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Grain price spikes and beggar-thy-neighbor policy responses : a global economywide analysis

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  • Jensen, Hans G
  • Anderson, Kym

Abstract

When prices spike in international grain markets, national governments often reduce the extent to which that spike affects their domestic food markets. Those actions exacerbate the price spike and international welfare transfer associated with the terms of trade change. Several recent analyses have assessed the extent to which those policies contributed to the 2006-08 international price rise, but only by focusing on one commodity or using a back-of-the-envelope method. This paper provides a more comprehensive analysis that uses a global economywide model that is able to take account of the interactions between markets for farm products that are closely related in production or consumption. The model is able to estimate the impacts of those insulating policies on grain prices and on the grain trade and economic welfare of various countries. The results support the conclusion from earlier studies that there is a need for stronger World Trade Organization disciplines on export restrictions.

Suggested Citation

  • Jensen, Hans G & Anderson, Kym, 2014. "Grain price spikes and beggar-thy-neighbor policy responses : a global economywide analysis," Policy Research Working Paper Series 7007, The World Bank.
    • Handle: RePEc:wbk:wbrwps:7007
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    References listed on IDEAS

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    1. Will Martin & Kym Anderson, 2012. "Export Restrictions and Price Insulation During Commodity Price Booms," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 94(2), pages 422-427.
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    5. Jensen, Hans Grinsted & Kym Anderson, 2014. "Alternative Agricultural Price Distortions for CGE Analysis, 2007 and 2011," GTAP Research Memoranda 4364, Center for Global Trade Analysis, Department of Agricultural Economics, Purdue University.
    6. Hertel, Thomas, 1997. "Global Trade Analysis: Modeling and applications," GTAP Books, Center for Global Trade Analysis, Department of Agricultural Economics, Purdue University, number 7685, December.
    7. W. Jill Harrison & J. Mark Horridge & K.R. Pearson, 2000. "Decomposing Simulation Results with Respect to Exogenous Shocks," Computational Economics, Springer;Society for Computational Economics, vol. 15(3), pages 227-249, June.
    8. Rutten, Martine & Shutes, Lindsay & Meijerink, Gerdien, 2013. "Sit down at the ball game: How trade barriers make the world less food secure," Food Policy, Elsevier, vol. 38(C), pages 1-10.
    9. Malcolm, Gerard, 1998. "Adjusting Tax Rates In The Gtap Data Base," Technical Papers 28721, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    10. Kym Anderson & Signe Nelgen, 2012. "Agricultural trade distortions during the global financial crisis," Oxford Review of Economic Policy, Oxford University Press and Oxford Review of Economic Policy Limited, vol. 28(2), pages 235-260, SUMMER.
    11. Brian D. Wright, 2011. "The Economics of Grain Price Volatility," Applied Economic Perspectives and Policy, Agricultural and Applied Economics Association, vol. 33(1), pages 32-58.
    12. Malcolm, Gerard, 1998. "Adjusting Tax Rates in the GTAP Data Base," GTAP Technical Papers 315, Center for Global Trade Analysis, Department of Agricultural Economics, Purdue University.
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    Citations

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    Cited by:

    1. Kym Anderson, 2023. "Agriculture's globalization: Endowments, technologies, tastes and policies," Journal of Economic Surveys, Wiley Blackwell, vol. 37(4), pages 1314-1352, September.
    2. Anderson, Kym, 2022. "Trade-related food policies in a more volatile climate and trade environment," Food Policy, Elsevier, vol. 109(C).
    3. Kym Anderson, 2022. "Agriculture in a more uncertain global trade environment," Agricultural Economics, International Association of Agricultural Economists, vol. 53(4), pages 563-579, July.
    4. Estrades, Carmen, 2015. "The Role of Export Restrictions in Agriculture Trade," 2015: Trade and Societal Well-Being, December 13-15, 2015, Clearwater Beach, Florida 229229, International Agricultural Trade Research Consortium.
    5. Consoli, Sarah & Egas Yerovi, Juan José & Machiorlatti, Matteo & Morales Opazo, Cristian, 2023. "Real-time monitoring of food price policy interventions during the first two years of COVID-19," Food Policy, Elsevier, vol. 115(C).
    6. Will Martin & Nicholas Minot, 2022. "The impacts of price insulation on world wheat markets during the 2022 food price crisis," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 66(4), pages 753-774, October.
    7. Elleby, Christian & Hansen, Henrik & Yu, Wusheng, 2015. "Domestic Price and Welfare Effects of the 2007-11 Indian Grain Export Restrictions," 2015 AAEA & WAEA Joint Annual Meeting, July 26-28, San Francisco, California 205578, Agricultural and Applied Economics Association.
    8. Kym Anderson, 2021. "Food policy in a more volatile climate and trade environment," Departmental Working Papers 2021-25, The Australian National University, Arndt-Corden Department of Economics.
    9. Shikha Jha & Kensuke Kubo & Bharat Ramaswami, 2016. "International Trade and Risk Sharing in the Global Rice Market: The Impact of Foreign and Domestic Supply Shocks," Asian Development Review, MIT Press, vol. 33(1), pages 162-182, March.
    10. Simon J. Evenett, 2020. "Sicken thy neighbour: The initial trade policy response to COVID‐19," The World Economy, Wiley Blackwell, vol. 43(4), pages 828-839, April.
    11. Djuric, Ivan & Götz, Linde, 2016. "Export restrictions – Do consumers really benefit? The wheat-to-bread supply chain in Serbia," Food Policy, Elsevier, vol. 63(C), pages 112-123.
    12. Jayson Beckman & Carmen Estrades & Angel Aguiar, 2019. "Export taxes, food prices and poverty: a global CGE evaluation," Food Security: The Science, Sociology and Economics of Food Production and Access to Food, Springer;The International Society for Plant Pathology, vol. 11(1), pages 233-247, February.
    13. Huw Lloyd-Ellis & Ardyn Nordstrom, 2021. "Trade, poverty and food security: A survey of recent research and its implications for East Africa," Working Paper 1460, Economics Department, Queen's University.
    14. Thennakoon, Jayanthi & Anderson, Kym, 2015. "Could the proposed WTO Special Safeguard Mechanism protect farmers from low international prices?," Food Policy, Elsevier, vol. 50(C), pages 106-113.
    15. Anderson, Kym & Thennakoon, Jayanthi, 2015. "Food Prices Spikes and Poor, Small Economies: What Role for Trade Policies," African Journal of Agricultural and Resource Economics, African Association of Agricultural Economists, vol. 10(1), pages 1-16, March.

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    More about this item

    Keywords

    Markets and Market Access; Emerging Markets; Food&Beverage Industry; Climate Change Economics; Currencies and Exchange Rates;
    All these keywords.

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • Q17 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agriculture in International Trade
    • Q18 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Policy; Food Policy; Animal Welfare Policy

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