Regional Impacts Of Farm Programs: A Top-Down CGE Analysis

This paper analyzes the regional impacts of changing a major component of national farm policy. Using a national-level computable general equilibrium (CGE), we estimate the national impacts of removing deficiency payments, one of the primary components of U.S. farm programs. We then use two top-down methods of regionalization to analyze the regional impacts. While both top-down methods are easy to implement, the analysis demonstrates the importance of accounting for the presence of local linkages in assessing regional impacts of policy changes. The analysis indicates that elimination of the deficiency payment· program would result in efficiency gains at the national level, but because of the reallocation of resources, nonmetropolitan regions would lose and metropolitan regions would gain.