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Category_ID - 5
Doc_Title - The Real Rate of Protection: The Stabilizing Effect of Price Policies and Direct Payments
Doc_Author - Stanley R. Thompson, P. Michael Schmitz
Doc_Number - AEDE-WP-0013-01
Doc_Start_Date - 07/27/2001
Doc_End_Date - 07/27/2005
Doc_URL_AddLocal - C:\WINNT\ACF52.tmp
Tag_Functional - AED Econ Working Paper
Tag_SubUnit - Agricultural Economics,Trade
Tag_Program - NULL
Tag_Industry - Government
Tag_Misc - Europe
Tag_Resources - Wheat
Tag_Practice - International,Prices,Trade

Traditional indicators of protection refer to the level effect of price policies on income and ignore the stabilizing effect. We derive a measure of the real rate of protection which incorporates these dual dimensions. The income stabilizing effects of price policy protection lead to a greater level of real protection than would be measured conventionally. Without compensatory payments real protection rates for the European Union wheat market over the pre- and post-MacSharry reform periods would have been some 10 percent greater than traditional indicators. However, the direct payments to farmers following the 1992 reforms had a major risk reducing impact. Keywords: Protection rates, income stabilization, EU wheat market