Relationship between Subsidies and Productivity Shocks in Agricultural Sector

Under recent subsidies law، subsidies which are paid to agricultural products have been changed. These changes have affected on some variables such as agricultural total factor productivity. This paper aims to determine the effect of subsides on agricultural sector with emphasis on farming subsector. Malmquist index is used to calculate total factor productivity. In addition، Hoderick Prescott Filter is used to determine productivity shocks. The results show that subsidies can reduce the negative productivity shocks in the agricultural sector.