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Decomposing Changes in Agricultural Price Gaps

  • Liefert, William M.

The paper develops a procedure for decomposing changes in agricultural price gaps, defined as the difference between a commodity's domestic producer and border prices. Two decomposition approaches are presented, depending on whether policy allows transmission from changes in trade prices and exchange rates to domestic prices. The methods allow one to isolate and measure the effect on the price gap of changes in agricultural policy versus non-policy variables. The decomposition procedure is demonstrated in an example involving the price gap for Russian poultry in the late 1990s. The results are consistent with the argument that for developing and transition economies, the main cause of changes in price gaps is incomplete transmission of changes in exchange rates to domestic prices, resulting not from policy intervention, but rather from undeveloped market infrastructure.

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File URL: http://purl.umn.edu/14592
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Paper provided by International Agricultural Trade Research Consortium in its series Working Papers with number 14592.

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Date of creation: 2005
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Handle: RePEc:ags:iatrwp:14592
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  1. Valdes, A, 1996. "Surveillance of Agricultural Price and Trade Policy in Latin America during Major Policy Reform," World Bank - Discussion Papers 349, World Bank.
  2. Barry K. Goodwin & Thomas J. Grennes & Christine McCurdy, 1999. "Spatial price dynamics and integration in russian food markets," Journal of Economic Policy Reform, Taylor & Francis Journals, vol. 3(2), pages 157-193.
  3. William M. Liefert & David J. Sedik & Robert B. Koopman & Eugenia Serova & Olga Melyukhina, 1996. "Producer Subsidy Equivalents for Russian Agriculture: Estimation and Interpretation," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 78(3), pages 792-798.
  4. Valdes, A., 2000. "Agricultural Support Policies in Transition Economies," Papers 470, World Bank - Technical Papers.
  5. Mundlak, Yair & Larson, Donald F, 1992. "On the Transmission of World Agricultural Prices," World Bank Economic Review, World Bank Group, vol. 6(3), pages 399-422, September.
  6. Liefert, William M., 2007. "Decomposing Changes in Agricultural Price Gaps," Working Papers 14576, International Agricultural Trade Research Consortium.
  7. Skully, David W., 2001. "Economics Of Tariff-Rate Quota Administration," Technical Bulletins 33576, United States Department of Agriculture, Economic Research Service.
  8. Ackerman, Karen Z. & Dixit, Praveen M., 1999. "An Introduction To State Trading In Agriculture," Agricultural Economics Reports 33909, United States Department of Agriculture, Economic Research Service.
  9. Jorge Quiróz & Raimundo Soto, . "International Price Signals in Agricultural Markets: DoGovernments Care?," ILADES-Georgetown University Working Papers inv088, Ilades-Georgetown University, Universidad Alberto Hurtado/School of Economics and Bussines.
  10. Fackler, Paul L. & Goodwin, Barry K., 2001. "Spatial price analysis," Handbook of Agricultural Economics, in: B. L. Gardner & G. C. Rausser (ed.), Handbook of Agricultural Economics, edition 1, volume 1, chapter 17, pages 971-1024 Elsevier.
  11. Quiroz, Jorge & Valdes, Alberto, 1993. "Agricultural incentives and international competitiveness: Government interventions and exogenous shocks in four East African countries," Food Policy, Elsevier, vol. 18(4), pages 342-354, August.
  12. Paula De Masi & Vincent Koen, 1996. "Relative Price Convergence in Russia," IMF Staff Papers, Palgrave Macmillan, vol. 43(1), pages 97-122, March.
  13. Stefan R Osborne & William M Liefert, 2004. "Price and Exchange Rate Transmission in Russian Meat Markets," Comparative Economic Studies, Palgrave Macmillan, vol. 46(2), pages 221-244, June.
  14. Christopher B. Barrett & Jau Rong Li, 2002. "Distinguishing between Equilibrium and Integration in Spatial Price Analysis," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 84(2), pages 292-307.
  15. Skully, David W., 2001. "Economics of Tariff-Rate Quota Administration," Technical Bulletins 184332, United States Department of Agriculture, Economic Research Service.
  16. Roberts, Donna & Josling, Timothy E. & Orden, David, 1999. "A Framework for Analyzing Technical Trade Barriers in Agricultural Markets," Technical Bulletins 33560, United States Department of Agriculture, Economic Research Service.
  17. Matthew Harley, 1996. "Use of the Producer Subsidy Equivalent as a Measure of Support to Agriculture in Transition Economies," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 78(3), pages 799-804.
  18. Csaki, S. & Nash, J., 1998. "The Agrarian Economies of Central and Eastern Europe and the Commonwealth of Independent States. Situation and Perspectives, 1997," World Bank - Discussion Papers 387, World Bank.
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