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Abstract
This paper analyses the impact of increasing direct payments on land rents in six new
EU member states in which agricultural subsidies largely increased as a result of their
EU accession. We find that up to 25 eurocents per additional euro of direct payments is
capitalized in land rents. In addition, the results show that capitalization of direct
payments is higher in more credit constrained markets, while capitalization of direct
payments is lower in countries where more land is used by corporate farms.