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Trade Barrier Volatility and Agricultural Price Stabilization

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  • Anderson, Kym
  • Nelgen, Signe

Abstract

National barriers to agricultural trade are often varied to insulate domestic markets from international price variability, especially following a sudden spike. This paper examines the extent of that behavior by governments using new annual estimates of agricultural price distortions in 75 countries. Responses to price spikes are shown to be equally substantial for agricultural-importing and agricultural-exporting countries, thereby weakening the domestic price-stabilizing effect of their interventions. Bringing discipline to export restrictions through new World Trade Organization rules could help alleviate the extent to which government responses to exogenous upward price spikes exacerbate those shocks.

Suggested Citation

  • Anderson, Kym & Nelgen, Signe, 2012. "Trade Barrier Volatility and Agricultural Price Stabilization," World Development, Elsevier, vol. 40(1), pages 36-48.
  • Handle: RePEc:eee:wdevel:v:40:y:2012:i:1:p:36-48
    DOI: 10.1016/j.worlddev.2011.05.018
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    References listed on IDEAS

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    9. Nerlove, Marc, 1972. "Lags in Economic Behavior," Econometrica, Econometric Society, vol. 40(2), pages 221-251, March.
    10. Anderson,Kym (ed.), 2010. "The Political Economy of Agricultural Price Distortions," Cambridge Books, Cambridge University Press, number 9780521763233.
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    18. Rodney Tyers, 1991. "On The Neglect Of Dynamics, Risk And Market Insulation In The Analysis Of Uruguay Round Food Trade Reforms," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 35(3), pages 295-313, December.
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    20. Tovar, Patricia, 2009. "The effects of loss aversion on trade policy: Theory and evidence," Journal of International Economics, Elsevier, vol. 78(1), pages 154-167, June.
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    22. Kym Anderson & Will Martin, 2009. "Distortions to Agricultural Incentives in Asia," World Bank Publications - Books, The World Bank Group, number 2611, December.
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    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    commodity price stabilization; price transmission; domestic market insulation; distorted incentives; developing and high-income countries;
    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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