Managing Food Price Volatility in a Large Open Country : The Case of Wheat in India
India has pursued an active food security policy for many years, using a combination of trade policy interventions, public distribution of food staples, and assistance to farmers through minimum support prices defended by public stocks. This policy...
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World Bank, Washington, DC
2016
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| Online Access: | http://documents.worldbank.org/curated/en/2016/02/25860944/managing-food-price-volatility-large-open-country-case-wheat-india http://hdl.handle.net/10986/23728 |
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okr-10986-237282021-04-23T14:04:17Z Managing Food Price Volatility in a Large Open Country : The Case of Wheat in India Gouel, Christophe Gautam, Madhur Martin, William J. `Martin, Will J. PROFIT MAXIMIZATION SUBSTITUTION PRODUCTION MULTIPLIERS PRICE LEVELS PRICE STABILIZATION LAGS STOCK STABILIZATION POLICIES SALES INCOME INTEREST EXPECTATIONS MARGINAL COST TRADE BARRIERS INTEREST RATE EXCHANGE EXPORTS DOMESTIC MARKET ELASTICITY PRODUCER PRICES PRIVATE ENTITY WELFARE OPTIMIZATION INCENTIVES FAIR EQUILIBRIUM DISTRIBUTION VARIABLES DOMESTIC PRICE SUBSIDY PRICE REAL INCOME INPUTS PRICE UNCERTAINTY FREE TRADE CASH FLOWS RISK‐NEUTRAL TRENDS CHOICE STABILIZATION POLICY PUBLIC POLICY INFLUENCE SAVINGS COSTS DEVELOPMENT ECONOMICS DEMAND ELASTICITY PRICE VOLATILITY FOOD PRICE OUTPUTS SURPLUS PRODUCTS EXCHANGE RATES ECONOMETRICS INTEREST RATES LAISSEZ‐FAIRE FAILURES CRITERIA MARKETING MARKETS OPEN ECONOMY PRICE ELASTICITY PRICE POLICY TRADE POLICY PRODUCT PRICE BEHAVIOR UTILITY SUPPLY ELASTICITY SUBSIDIES COMMODITY PRICE TRADE POLICIES MARKET PRICE TAXES PRICE CHANGE MARKET ECONOMY INCOMPLETE MARKETS CONSUMPTION RISK NEUTRAL OPPORTUNITY COST FRAUD INTERNATIONAL TRADE VOLATILITY BARRIERS MARKET CONDITIONS MARKET FAILURES MARKET PRICES VALUE PRODUCER PRICE DEMAND AGGREGATE DEMAND PRICE RISK DEMAND FUNCTION FLOOR PRICE CONSUMER PRICE PRICE STABILITY TIME VALUE OF MONEY PRICE CHANGES AGRICULTURE CONSUMERS EQUATIONS EQUILIBRIUM VALUES RAPID EXPANSION MARKET BENCHMARK ECONOMIC THEORY MIDDLE-INCOME COUNTRY PRICE INSTABILITY CLOSED ECONOMY OUTPUT PRICE MOVEMENTS BIDDING TRADE DOMESTIC PRICES THEORY SECURITY STOCKS MARKET EQUILIBRIUM SHARE SUPPLY PURCHASING MARKET POWER RISK‐AVERSE CONSUMER PRICE INDEX WORLD TRADE COMMUNICATION COMMODITIES EXCHANGE RATE LAISSEZ FAIRE RISK AVERSION FOOD PRICES ARBITRAGE ACCELERATOR ECONOMICS RESEARCH PRICE INDEX BORDER PRICE OUTCOMES MARGINAL UTILITY COMMODITY WORLD MARKET PRICES VALUE OF MONEY CASH FLOW DEVELOPMENT POLICY STORAGE India has pursued an active food security policy for many years, using a combination of trade policy interventions, public distribution of food staples, and assistance to farmers through minimum support prices defended by public stocks. This policy has been quite successful in stabilizing staple food prices, but at a high cost, and with potential risks of unmanageable stock accumulation. Based on a rational expectations storage model representing the Indian