Impacts of direct government payments on US agriculture: evidence from 1960-2010 data

Purpose – The purpose of this paper is to examine the impacts of direct government payments on agricultural production and exports in the USA. Design/methodology/approach – Alternative regression models are estimated using the time-series data of 1960 to 2010 from ERS/USDA to address the research questions. Findings – Regression results suggest that current direct government payments had negative influences on US agricultural production and exports, and the lagged influences were positive, but as a whole the impacts of direct government payments were very limited. Practical implications – Findings from this study provide useful information to agricultural policymakers in the USA, as well as other nations such as China. China may learn from the US experience in developing agricultural subsidies that are effective and allowed under WTO. Originality/value – While many agricultural trade disputes under WTO are related to the question of whether domestic government supports have boosted agricultural production and exports or reduced imports, this paper addresses the question based on empirical analysis.