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Abstract

Among the several propositions advanced to explain the rising cost of subsidizing soft wheat production and consumption in Morocco are the indirect effects emanating from related markets, namely the hard wheat and barley markets. A three-sector supply-demand model, described in this paper, was used to estimate the direct and indirect (induced) effects on government cost of changes in the soft wheat subsidy. The results show that virtually all the indirect effects come from the soft wheat market itself. The indirect effects emanating from the related markets are negligible.

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