Impacts of agricultural public spending on Chinese food economy

Abstract

PurposeThe purpose of this paper is to develop a dynamic computable general equilibrium (DCGE) model to analyze economy‐wide impacts of different types of public spending in China. A particular focus is placed on their impacts on food economy.Design/methodology/approachIn this paper, DCGE model is developed to analyze economy‐wide impacts of different types of public spending in China. The effects of increased agricultural subsidies, agricultural R&D, and irrigation are simulated by using China DCGE model.FindingsThe results show that public spending has significant impact on food production, price, and trade. The increased public spending on agricultural R&D, irrigation, and agricultural subsidy also has modest impacts on other sectors such as industry, service, and GDP growth.Originality/valueThe paper constructs the China dynamic CGE model and analyzes economy‐wide impacts of different types of public spending in China, especially for the food economy.