@article{Harris:16271,
      recid = {16271},
      author = {Harris, Rebecca Lee},
      title = {A COMPUTABLE GENERAL EQUILIBRIUM ANALYSIS OF MEXICO'S  AGRICULTURAL POLICY REFORMS},
      address = {2001},
      number = {607-2016-40354},
      series = {TMD Discussion Paper},
      pages = {40},
      year = {2001},
      abstract = {Since the late 1980s, Mexico has liberalized its  agricultural sector, moving from a system of
price  supports, producer subsidies and consumer subsidies to a  less distorting scheme in which
market forces play a  greater role. Coinciding with these agrarian and food  policy reforms, the
government has implemented the PROCAMPO  system of direct payments to farmers.
There is a general  consensus that a direct payment program has the potential  to be more
efficient than a system of subsidies and  supports. At the same time, there is widespread
agreement  that other policies need to be put in place to assure  protection of the economically
vulnerable segments of the  population. Within this context, this paper uses a  computable general
equilibrium (CGE) model to analyze the  regional, household and economy-wide effects of
switching  from the old system of price supports and subsidies to the  new system of
PROCAMPO payments. A CGE model of Mexico is  constructed with four rural regions and
one urban region  and a high disaggregation of the agricultural and food  sectors. It also includes
15 households, defined according  to region and income level to permit a rich analysis  of
distribution effects.
The initial experiment consists of  removing the PROCAMPO payments from the base year
(1996)  and adding back the subsidy and support scheme as it  existed in 1993, the year before
PROCAMPO began. Then two  policies are tested under an exchange rate depreciation to  see
how each policy regime reacts to adverse shocks.
The  simulations demonstrate that in a static situation, lump  sum payments are preferred to the
system of subsidies and  price supports. In the event of a negative external shock,  the
simulations suggest that the old system performs better  in terms of output and rural incomes.
However, urban  households are worse off, and their size in total  population may make this an
unattractive policy.},
      url = {http://ageconsearch.umn.edu/record/16271},
      doi = {https://doi.org/10.22004/ag.econ.16271},
}