Agricultural producers face agricultural disasters that cause serious negative impacts on agricultural production. Hence, agricultural producers and the government need to use risk management tools to control these agricultural risks. This paper focuses on one of the most important risk management tools in agriculture, i.e., agricultural insurance. Specifically, we study whether agricultural insurance can mitigate the negative impact of natural disasters on the primary industry. We firstly establish a theoretical macroeconomics model that combines agricultural risk, agricultural insurance, and moral hazard. The theoretical model shows that agricultural insurance can effectively reduce the negative impact of agricultural risks on primary industry production only when the moral hazard is not severe. Next, we use provincial data in China to empirically test the predictions of the theoretical model. The empirical results indicate that agricultural insurance promotes primary industry production. An increase of 1 RMB in agricultural insurance premium income can increase the primary industry production by 15 RMB. The purchase of agricultural insurance does not significantly change the production behavior of agricultural producers, indicating no significant moral hazard. This paper adds moral hazard to the traditional macroeconomics model, which allows a more reasonable role for agricultural insurance. The conclusions of this study give important implications for agricultural producers and governments.
| Published in | Economics (Volume 11, Issue 2) |
| DOI | 10.11648/j.eco.20221102.13 |
| Page(s) | 88-97 |
| Creative Commons |
This is an Open Access article, distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution and reproduction in any medium or format, provided the original work is properly cited. |
| Copyright |
Copyright © The Author(s), 2022. Published by Science Publishing Group |
Agricultural Risk, Agricultural Insurance, Moral Hazard, Primary Industry
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APA Style
Meng Fei, Yikun Liu, Yingyan Wan. (2022). An Empirical Study on the Moderating Effect of Agricultural Insurance Against Natural Disasters. Economics, 11(2), 88-97. https://doi.org/10.11648/j.eco.20221102.13
ACS Style
Meng Fei; Yikun Liu; Yingyan Wan. An Empirical Study on the Moderating Effect of Agricultural Insurance Against Natural Disasters. Economics. 2022, 11(2), 88-97. doi: 10.11648/j.eco.20221102.13
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Download@article{10.11648/j.eco.20221102.13,
author = {Meng Fei and Yikun Liu and Yingyan Wan},
title = {An Empirical Study on the Moderating Effect of Agricultural Insurance Against Natural Disasters},
journal = {Economics},
volume = {11},
number = {2},
pages = {88-97},
doi = {10.11648/j.eco.20221102.13},
url = {https://doi.org/10.11648/j.eco.20221102.13},
eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.eco.20221102.13},
abstract = {Agricultural producers face agricultural disasters that cause serious negative impacts on agricultural production. Hence, agricultural producers and the government need to use risk management tools to control these agricultural risks. This paper focuses on one of the most important risk management tools in agriculture, i.e., agricultural insurance. Specifically, we study whether agricultural insurance can mitigate the negative impact of natural disasters on the primary industry. We firstly establish a theoretical macroeconomics model that combines agricultural risk, agricultural insurance, and moral hazard. The theoretical model shows that agricultural insurance can effectively reduce the negative impact of agricultural risks on primary industry production only when the moral hazard is not severe. Next, we use provincial data in China to empirically test the predictions of the theoretical model. The empirical results indicate that agricultural insurance promotes primary industry production. An increase of 1 RMB in agricultural insurance premium income can increase the primary industry production by 15 RMB. The purchase of agricultural insurance does not significantly change the production behavior of agricultural producers, indicating no significant moral hazard. This paper adds moral hazard to the traditional macroeconomics model, which allows a more reasonable role for agricultural insurance. The conclusions of this study give important implications for agricultural producers and governments.},
year = {2022}
}
TY - JOUR T1 - An Empirical Study on the Moderating Effect of Agricultural Insurance Against Natural Disasters AU - Meng Fei AU - Yikun Liu AU - Yingyan Wan Y1 - 2022/06/29 PY - 2022 N1 - https://doi.org/10.11648/j.eco.20221102.13 DO - 10.11648/j.eco.20221102.13 T2 - Economics JF - Economics JO - Economics SP - 88 EP - 97 PB - Science Publishing Group SN - 2376-6603 UR - https://doi.org/10.11648/j.eco.20221102.13 AB - Agricultural producers face agricultural disasters that cause serious negative impacts on agricultural production. Hence, agricultural producers and the government need to use risk management tools to control these agricultural risks. This paper focuses on one of the most important risk management tools in agriculture, i.e., agricultural insurance. Specifically, we study whether agricultural insurance can mitigate the negative impact of natural disasters on the primary industry. We firstly establish a theoretical macroeconomics model that combines agricultural risk, agricultural insurance, and moral hazard. The theoretical model shows that agricultural insurance can effectively reduce the negative impact of agricultural risks on primary industry production only when the moral hazard is not severe. Next, we use provincial data in China to empirically test the predictions of the theoretical model. The empirical results indicate that agricultural insurance promotes primary industry production. An increase of 1 RMB in agricultural insurance premium income can increase the primary industry production by 15 RMB. The purchase of agricultural insurance does not significantly change the production behavior of agricultural producers, indicating no significant moral hazard. This paper adds moral hazard to the traditional macroeconomics model, which allows a more reasonable role for agricultural insurance. The conclusions of this study give important implications for agricultural producers and governments. VL - 11 IS - 2 ER -
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