Abstract
AbstractThis paper assesses the effects of pricing, procurement, and loan policies on China's grain economy. A dynamic control model of the village leader is specified. Parameters of structural and control equations are estimated using time‐series cross‐section data. Simulation results show that pricing and procurement policies are not effective in raising yields, because of conflicting objectives of local officials. Loan policies can increase yields. The paper concludes that rural policies often have contradictory effects that can arise for a number of reasons. An important reason is the fact that local officials in a reforming economy have greater decision‐making discretion than higher‐level officials and execute policies to meet their own objectives.
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