General Equilibrium Modelling of the Insurance Industry: U.S. Crop Insurance

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Published: 2019-12-25
DOI: https://doi.org/10.21642/JGEA.040203AF
Keywords:
Crop Insurance, U.S. Farm Policy, Markets, Welfare.

Main Article Content

Alexandre Gohin
Institut National de la Recherche Agronomique (INRA)

Abstract

The U.S. farm policy has progressively changed in recent years, with greater reliance on subsidized crop insurance programs in the place of fixed direct payments. Despite the use of such insurance over a long period of time, quantitative macroeconomic assessments of insurance programs are lacking. We develop an original stochastic computable general equilibrium framework where we isolate the coverage effects provided by subsidized insurance programs. We find that their welfare effects are dramatically modified once we recognize their risk sharing properties. Our simulated market effects on the U.S. cereal markets are consistent with currently available microeconometric evidence.

Article Details

Issue

Vol. 4 No. 2 (2019)

Section

Advances in Methods and Theory

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How to Cite

General Equilibrium Modelling of the Insurance Industry: U.S. Crop Insurance. (2019). Journal of Global Economic Analysis, 4(2), 108-145. https://doi.org/10.21642/JGEA.040203AF