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The Global Food Price Crisis and China-World Rice Market Integration: A Spatial-Temporal Rational Expectations Equilibrium Model

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Listed:
  • Liu, Xianglin
  • Romero-Aguilar, Randall S.
  • Chen, Shu-Ling
  • Miranda, Mario J.

Abstract

In this paper, we examine how China, the world’s largest rice producer and consumer, would affect the international rice market if it liberalized its trade in rice and became more fully integrated into the global rice market. The impacts of trade liberalization are estimated using a spatial-temporal rational expectations model of the world rice market characterized by four interdependent markets with stochastic production patterns, constant-elasticity demands, expected-profit maximizing private speculative storers, and government stockpiling authorities. The results show that full entry by China into the world rice market will substantially reduce and stabilize the world rice price, reducing the risk faced by major importers, particularly price spikes caused by restrictive trade policies implemented by major exporters.

Suggested Citation

  • Liu, Xianglin & Romero-Aguilar, Randall S. & Chen, Shu-Ling & Miranda, Mario J., 2013. "The Global Food Price Crisis and China-World Rice Market Integration: A Spatial-Temporal Rational Expectations Equilibrium Model," 2013 Annual Meeting, August 4-6, 2013, Washington, D.C. 149965, Agricultural and Applied Economics Association.
  • Handle: RePEc:ags:aaea13:149965
    DOI: 10.22004/ag.econ.149965
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    References listed on IDEAS

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    1. Eugenio Bobenrieth & Brian Wright & Di Zeng, 2013. "Stocks-to-use ratios and prices as indicators of vulnerability to spikes in global cereal markets," Agricultural Economics, International Association of Agricultural Economists, vol. 44(s1), pages 43-52, November.
    2. Rozelle, Scott & Park, Albert & Huang, Jikun & Jin, Hehui, 2000. "Bureaucrat to Entrepreneur: The Changing Role of the State in China's Grain Economy," Economic Development and Cultural Change, University of Chicago Press, vol. 48(2), pages 227-252, January.
    3. Donald F. Larson & Julian Lampietti & Christophe Gouel & Carlo Cafiero & John Roberts, 2014. "Food Security and Storage in the Middle East and North Africa," World Bank Economic Review, World Bank Group, vol. 28(1), pages 48-73.
    4. Shiva S. Makki & Luther G. Tweeten & Mario J. Miranda, 1996. "Wheat Storage and Trade in an Efficient Global Market," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 78(4), pages 879-890.
    5. Brennan, Donna, 2003. "Price dynamics in the Bangladesh rice market: implications for public intervention," Agricultural Economics, Blackwell, vol. 29(1), pages 15-25, July.
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    Keywords

    Agricultural and Food Policy; Food Security and Poverty; International Relations/Trade;
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