Beyond income transfers to farmers, the macroeconomic spillover of CAP payments in Aragon (Spain), 2007-2013

Abstract

This paper provides an assessment of the macroeconomic impact of the Common Agricultural Policy (CAP) on Aragon (Spain) through a computable general equilibrium (CGE) model. During the EU programming period 2007- 2013, Aragon received agricultural subsidies worth 4,055 million Euros. These grants are received by farmers and then redistributed through their spending towards other institutional sectors. CAP funds carry in Aragon an average annual GDP growth of 2.6 % or an average annual increase of agricultural GVA by 19.6% among other results. This analysis is important because CAP is changing and resources for this EU policy are expected to be reduced. In February 2013, the European Council approved the Multiannual Financial Framework 2014-2020 in which the overall EU budget decreases, is redistributed and clearly restricts allocations for agricultural policies