This article investigates the capitalization of farm subsidies in Italy by relying on a novel approach based on the Grouped Fixed Effect (GFE) estimator. This methodology allows us to account for the regional unobserved time-varying determinants of the Italian land values. Results show that the elasticity of land price with respect to coupled and decoupled subsidies is below one. Particularly, for the latter payments, the degree of capitalization declines with decreasing competition in farmland markets.

The capitalization of CAP payments into land rental prices: a grouped fixed-effects estimator / D. Valenti, D. Bertoni, D. Cavicchioli, A. Olper. - In: APPLIED ECONOMICS LETTERS. - ISSN 1350-4851. - 28:3(2021 Feb 06), pp. 231-236. [10.1080/13504851.2020.1749227]

The capitalization of CAP payments into land rental prices: a grouped fixed-effects estimator

D. Valenti
Primo
;
D. Bertoni
Secondo
;
D. Cavicchioli
Penultimo
;
A. Olper
Ultimo
2021-02-06

Abstract

This article investigates the capitalization of farm subsidies in Italy by relying on a novel approach based on the Grouped Fixed Effect (GFE) estimator. This methodology allows us to account for the regional unobserved time-varying determinants of the Italian land values. Results show that the elasticity of land price with respect to coupled and decoupled subsidies is below one. Particularly, for the latter payments, the degree of capitalization declines with decreasing competition in farmland markets.
Common Agricultural Policy (CAP); land values; subsidy capitalization; grouped Fixed Effect Estimator (GFE)
Settore AGR/01 - Economia ed Estimo Rurale
Evaluation of CAP 2015-2020 and taking action (CAPTION)
8-apr-2020
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Utilizza questo identificativo per citare o creare un link a questo documento: http://hdl.handle.net/2434/728721
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