Food trade policy and food price volatility
Food trade barriers in many countries are systematically adjusted to insulate domestic markets from world price changes—a response not predicted by traditional political economy models. In this study, policymakers are assumed to minimize the political costs associated with changing domestic prices a...
| Autores principales: | , , |
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| Formato: | Artículo preliminar |
| Lenguaje: | Inglés |
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International Food Policy Research Institute
2024
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| Materias: | |
| Acceso en línea: | https://hdl.handle.net/10568/141800 |
| _version_ | 1855527243895275520 |
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| author | Martin, Will Mamun, Abdullah Minot, Nicholas |
| author_browse | Mamun, Abdullah Martin, Will Minot, Nicholas |
| author_facet | Martin, Will Mamun, Abdullah Minot, Nicholas |
| author_sort | Martin, Will |
| collection | Repository of Agricultural Research Outputs (CGSpace) |
| description | Food trade barriers in many countries are systematically adjusted to insulate domestic markets from world price changes—a response not predicted by traditional political economy models. In this study, policymakers are assumed to minimize the political costs associated with changing domestic prices and deviating from longer-run political-economy equilibria. Error correction techniques applied to domestic and world price data for rice and wheat collected to measure trade policy distortions allow estimation of policy response parameters. The results suggest that systematic short-run price insulation reduces shocks to domestic prices but sharply increases world price volatility and the costs of trade distortions. However, idiosyncratic domestic price shocks resulting from inefficient policy instruments such as quantitative restrictions increase domestic price volatility relative to the magnified volatility of world prices—frequently outweighing the stabilizing impacts of price insulation. This fundamentally changes our understanding of the impacts of price-insulation—from a zero-sum game where some countries reduce the volatility of their prices using beggar-thy-neighbor policies that raise price volatility elsewhere, into one where price volatility rises in most countries. National policy reforms to move away from discretionary, destabilizing policies could lower costs, reduce volatility in domestic and world prices, and facilitate reform of international trade rules. |
| format | Artículo preliminar |
| id | CGSpace141800 |
| institution | CGIAR Consortium |
| language | Inglés |
| publishDate | 2024 |
| publishDateRange | 2024 |
| publishDateSort | 2024 |
| publisher | International Food Policy Research Institute |
| publisherStr | International Food Policy Research Institute |
| record_format | dspace |
| spelling | CGSpace1418002025-11-06T06:25:15Z Food trade policy and food price volatility Martin, Will Mamun, Abdullah Minot, Nicholas food prices volatility consumer economics trade policies behaviour econometric models Food trade barriers in many countries are systematically adjusted to insulate domestic markets from world price changes—a response not predicted by traditional political economy models. In this study, policymakers are assumed to minimize the political costs associated with changing domestic prices and deviating from longer-run political-economy equilibria. Error correction techniques applied to domestic and world price data for rice and wheat collected to measure trade policy distortions allow estimation of policy response parameters. The results suggest that systematic short-run price insulation reduces shocks to domestic prices but sharply increases world price volatility and the costs of trade distortions. However, idiosyncratic domestic price shocks resulting from inefficient policy instruments such as quantitative restrictions increase domestic price volatility relative to the magnified volatility of world prices—frequently outweighing the stabilizing impacts of price insulation. This fundamentally changes our understanding of the impacts of price-insulation—from a zero-sum game where some countries reduce the volatility of their prices using beggar-thy-neighbor policies that raise price volatility elsewhere, into one where price volatility rises in most countries. National policy reforms to move away from discretionary, destabilizing policies could lower costs, reduce volatility in domestic and world prices, and facilitate reform of international trade rules. 2024-05-09 2024-05-09T19:27:06Z 2024-05-09T19:27:06Z Working Paper https://hdl.handle.net/10568/141800 en Open Access application/pdf International Food Policy Research Institute Martin, Will; Mamun, Abdullah; and Minot, Nicholas. 2024. Food trade policy and food price volatility. IFPRI Discussion Paper 2253. Washington, DC: International Food Policy Research Institute. https://hdl.handle.net/10568/141800 |
| spellingShingle | food prices volatility consumer economics trade policies behaviour econometric models Martin, Will Mamun, Abdullah Minot, Nicholas Food trade policy and food price volatility |
| title | Food trade policy and food price volatility |
| title_full | Food trade policy and food price volatility |
| title_fullStr | Food trade policy and food price volatility |
| title_full_unstemmed | Food trade policy and food price volatility |
| title_short | Food trade policy and food price volatility |
| title_sort | food trade policy and food price volatility |
| topic | food prices volatility consumer economics trade policies behaviour econometric models |
| url | https://hdl.handle.net/10568/141800 |
| work_keys_str_mv | AT martinwill foodtradepolicyandfoodpricevolatility AT mamunabdullah foodtradepolicyandfoodpricevolatility AT minotnicholas foodtradepolicyandfoodpricevolatility |