Research On Response Of Agricultural Supply To Price Instability And Stabilizing Effect Of Agricultural Policy

China is the largest country to consumer agricultural products in world, agricultural self-sufficiency is a matter of the most fundamental safeguard for people, however, in recent years, since "failure" of agricultural markets, fluctuations in agricultural prices that farmers a unstable income, more and more farmers choose to exit agricultural markets, or reduce agricultural inputs, which are certain impact on agricultural output, in order to stabilize agricultural production, to avoid risks, the state continued to provide policy support in agricultural field, in addition to agricultural expenditure for agricultural science and technology, infrastructure construction, but also accelerate the establishment of comprehensive agricultural insurance and rural finance support system. Based on this, we study agricultural price volatility impact on agricultural production and supply, while consider whether support for such policies can help ease the effects of price influence.The article first presented the research background and significance. Then reviewed some literature about how agricultural price volatility impact on agriculture supply, agricultural insurance, agricultural expenditure, rural financial support. Based on this, proposed contention that the dynamic panel model by using GMM estimation method to research how did agricultural price volatility influence on agricultural production and whether agricultural policy play a stabilizing role.Then, as a theoretical introduction, the article first introduced the expectations theory, the theory of elasticity, market failure and public policy theory. as the theoretical basis of this study. The third chapter introduced the mechanism of agricultural prices and price volatility impact on agricultural production, the fourth chapter described China’s agricultural support policies development and their role.The third part is the empirical study, first, presented the partial adjustment model and the price expectations model, then build the model used in this article, selected the sample and variables, finally, used dynamic panel model GMM estimation method to estimate the model. Empirical results showed that:(a) price fluctuations on the impact of agricultural output is negative, it is not conducive to improving agricultural output, and the estimation results significantly;(b) agricultural expenditure, agricultural insurance can significantly promote agricultural output, contrast on this, the influence of agricultural loans to improve agricultural output was not significant,(c) with the cross multiply items of price volatility and agricultural support policy impact on agricultural output represents agricultural policies’stabilizing effect on price fluctuations, the result is agricultural insurance policy did not play a stabilizing effect on the role of price fluctuations, agricultural expenditure and agricultural loans has played a stabilizing role effect on price volatility.Finally, based on the foregoing theoretical analysis and empirical findings, made some policy recommendations to improve China’s rural financial system.In the agricultural insurance field, we need to accelerate the legislative process, conduct agricultural risk zoning, built agricultural reinsurance system and risk provision system. In part of rural financial policies, we can relax financial regulation, make the rural financial system diversified and competitive, optimize the structure of financial instruments. Also, we need pay attention to agricultural insurance and agricultural loans synergy.Innovation of the thesis:(a) this article study the whole agricultural supply response to price fluctuations, and the role of agricultural insurance, agricultural expenditure, agricultural loans in stabilizing the supply response to price fluctuations;(b) in this article, use the rational price expectations model to expect price, rather than use naive price expectations and adaptive price expectations model for general;(c) As used herein, the dynamic panel model GMM estimation.The inadequacy of this article:(a) the agricultural production index is based on the logarithm of alternative agricultural output;(b) the establishment of agricultural price index, this paper use the arithmetic average of major agricultural products prices, which does not fully represent the real price index.