ABSTRACT
This chapter presents the results of calculations of the market and budgetary effects of both the Common Agricultural Policy (CAP) and some alternative policies. The calculations were obtained by writing and running a computer programme to simulate the physical and financial flows occurring under a ‘base’ policy corresponding to the CAP in 1980 ‘CAP 1980’–and those which might occur under some specified alternative policies. Comparison of the results for CAP 1980 and alternative situations will indicate the relative costs and benefits that accrue in various ways from different courses of policy action. The policy instruments represented in the model include the major expenditure categories of the Guarantee Section of the European Agricultural Guidance and Guarantee Fund. In order to run the model for any specified policy, prices are either set or calculated in each country for each commodity. The various policy alternatives therefore have complex consequences for the pattern of public-finance flows between both member-states and commodities.
