ECONOMETRIC INVESTIGATION OF THE DYNAMIC EFFECTS OF THE 1983 PAYMENT-IN-KIND PROGRAM ON THE WHEAT ECONOMY

A stochastic, dynamic, and control-system econometric model of the wheat sector is developed to assess the effects of the Payment-in Kind program. Empirical results the complex dynamics of the responses. Reduced storage costs and deficiency payments for the U.S. government and increased income for wheat farmers are benefits from the PIK program in the short-run. Increased direct government transfers from the public to support the program were required. The long-run economic implications are not clearly desirable. This is due primarily to the highly sensitive international wheat market.