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Rain, food and tariffs

  • Paulo Bastos


    (Research Department, Inter-American Development Bank, United States)

  • Odd Rune Straume


    (Department of Economics, University of Minho)

  • Jaime A. Urrego


    (Research Department, Inter-American Development Bank, United States)

We examine whether and how rainfall shocks affect tariff setting in the agricultural sector. In a model of international oligopoly, we show that the impact of a negative rainfall shock on optimal import tariffs is generally ambiguous, depending on the weight placed by the domestic policy maker on tariff revenue, profi ts and the consumer surplus. The more weight placed on domestic profits ts, the more likely it is that the policy maker will respond to a rainfall shortage by reducing import tariffs. Using detailed panel data on applied tariffs and rainfall for 70 nations, we fi nd that rainfall shortages generally induce policy makers to set lower tariffs on agricultural imports.

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Paper provided by NIPE - Universidade do Minho in its series NIPE Working Papers with number 06/2012.

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Date of creation: 2012
Date of revision:
Handle: RePEc:nip:nipewp:06/2012
Contact details of provider: Postal: Núcleo de Investigação em Políticas Económicas, Escola de Economia e Gestão, Universidade do Minho, P-4710-057 Braga, Portugal
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  1. Sharon Maccini & Dean Yang, 2009. "Under the Weather: Health, Schooling, and Economic Consequences of Early-Life Rainfall," American Economic Review, American Economic Association, vol. 99(3), pages 1006-26, June.
  2. Brückner, Markus & Ciccone, Antonio, 2008. "Rain and the Democratic Window of Opportunity," CEPR Discussion Papers 6691, C.E.P.R. Discussion Papers.
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  4. Gibson, Paul R. & Wainio, John & Whitley, Daniel B. & Bohman, Mary, 2001. "Profiles Of Tariffs In Global Agricultural Markets," Agricultural Economics Reports 34055, United States Department of Agriculture, Economic Research Service.
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  6. Bagwell, Kyle & Staiger, Robert W., 2009. "The economics of trade agreements in the linear Cournot delocation model," WTO Staff Working Papers ERSD-2009-10, World Trade Organization (WTO), Economic Research and Statistics Division.
  7. Grossman, Gene M & Helpman, Elhanan, 1994. "Protection for Sale," American Economic Review, American Economic Association, vol. 84(4), pages 833-50, September.
  8. S. Narayan, 2009. "India," Chapters, in: The Political Economy of Trade Reform in Emerging Markets, chapter 7 Edward Elgar.
  9. Olivier Desch�nes & Michael Greenstone, 2007. "The Economic Impacts of Climate Change: Evidence from Agricultural Output and Random Fluctuations in Weather," American Economic Review, American Economic Association, vol. 97(1), pages 354-385, March.
  10. Dixit, Avinash, 1984. "International Trade Policy for Oligopolistic Industries," Economic Journal, Royal Economic Society, vol. 94(376a), pages 1-16, Supplemen.
  11. Kishore Gawande & Usree Bandyopadhyay, 2000. "Is Protection for Sale? Evidence on the Grossman-Helpman Theory of Endogenous Protection," The Review of Economics and Statistics, MIT Press, vol. 82(1), pages 139-152, February.
  12. Dave Donaldson, 2010. "Railroads of the Raj: Estimating the Impact of Transportation Infrastructure," NBER Working Papers 16487, National Bureau of Economic Research, Inc.
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