The effects of farm subsidies on farm exports in the United States

Tong, Lan Anh, Pham, Cong S and Ulubaşoğlu, Mehmet A 2019, The effects of farm subsidies on farm exports in the United States, American journal of agricultural economics, vol. 101, no. 4, pp. 1277-1304, doi: 10.1093/ajae/aay112.

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Title The effects of farm subsidies on farm exports in the United States
Author(s) Tong, Lan Anh
Pham, Cong SORCID iD for Pham, Cong S
Ulubaşoğlu, Mehmet AORCID iD for Ulubaşoğlu, Mehmet A
Journal name American journal of agricultural economics
Volume number 101
Issue number 4
Start page 1277
End page 1304
Total pages 28
Publisher Oxford University Press
Place of publication Oxford, Eng.
Publication date 2019-07
ISSN 0002-9092
Keyword(s) Farm subsidies
U.S. farm bills
Gravity equation
U.S. farm exports
Summary We estimate the elasticity of U.S. farm exports to U.S. farm subsidies using a gravity model of state-level farm exports to 100 major trading destinations for the period 1999 to 2011. Our identification strategy exploits the within-state variation that is free of endogeneity bias in the levels and trends of farm subsidies and farm exports. We find that a 1% decrease in farm subsidies would reduce U.S. farm exports by 0.40% per annum. This equivalently means that the complete abolishment of the farm subsidy program would reduce U.S. farm exports by approximately $15.3 billion per year. Importantly, we document robust evidence that amber box subsidy programs such as counter-cyclical payments and marketing loan gains have the strongest effect on farm exports, while green box subsidy payments, such as direct payments have negligible effects. Finally, subsidy payments affect exports only in agricultural commodities, not in livestock. Our subsidy elasticity estimates are statistically significant, stable, and economically meaningful, and are vitally needed by U.S. and global policymakers in the face of critical domestic and international developments.
Language eng
DOI 10.1093/ajae/aay112
Indigenous content off
Field of Research 1402 Applied Economics
HERDC Research category C1 Refereed article in a scholarly journal
ERA Research output type C Journal article
Copyright notice ©2019, The Author(s)
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Document type: Journal Article
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Department of Economics
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