Institutions and EU Decisions-Making: the 'Power' of the European Commission

I develop a two-stage political economy model that explicitly models the complexity of decision-making in the European Union on the Common Agricultural Policy, and I derive how the institutional design affects the outcome and the influence of the various agents involved, and the likelihood of political stalemate.Political economy, European Union, Common Agricultural Policy, Voting, International Development,

AGENDA SETTING, INFLUENCE, AND VOTING RULES: THE INFLUENCE OF THE EUROPEAN COMMISSION AND STATUS QUO BIAS IN THE COMMON AGRICULTURAL POLICY OF THE EU

We develop a two-stage political economy model that explicitly models the complexity of decision-making in the European Union on the Common Agricultural Policy, and we derive how the institutional design affects the outcome and the influence of the various agents involved, and the likelihood of political stalemate.Agricultural and Food Policy,

Do agricultural subsidies crowd out or stimulate rural credit institutions? The Case of CAP Payments

In this paper we estimate the impact of subsidies from the EU’s common agricultural policy on farm bank loans. According to the theoretical results, if subsidies are paid at the beginning of the growing season they may reduce bank loans, whereas if they are paid at the end of the season they increase bank loans, but these results are conditional on whether farms are credit constrained and on the relative cost of internal and external financing. In the empirical analysis, we use farm-level panel data from the Farm Accountancy Data Network to test the theoretical predictions for the period 1995–2007. We employ fixed-effects and generalised method of moment models to estimate the impact of subsidies on farm loans. The results suggest that subsidies influence farm loans and the effects tend to be non-linear and indirect. The results also indicate that both coupled and decoupled subsidies stimulate long-term loans, but the long-term loans of large farms increase more than those of small farms, owing to decoupled subsidies. Furthermore, the results imply that short-term loans are affected only by decoupled subsidies, and they are altered by decoupled subsidies more for small farms than for large farms; however, when controlling for endogeneity, only the decoupled payments affect loans and the relationship is non-linear.

Why Some Sectors of Transition Economies are less Reformed than Others? The Case of Research and Education

We analyze university research and education in transition countries. University system differs from industry in the nature of product that it produces. University system is engaged in production of public goods rather than private goods. The sector also suffers from measurement problem. We argue that because of these factors reforms were slower in this sector leading to low productivity growth. Lobby groups succeeded to gain significant control inside administrative structures regulating the sector. The case studies from the Czech Republic and Slovakia provide the evidence in support of this argument.Research, education, public good, transition, reform, productivity

Comparative Advantages, Transaction Costs and Factor Content in Agricultural Trade: Empirical Evidence from the CEE

The present study examines factor content in the CEE transition country agricultural trade. However, deviating from the traditional approach, we do not test the HOV prediction. Instead, we examine the theoretical predictions that relate the factor content of international trade to cross-country differences in technology and endowments. Our empirical findings suggest that factor content between agricultural exports and imports is rather similar in CEE. In order to explain the general lack of the CEE agricultural specialisation and the observed paradox, we attempt to identify the role of transaction costs and market imperfections in determining factor content in agricultural production and trade. We find that technological differences and factor endowment are only weak determinants of country specialisation. Transaction costs and market imperfections distort farm specialisation and organisation in CEE, and hence factor content in traded agricultural goods.Comparative Advantage, Transaction Cost, Factor Content, Trade, International Relations/Trade,

The Rise and Fall of Enforcement Institutions: An Example of Religion and Secularism

Societies in Western civilisation enforce their rules through formal institutions such as secularism (SES), whereas in less developed civilisations often rely on informal institutions such as religion (RES). The present paper attempts to explain the determinants of societies’ choice between different enforcement systems, and their implications for society development using an example of two different enforcement models: one informal (RES) and one formal (SES). We find that, because the RES is based on beliefs, its efficiency depends heavily on its credibility, making it little flexible and highly susceptible to conflicts in dynamic environments. In contrast, because under the SES societal rules are enforced through a formal legal enforcement sector, the SES is more flexible though also more costly than the RES. The empirical evidence strongly supports our findings that wealthy, dynamic and fast growing economies typically choose the SES for enforcing societal norms and rules.Enforcement institutions, economic growth, conflicts, religion, secularism.

Trade Creation and Diversion in the Enlarged EU Market: Evidence for Agricultural Trade in Slovakia

In the paper the authors analyze the changes in agricultural trade patterns in Slovakia influenced by the gradual trade liberalization that occurred prior to European Union enlargement in 2004. The results show a significant trade-diversion effect of the enlargement on Slovak agricultural trade. A one-percentage-point reduction in the agricultural tariff rate of Slovakia increases agricultural imports from EU15 and Central and East European countries (CEEC) by around 3 percent. Given that the average reduction in tariff rates was 10.4 percent, the authors can conclude that approximately 31.4 percent of the increase in agricultural imports from the EU15 and CEEC was due to elimination of tariffs as Slovakia (and the other CEECs) joined the EU.agricultural trade; EU enlargement; Slovakia; trade liberalization

The 'restaurant-table effect': Europe and the common agricultural policy.

Policy; Trade;

Slovak Agricultural Markets Under Alternative CAP Scenarios - AG-MEMOD Modelling Approach

Slovak sectoral partial equilibrium econometric model based on AG-MEMOD approach is used to analyse the development of the Slovak agricultural markets after EU accession. Simulation results for cereals, oilseeds and meats are provided in this article. Two scenarios are analysed: non-accession baseline and accession with adoption of single area payment scheme. EU accession is expected to increase prices of most products, the biggest increase of prices will occur in animal sector. Because of higher prices consumption will go down. Decrease of consumption will be mitigated by income growth. Production will not increase substantially due to decoupling of direct payments. Trade balance for majority of products will improve.partial equilibrium econometric model, EU accession, Slovakia, agricultural markets, Agricultural and Food Policy, International Relations/Trade, C51, Q11, Q18,

THE ECONOMICS OF FARM ORGANIZATION IN CEEC AND FSU

In Western Europe, USA and other developed countries agriculture is dominated by small family farms. In Central and Eastern European Countries (CEEC) and Former Soviet Union (FSU) dual structure of farms exists. There are large corporate farms (CF) and small family farms (FF) in CEEC and FSU. Our paper shows that both CF and FF specialize in commodities in which they have comparative advantage. CF specialize in capital intensive products and in products with low labor monitoring. FF specialize in products with higher labor monitoring requirements. The implication of this paper is that farm structure determines in which products the country will be competitive on international markets. This is especially important for transition countries where high transaction costs hinder the change of farm organization. For this reason in transition countries suffering from high transaction cost the choice of product structure is more important than the choice of farm organization.farm structure, production specialization, transaction costs, CEEC, FSU, Farm Management,