Agricultural trade, commodity programs, and income protection in the United States

Abstract

Rodrik’s hypothesis is defined as the positive association between an economy’s foreign trade exposure and the size of its government. “Wagner’s law” is said to hold when government spending grows in proportion to output. The objective of this paper is to determine whether the government transfers to farmers in the United States between 1965 and 1995, considering major program crops such as wheat, cotton, and feed grains, were a product of the development of foreign markets for these commodities, a product of “Wagner’s law,” or a product of the protection of low-income farmers and political interest groups lobbying. Factors that explain these government spending patterns are protection of low-income farmers and the influence of political (lobbying) groups.