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Grain Price Spikes and Beggar-thy-Neighbor Policy Responses: A Global Economywide Analysis

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  • Hans G. Jensen
  • Kym Anderson

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 that terms of trade change. Several recent analyses have assessed the extent to which those policies contributed to the 2006–08 international price rises but only by focusing on one commodity or by using a back-of-the envelope (BOTE) method. The present more comprehensive analysis uses a global, economy-wide model that is able to take account of the interactions between markets for farm products that are closely related in production and/or consumption and able to estimate the impacts of those insulating policies on grain prices and on the grain trade and economic welfare of the world's various countries. Our results support the conclusion from earlier studies that there is a need for stronger WTO disciplines on export restrictions.

Suggested Citation

  • Hans G. Jensen & Kym Anderson, 2017. "Grain Price Spikes and Beggar-thy-Neighbor Policy Responses: A Global Economywide Analysis," World Bank Economic Review, World Bank Group, vol. 31(1), pages 158-175.
  • Handle: RePEc:oup:wbecrv:v:31:y:2017:i:1:p:158-175.
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    File URL: http://hdl.handle.net/10.1093/wber/lhv047
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    References listed on IDEAS

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    1. 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.
    2. 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.
    3. 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.
    4. Kym Anderson & Signe Nelgen, 2012. "Agricultural trade distortions during the global financial crisis," Oxford Review of Economic Policy, Oxford University Press, vol. 28(2), pages 235-260, SUMMER.
    5. 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.
    6. 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. 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.
    2. 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.
    3. 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.
    4. 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.
    5. 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.
    6. 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.

    More about this item

    Keywords

    Domestic market insulation; Distorted incentives; International price transmission; Commodity price stabilization;

    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

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