An analysis on the Italian agricultural firms: effects of public subsidies

Public subsidies to the agricultural sector are aimed to promote growth and sustainability. Considering the importance of the agricultural sector in Italy, especially in Sardinia, the impact of public subsidies on the agricultural production is assessed over the span time 2007-2013, that is the time period in which the effects exerted by the Fischler's reform can be detected. A Cobb Douglas growth model is employed to test such an impact at a micro level. While public intervention is likely to reduce the uncertainty of farm incomes, the findings reveal that decoupled public payments have a negative effect on the sector.