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Do Trade Agreements Reduce the Volatility of Agricultural Distortions?

Author

Listed:
  • Cadot, Olivier
  • Olarreaga, Marcelo
  • Tschopp, Jeanne

Abstract

The objective of this paper is to evaluate the extend to which trade agreements affect agricultural trade policy volatility. Using a new panel database compiled as part of the World Bank's Agricultural Distortions research project, we estimate the effect of regionalism (proxied in various ways) on the volatility of price distortions measured by the absolute value of their first differences, averaged, for each country and year, over all agricultural goods. Using an instrumental-variable approach to correct for the endogeneity of regional trade agreements, (RTAs), we find that participation in RTAs has a significantly negative effect on agricultural trade-policy volatility. We find that the WTO's agricultural agreement also contributed to reducing agricultural trade-policy volatility, in spite of the weak disciplines involved, but the effect is only weakly identified. Our results are robust to a variety of robustness checks and hold, in particular, for the Latin American sub-sample.

Suggested Citation

  • Cadot, Olivier & Olarreaga, Marcelo & Tschopp, Jeanne, 2009. "Do Trade Agreements Reduce the Volatility of Agricultural Distortions?," Agricultural Distortions Working Paper Series 50303, World Bank.
    • Handle: RePEc:ags:wbadwp:50303
    DOI: 10.22004/ag.econ.50303
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    Cited by:

    1. Matthias Kalkuhl & Lukas Kornher & Matthias Kalkuhl & Irfan Mujahid, 2015. "Food price volatility in developing countries – the role of trade and storage," EcoMod2015 8415, EcoMod.
    2. Kangni Kpodar & Patrick Imam, 2016. "Does a Regional Trade Agreement Lessen or Worsen Growth Volatility? An Empirical Investigation," Review of International Economics, Wiley Blackwell, vol. 24(5), pages 949-979, November.
    3. Valeria Groppo & Roberta Piermartini, 2014. "Trade Policy Uncertainty and the WTO," Discussion Papers of DIW Berlin 1437, DIW Berlin, German Institute for Economic Research.
    4. Mr. Kangni R Kpodar & Patrick A. Imam, 2015. "Does A Regional Trade Agreement Lessen or Exacerbate Growth Volatility? An Empirical Investigation," IMF Working Papers 2015/177, International Monetary Fund.
    5. Nuno Limão & Giovanni Maggi, 2018. "Uncertainty and Trade Agreements," World Scientific Book Chapters, in: Policy Externalities and International Trade Agreements, chapter 3, pages 47-88, World Scientific Publishing Co. Pte. Ltd..
    6. Adrian D. Lubis & Dian V. Panjaitan, 2012. "Volatility of volume imports of major food commodities in Indonesia," Economic Journal of Emerging Markets, Universitas Islam Indonesia, vol. 4(2), pages 127-142, April.
    7. Bürgi Bonanomi, Elisabeth & Elsig, Manfred & Espa, Ilaria, 2015. "The Commodity Sector and Related Governance Challenges from a Sustainable Development Perspective: The Example of Switzerland Current Research Gaps," Papers 865, World Trade Institute.

    More about this item

    Keywords

    Agricultural and Food Policy; International Relations/Trade;

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