The Political Economy of Policy Instrument Choice: Theory and Evidence from Agricultural Policies

Swinnen, Johan F. M.; Olper, Alessandro; Vandemoortele, Thijs

doi:10.2139/ssrn.1786347

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The Political Economy of Policy Instrument Choice: Theory and Evidence from Agricultural Policies

49 Pages Posted: 20 Mar 2011

See all articles by Johan F. M. Swinnen

Johan F. M. Swinnen

KU Leuven - Centre for Institutions and Economic Performance (LICOS); European Commission, DG II

Alessandro Olper

Università degli Studi di Milano; KU Leuven - Centre for Institutions and Economic Performance (LICOS)

Thijs Vandemoortele

LICOS Centre for Institutions and Economic Performance

Date Written: March 4, 2011

Abstract

We study the political economy of instrument choice in agricultural and food policies. After a review of the historical evolution of European agricultural price and trade policy instruments since 1880, we develop a political economy model of instrument choice. The key predictions of the model suggest a rational explanation of instrument choice patterns, based on the trade-off between the different cost components of the policies, and internal and external political constraints. An empirical analysis supports the main predictions of the theoretical model. We find that the GATT/WTO agreement had a significant impact.

Keywords: Political Economy, Instrument Choice, Agricultural Policy, GATT, WTO

JEL Classification: D78, Q18

Suggested Citation: Suggested Citation

Swinnen, Johan F.M. and Olper, Alessandro and Vandemoortele, Thijs, The Political Economy of Policy Instrument Choice: Theory and Evidence from Agricultural Policies (March 4, 2011). Available at SSRN: https://ssrn.com/abstract=1786347 or http://dx.doi.org/10.2139/ssrn.1786347