Rules versus discretion in food storage policies
This article compares different policies in a rational expectations storage model with risk-averse consumers and missing insurance markets calibrated to represent a developing country. We consider an optimal storage policy under discretion and two optimal simple rules, a constant private storage subsidy and a price-band. The storage subsidy achieves welfare gains similar to the discretionary policy. The price-band maximizing social welfare is a price-peg scheme: the floor and ceiling prices are the same, and the capacity constraint represents 11% of the steady-state production level. It achieves three-quarters of the gains from the optimal policy under discretion.
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|Date of creation:||2013|
|Publication status:||Published in American Journal of Agricultural Economics, Oxford University Press (OUP), 2013, 95 (4), pp.1029-1044. <10.1093/ajae/aat016>|
|Note:||View the original document on HAL open archive server: https://hal.archives-ouvertes.fr/hal-00939613|
|Contact details of provider:|| Web page: https://hal.archives-ouvertes.fr/|
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