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This paper explores the impacts of agricultural policy reforms on a Mexican villageeconomy, using a village computable general equilibrium (CGE) model. In 1994, the Mexican governmentreplaced staple price supports with direct income transfers to producers. Two scenarios are considered inthis paper. The first is the case in which the elimination of price supports is transmitted directly to thevillage. The second is the case in which, due to high transactions costs in staple markets, the village isentirely insulated from the price change. In this case, the policy change consists only of an income transferto crop producers. The more the reduction in controlled prices results in a decrease in local consumptionprices, the more progressive the effect of the policy change is for household-farm incomes. The greater thetransmission of the government price change to local producer prices, the greater the impact on localproduction activities and the greater the potential efficiency gain.

Subject(s): Agricultural and Food Policy

Community/Rural/Urban Development

Issue Date: 1997

Publication Type: Conference Paper/ Presentation

PURL Identifier: Page range: 298-304

Total Pages: 7

Record appears in: International Association of Agricultural Economists (IAAE) > 1997 Occasional Paper Series No. 7

Autor: Taylor, J. Edward ; Yunez-Naude, Antonio


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