CREDIT MARKET IMPERFECTIONS AND THE DISTRIBUTION OF POLICY RENTS: THE COMMON AGRICULTURAL POLICY IN THE NEW EU MEMBER STATES

This article analyses how credit market imperfections affect the impacts of subsidies by analyzing theeffects of agricultural subsidies in the new Eastern Member States of the European Union with apartial equilibrium model which integrates credit and land market imperfections. We show that creditconstraints have important implications for the distribution of policy rents. Credit marketimperfections may induce very different effects of direct payments and lump-sum transfers.