Rolf Jens Brunstad

Regional growth in Western Europe : an empirical exploration of interactions with agriculture and agricultural policy

Much of the analysis of regional growth in Europe in recent years has concentrated on the concept of convergence, whether in the neo-classical model, or in alternative formulations. Empirical work has shifted from more confirmatory nonspatial estimation to the acknowledgement of the importance of spatial factors, including spillovers, and to exploratory spatial data analysis. This has occurred in conjunction with similar work in North America, and has led to a better understanding of the difficulties involved in relying simply on the convergence model without augmentations.

Agriculture as a provider of public goods: a case study for Norway

A valid argument for support is that subsidies are remedies for market failures. Agriculture contributes positively to public goods as food security, landscape preservation and maintenance of population in remote areas. Using a numerical model we simulate what Norwegian agriculture would look like if the only purpose of supporting agriculture was to provide such public goods. This is compared to the consequences of the Uruguay round in GATT and possible future EU membership for Norwegian agriculture. Although the GATT agreement will change agriculture in the desirable direction, the agreement puts no substantial pressure on the current agricultural policy. EU membership on the lines laid down by the accession treaty between EU and Norway prior to the referendum in 1994 would have given a stronger impetus towards the optimal solution.

Optimal Agricultural Policy and PSE Measurement: An Assessment and Application to Norway

The producer support estimate (the successor to the producer support equivalent) calculated by the OECD is widely used as an indicator of distortions created by agricultural policies. In this paper we demonstrate that changes in the relative (percentage) PSE are not an accurate indicator of the implications of policy reform for domestic welfare or for trade distortions. We demonstrate that it is important to consider the implications of changes in both the level and the form of support in evaluating the impact of policy reform. Using a model of Norwegian agriculture we show that reforms indicated towards the provision of public goods, while apparently leading to an increase in relative support, are actually superior to existing agricultural policies or to a policy aimed at eliminating subsidized exports both in terms of reducing trade distortions and increasing domestic economic welfare.

Optimal provision of public goods. Implications for support to agriculture

This paper summarises a decade of research by the authors into the welfare economic foundations for agricultural policy. The main results are that the levels of support to agriculture in rich developed countries like Norway are way out of proportion with what could conceivably be defended by welfare theoretic arguments. However, the present debate on the multifunctional role of agriculture points to valid arguments for agricultural support. In terms of welfare economics these arguments are found in the links between agriculture and public goods like landscape amenities and food security. This paper offers a modest attempt to quantify the Pigouvian subsidies that could be derived from these arguments.

Agricultural support as a Pigouvian subsidy for landscape amenity benefits: revisiting European regional convergence

European regional per capita income levels may be underestimated if the positive external effects of landscape amenity benefits are omitted. This may impact β -convergence models of regional growth. Agricultural support has been used as a conditioning variable in a number of studies of European regional growth. Without correction for a possible Pigouvian subsidy, we would expect a negative relationship between agricultural support and regional growth. If agricultural support is intended to act as a Pigouvian subsidy aiming at internalising landscape amenity benefit, we would expect to see upward shifts in coefficient values and possibly a sign change. Because landscape amenity benefits cannot be readily measured, we will be obliged to explore the parameter space of models including such a correction, in particular to see whether positive coefficient values for agricultural support can be found for representations of amenity benefit that harmonise with economic theory.