GRAIN POLICY IN CHINESE VILLAGES - YIELD RESPONSE TO PRICING, PROCUREMENT, AND LOAN POLICIES

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