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Novel indicators of the trade and welfare effects of agricultural distortions in OECD countries

  • Kym Anderson


  • Johanna Croser


Agricultural markets in OECD countries have long been highly distorted by government policies. Traditional weighted average aggregates of the price distortions involved, such as producer and consumer support estimates (PSEs and CSEs), can be poor indicators of the trade restrictiveness and economic welfare losses associated with them, especially if a country’s support estimates vary a lot across the product range. Certainly estimates of trade and welfare effects of price supports can be obtained from sectoral or economywide models using price elasticity estimates, but the results can be contentious if there is no consensus on what model specification and elasticity parameters to use. This paper shows that, if there is a willingness to accept simple assumptions about elasticities, it is possible to generate indicators of the welfare and trade restrictiveness of agricultural policies using no more than the price and quantity data needed to generate PSEs and CSEs. These new indexes thus provide an attractive supplement to the current policy monitoring regime developed by the OECD Secretariat.

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Article provided by Springer in its journal Review of World Economics.

Volume (Year): 147 (2011)
Issue (Month): 2 (June)
Pages: 269-302

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Handle: RePEc:spr:weltar:v:147:y:2011:i:2:p:269-302
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  1. Anderson, Kym & Croser, Johanna L. & Lloyd, Peter J, 2009. "How Do Agricultural Policy Restrictions to Global Trade and Welfare Differ Across Commodities?," CEPR Discussion Papers 7230, C.E.P.R. Discussion Papers.
  2. Kym Anderson, 2009. "Distortions to Agricultural Incentives : A Global Perspective, 1955-2007," World Bank Publications, The World Bank, number 9436.
  3. Anderson, Kym & Swinnen, Johan F.M., 2007. "Distortions to Agricultural Incentives in Europe’s Transition Economies," Agricultural Distortions Working Paper 48556, World Bank.
  4. Lloyd, Peter J. & Croser, Johanna L. & Anderson, Kym, 2009. "Global Distortions to Agricultural Markets: New Indicators of Trade and Welfare Impacts, 1955 to 2007," 2009 Conference (53rd), February 11-13, 2009, Cairns, Australia 48049, Australian Agricultural and Resource Economics Society.
  5. Kym Anderson & Ernesto Valenzuela, 2007. "Do Global Trade Distortions Still Harm Developing Country Farmers?," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 143(1), pages 108-139, April.
  6. Johanna Croser & Kym Anderson, 2010. "Changing Ccontributions of Different Agricultural Policy Instruments to Global Reductions in Trade and Welfare," Centre for International Economic Studies Working Papers 2010-05, University of Adelaide, Centre for International Economic Studies.
  7. Kee, Hiau Looi & Nicita, Alessandro & Olarreaga, Marcelo, 2006. "Estimating trade restrictiveness indices," Policy Research Working Paper Series 3840, The World Bank.
  8. Anderson, Kym & Martin, William J., 2007. "Distortions to Agricultural Incentives in Asia," Agricultural Distortions Working Paper 48557, World Bank.
  9. Kym Anderson, 2010. "Global Distortions to Agricultural Markets: New Indicators of Trade and Welfare Impacts, 1960 to 2007," Centre for International Economic Studies Working Papers 2010-03, University of Adelaide, Centre for International Economic Studies.
  10. Anderson, Kym & Lattimore, Ralph G. & Lloyd, Peter J. & MacLaren, Donald, 2007. "Distortions to Agricultural Incentives in Australia and New Zealand," 2007 Conference (51st), February 13-16, 2007, Queenstown, New Zealand 10407, Australian Agricultural and Resource Economics Society.
  11. James E. Anderson & J. Peter Neary, 2005. "Measuring the Restrictiveness of International Trade Policy," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262012200, June.
  12. Anderson, Kym, 2009. "Five Decades of Distortions to Agricultural Incentives," Agricultural Distortions Working Paper 48742, World Bank.
  13. Teresa Serra & David Zilberman & Barry K. Goodwin & Allen Featherstone, 2006. "Effects of decoupling on the mean and variability of output," European Review of Agricultural Economics, Foundation for the European Review of Agricultural Economics, vol. 33(3), pages 269-288, September.
  14. Douglas A. Irwin, 2010. "Trade Restrictiveness and Deadweight Losses from US Tariffs," American Economic Journal: Economic Policy, American Economic Association, vol. 2(3), pages 111-33, August.
  15. Valdés, Alberto & Zietz, Joachim A., 1980. "Agricultural protection in OECD countries: its cost to less-developed countries," Research reports 21, International Food Policy Research Institute (IFPRI).
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