EC Agricultural Policies and Their Contribution to Turbulence in Agriculture

The Common Agncultural Policy (CAP) of the European Commumty (EC) has contributed considerably to turbulence in agriculture. In this paper, a model of the determinants of EC price policies is developed and tested empmcally. The results show that the annual decisions on agncultural pnces m the EC could be largely explained by past agricultural income growth and the actual development of EC budgetary expenditures. The paper concludes with a discussion of the contnbution of EC price policy dec1s1ons to domestic and mternatmnal turbulence in agriculture.