Europe’s Dog in the Nighttime. CEPS Commentary, 12 November 2014

Two recent instances of flagrant infringement of agreed EU rules – the submission by Italy and France of budget plans for 2015 that clearly violated their governments’ vows of continued austerity under the Stability and Growth Pact and David Cameron’s petulant refusal to pay a back payment of billions of euros to the EU budget – threaten the EU’s fundamental workings, which are based on a clear rulebook enforced vigorously by a strong Commission. As warned by Daniel Gros in his latest CEPS Commentary, Juncker’s Commission risks losing its authority from the start if rules can be bent or broken to accommodate the larger member states’ domestic political priorities. He also calls upon leaders in member states to play their part as well. Pandering to populists may be attractive in terms of short-term electoral gains, but the long-term cost in terms of credibility, both their own and that of the EU, will be very high.

Simulation of Land Use and Investment Behaviour under Different Policy Scenarios: Results of the extended farm/household model. Factor Markets Working Paper No. 27, July 2012

Factor markets are a central issue in analyses of farm development and of agricultural sector vitality. Among the different production factors, land is one of the most studied. Several studies seek to estimate the effect of government policy payments on land value or land rental prices. The studies mostly agree that government payments and other types of policy support are significant in explaining land prices and account for a large share of them. In October 2011, the European Commission published a new policy proposal for the common agricultural policy (CAP) up to 2020. The proposed regulation includes a shift from historical to regional payments. The objective of this paper is to provide an ex ante analysis of the impact of the new CAP policy instruments on the land market. In particular, the effect of the regionalisation of payments in Italy is examined. The analysis is based on the use of a mathematical programming model to simulate the changes in land demand for a farm in Emilia Romagna. The results highlight the relevance of the new policy mechanism in determining a change in land demand. Yet the effect is highly dependent on initial ownership of entitlements under the historical payment scheme.