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Does agricultural subsidies foster Italian southern farms? A Spatial Quantile Regression Approach

Marusca De Castris, Daniele Di Gennaro

arXiv 15 Mar 2018 · Econometrics · 2 citations (OpenAlex)

arXiv:1803.05659 · PDF · DOI · OpenAlex · Extracted main text

Abstract

During the last decades, public policies become a central pillar in supporting and stabilising agricultural sector. In 1962, EU policy-makers developed the so-called Common Agricultural Policy (CAP) to ensure competitiveness and a common market organisation for agricultural products, while 2003 reform decouple the CAP from the production to focus only on income stabilization and the sustainability of agricultural sector. Notwithstanding farmers are highly dependent to public support, literature on the role played by the CAP in fostering agricultural performances is still scarce and fragmented. Actual CAP policies increases performance differentials between Northern Central EU countries and peripheral regions. This paper aims to evaluate the effectiveness of CAP in stimulate performances by focusing on Italian lagged Regions. Moreover, agricultural sector is deeply rooted in place-based production processes. In this sense, economic analysis which omit the presence of spatial dependence produce biased estimates of the performances. Therefore, this paper, using data on subsidies and economic results of farms from the RICA dataset which is part of the Farm Accountancy Data Network (FADN), proposes a spatial Augmented Cobb-Douglas Production Function to evaluate the effects of subsidies on farm's performances. The major innovation in this paper is the implementation of a micro-founded quantile version of a spatial lag model to examine how the impact of the subsidies may vary across the conditional distribution of agricultural performances. Results show an increasing shape which switch from negative to positive at the median and becomes statistical significant for higher quantiles. Additionally, spatial autocorrelation parameter is positive and significant across all the conditional distribution, suggesting the presence of significant spatial spillovers in agricultural performances.

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Most heavily cited references

The works this paper leans on most, across its whole bibliography — not restricted to papers in our corpus. Ranked by composite intensity, which combines how often a work is mentioned, how many sections mention it, and how much of that falls in the main text rather than the appendix.

ReferenceIntensityMentionsSectionsMain text
1De Castris, M. and Di Gennaro, D (2017) What is Below the CAP? Evaluating Spatial Patterns in Agricultural Subsidies1.00083100%
2Kim, T.-H. and Muller, C (2004) Two-stage quantile regression when the first stage is based on quantile regression1.00053100%
3Chernozhukov, V. and Hansen, C (2006) Instrumental quantile regression inference for structural and treatment effect models0.87462100%
4Kostov, P (2009) A Spatial Quantile Regression Hedonic Model of Agricultural Land Prices0.84333100%
5Zhu, X. and Demeter, R. M (2012) Technical efficiency and productivity differentials of dairy farms in three EU countries: the role of CAP subsidies0.84333100%
6Giannakis, E. and Bruggeman, A (2015) The highly variable economic performance of European agriculture0.73732100%
7Bojnec, S. and Latruffe, L (2013) Farm size, agricultural subsidies and farm performance in Slovenia0.64422100%
8Anselin, L., Bera, A. K., Florax, R., and Yoon, M. J (1996) Simple diagnostic tests for spatial dependence0.5112250%
9Billé, A. G., Salvioni, C., and Benedetti, R (2015) Spatial Heterogeneity in Production Functions Models0.51121100%
10Kelejian, H. H. and Prucha, I (1998) A Generalized Spatial Two-Stage Least Squares Procedure for Estimating a Spatial Autoregressive Model with Autoregressive Distur…0.51121100%

Showing the top 10 of 52 scored citations.