Research Reports
A Preliminary study for Operating the Policy Evaluation Model developed by the OECD
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AuthorSung, Myunghwan
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Publication Date2006.11.01
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Original
This study aims to review the general characteristics of the Policy Evaluation Model, PEM, that has been developed by the OECD to evaluate members' agricultural policies and to provide the basic ideas and directions to operate the model in Korea. Especially, this study focuses on the effects of agricultural policies such as market price, payments based on output and area, and input subsidies on economic costs and concerned parties including taxpayers, consumers, farm households, input suppliers, and the government.
The PEM model consists of production, consumption, and trade of aggregates of wheat, coarse grains, oilseeds, rice, milk, and beef in six OECD countries, which are Canada, the European Union, Japan, Mexico, Switzerland, and the United States. The commodity modules of the PEM model were developed according to a common structure. Policy experiments are carried out using a model linking individual modules through world price and trade effects.
In the publication Market Effects of Crop Support Measures, the policy effects of q given amount of support provided via different support measures were compared to draw some conclusions about their relative marginal impacts on the selected indicators. Market price support was used as a reference category of support to compare only relative effects of the various support measures across countries. The conclusion of the analysis was that the support based on the use of variable inputs was the most production and trade distorting. The market price support and output support were seen as somewhat less distorting. The payments based on area planted and payments based on historical entitlements were the least production and trade distorting and most efficient at transferring income.
Researcher: Sung Myung-Hwan
E-mail address: mhsung@krei.re.kr
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