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Abstract

This study examines how federal farm policies, specifically crop insurance, have affected the farm economic structure of North Dakota’s agriculture sector. The system of derived input demand equations is estimated to quantify the changes in North Dakota farmers’ input use when they purchase crop insurance. Further, the cumulative rolling regression technique is applied to capture the varying effects of the farm policies over time. Empirical results from the system of input demand functions indicate that there is no moral hazard since North Dakota farmers will increase fertilizer and pesticide use in the presence of crop insurance. Results also indicate that farmers in this state will not increase the use of land.

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