price, HHS Income Effects ()  AGGREGATE AND NET RURAL/URBAN EFFECT DEPENDS ON COMPETING FORCES

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Agricultural Policy Scenarios and Causal Mechanisms Scenario 2: Full Decoupling  Direct Income Transfers from GOV to Agr. HHS   Income and Spending of Agr. HHS  Good Produced in the study areas  Factor and Goods Prices  Production Leak towards the RoW  Second-arrange Production, Price & HHS Income impacts () TOTAL EFFECT DEPENDS ON INTERACTION OF THE TWO MECHANISMS

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Agricultural Policy Scenarios and Causal Mechanisms Scenario 3: Switch of Pillar1 trusts into Pillar2-Axis 3  Exogenous Investment Demand of the Construction Commodity  Demand of Composite Good and Imports of the Construction Commodity   Activity of the Construction Sector  Construction is connected with the other Rural/Urban Sectors  Second-arrange Production, Price, HHS Income Effects ()  AGGREGATE AND NET RURAL/URBAN EFFECT DEPENDS ON COMPETING FORCES

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Agricultural Policy Scenarios and Causal Mechanisms Scenario 4: Increased Modulation 80% Direct Income Transfers from GOV to Agr. HHS  20% Exogenous Investment Demand of the Construction Commodity TOTAL EFFECT DEPENDS ON INTERACTION OF THE THREE MECHANISMS

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Results

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Results

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Conclusions Spread of CAP effects from country to urban territories Coupled value backing is critical for the provincial economies  evacuating them results in misfortunes yet these don't appear to be extreme Coupled value bolster appears to oblige monetary movement in the urban districts Cutting coupled value support “hurts” others than just ranchers  farming connected parts (particularly handling segments of horticultural items) appear to encounter difficult times

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Conclusions Pillar 2 situation prompts higher negative impacts Transfer of SFP stores to the salary of Agricultural HHS rather “improves” the circumstance yet “improvements” are fairly minimal  family unit spending breaks from the locale more than agrarian generation “spending” Should rural families decided to utilize their additional pay to bolster creation instead of utilization (as accepted in the model), the extent and circulation of effects would be more like those of AGPCUT situation

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Conclusions Impacts of Modulation Scenario: a touch more awful than Pillar 2 yet superior to anything Full Decoupling Differences of results between the study regions: Stronger connections in the middle of agribusiness and preparing divisions responsibility for variables by urban occupants Results propose that other more extensive impacts may be in power as value and wage impacts work their way around local economies and crosswise over rustic and urban limits, yet that these more extensive impacts will be area particular.

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Conclusions However results propose that there may be a case (and opportunities) for intra-local focused on remuneration to diminish the negative impacts of CAP change while advancing the beneficial outcomes of a move towar