The Impact of US Subsidies on the World Cotton Market: A Reassessment
AbstractFollowing a critical review of the existing quantitative literature on cotton subsidies, a vector autoregression (VAR) is used to model the effects of US subsidies on the world cotton market from 1965 to 2001. Surprisingly, subsidies are found to have only a limited impact on prices despite their effects on production and consumption. The dynamic relationships between quantities, prices, stocks and subsidies are found to be considerably more complex than those suggested by basic theory. Finally, simulation results indicate that even large reductions in US subsidies will not necessarily lead to significantly higher world prices.
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Bibliographic InfoPaper provided by EconWPA in its series International Trade with number 0511012.
Length: 42 pages
Date of creation: 24 Nov 2005
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Vector Autoregression; Subsidies; World Prices; Cotton Market;
Find related papers by JEL classification:
- Q17 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agriculture in International Trade
- C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models
This paper has been announced in the following NEP Reports:
- NEP-ALL-2005-12-09 (All new papers)
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