Working Paper: NBER ID: w30704
Authors: Lauren F. Bergquist; Benjamin Faber; Thibault Fally; Matthias Hoelzlein; Edward Miguel; Andrés Rodríguez-Clare
Abstract: Policies aimed at raising agricultural productivity have been a centerpiece in the fight against global poverty. Their impacts are often measured using field or quasi-experiments that provide strong causal identification, but may be too small-scale to capture the general equilibrium (GE) effects that emerge once the policy is scaled up. We propose a new approach for quantifying large-scale GE policy counterfactuals that can both complement and be informed by evidence from field and quasi-experiments. We develop a quantitative model of farm production, consumption and trading that captures important features of this setting, and propose a new solution method that relies on rich but widely available microdata. We showcase our approach in the context of a subsidy for modern inputs in Uganda, using variation from field and quasi-experiments for parameter estimation. We find that both the average and distributional impacts of the subsidy differ meaningfully when comparing a local intervention to one at scale, even for the same sample of farmers, and quantify the underlying mechanisms. We further document new insights on how GE forces differ as a function of saturation rates at different geographical scales, and on the importance of capturing a granular economic geography for counterfactual analysis.
Keywords: agriculture; policy interventions; general equilibrium; poverty alleviation
JEL Codes: F15; F63; O13
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Saturation rates (Q31) | Average gains (C29) |
| Price index shifts (E31) | Household welfare (I38) |
| Agricultural subsidy interventions (Q18) | Household welfare (I38) |
| Agricultural subsidy interventions (at scale) (Q16) | Household welfare (I38) |
| Local interventions (F38) | Household welfare (land-rich farmers) (D69) |
| At-scale interventions (C93) | Household welfare (land-poor farmers) (I39) |
| Local interventions (F38) | Household welfare (land-poor farmers) (I39) |