Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/251101
Authors: 
Ciaian, Pavel
Baldoni, Edoardo
Kancs, D'Artis
Drabik, Dušan
Year of Publication: 
2020
Series/Report no.: 
EERI Research Paper Series No. 09/2020
Publisher: 
Economics and Econometrics Research Institute (EERI), Brussels
Abstract: 
We review the recent theoretical and empirical literature on the capitalization of agricultural subsidies into land prices. The theoretical literature predicts that agricultural subsidies are capitalized into land prices when land supply is inelastic and land markets function well. The share of capitalized subsidies significantly depends on the implementation of farm subsidies, local land-market institutions, rural market imperfections, and spatial effects. Most empirical studies have shown that agricultural subsidies are only partially capitalized into land prices, estimating that decoupled payments and land-based subsidies exhibit higher capitalization than coupled payments and non-land-based subsidies, respectively. However, estimated capitalization rates vary widely across studies largely because of data availability and identification challenges.
Subjects: 
agricultural subsidies
capitalization
land prices
land rents
land values
land market
coupled and decoupled payments
JEL: 
O13
Q16
Q17
Q18
Document Type: 
Working Paper

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