wheat market and its relation to the rest of the world, this paper analyzes the cost and welfare implications of this policy and unpacks the contribution of its different elements. To analyze alternative policies, social welfare is assumed to include an objective of price stabilization and optimal policies corresponding to this objective are assessed. Considering fully optimal policies under commitment as well as optimal simple rules, it is shown that adopting simple rules can achieve most of the gains from fully optimal policies, with both potentially allowing for lower stockholding levels and costs. 2016-02-03T20:00:35Z 2016-02-03T20:00:35Z 2016-02 Working Paper http://documents.worldbank.org/curated/en/2016/02/25860944/managing-food-price-volatility-large-open-country-case-wheat-india http://hdl.handle.net/10986/23728 English en_US Policy Research Working Paper;No. 7551 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ World Bank World Bank, Washington, DC Publications & Research Publications & Research :: Policy Research Working Paper South Asia India |
| repository_type |
Digital Repository |
| institution_category |
Foreign Institution |
| institution |
Digital Repositories |
| building |
World Bank Open Knowledge Repository |
| collection |
World Bank |
| language |
English en_US |
| topic |
PROFIT MAXIMIZATION SUBSTITUTION PRODUCTION MULTIPLIERS PRICE LEVELS PRICE STABILIZATION LAGS STOCK STABILIZATION POLICIES SALES INCOME INTEREST EXPECTATIONS MARGINAL COST TRADE BARRIERS INTEREST RATE EXCHANGE EXPORTS DOMESTIC MARKET ELASTICITY PRODUCER PRICES PRIVATE ENTITY WELFARE OPTIMIZATION INCENTIVES FAIR EQUILIBRIUM DISTRIBUTION VARIABLES DOMESTIC PRICE SUBSIDY PRICE REAL INCOME INPUTS PRICE UNCERTAINTY FREE TRADE CASH FLOWS RISK‐NEUTRAL TRENDS CHOICE STABILIZATION POLICY PUBLIC POLICY INFLUENCE SAVINGS COSTS DEVELOPMENT ECONOMICS DEMAND ELASTICITY PRICE VOLATILITY FOOD PRICE OUTPUTS SURPLUS PRODUCTS EXCHANGE RATES ECONOMETRICS INTEREST RATES LAISSEZ‐FAIRE FAILURES CRITERIA MARKETING MARKETS OPEN ECONOMY PRICE ELASTICITY PRICE POLICY TRADE POLICY PRODUCT PRICE BEHAVIOR UTILITY SUPPLY ELASTICITY SUBSIDIES COMMODITY PRICE TRADE POLICIES MARKET PRICE TAXES PRICE CHANGE MARKET ECONOMY INCOMPLETE MARKETS CONSUMPTION RISK NEUTRAL OPPORTUNITY COST FRAUD INTERNATIONAL TRADE VOLATILITY BARRIERS MARKET CONDITIONS MARKET FAILURES MARKET PRICES VALUE PRODUCER PRICE DEMAND AGGREGATE DEMAND PRICE RISK DEMAND FUNCTION FLOOR PRICE CONSUMER PRICE PRICE STABILITY TIME VALUE OF MONEY PRICE CHANGES AGRICULTURE CONSUMERS EQUATIONS EQUILIBRIUM VALUES RAPID EXPANSION MARKET BENCHMARK ECONOMIC THEORY MIDDLE-INCOME COUNTRY PRICE INSTABILITY CLOSED ECONOMY OUTPUT PRICE MOVEMENTS BIDDING TRADE DOMESTIC PRICES THEORY SECURITY STOCKS MARKET EQUILIBRIUM SHARE SUPPLY PURCHASING MARKET POWER RISK‐AVERSE CONSUMER PRICE INDEX WORLD TRADE COMMUNICATION COMMODITIES EXCHANGE RATE LAISSEZ FAIRE RISK AVERSION FOOD PRICES ARBITRAGE ACCELERATOR ECONOMICS RESEARCH PRICE INDEX BORDER PRICE OUTCOMES MARGINAL UTILITY COMMODITY WORLD MARKET PRICES VALUE OF MONEY CASH FLOW DEVELOPMENT POLICY STORAGE |
| spellingShingle |
PROFIT MAXIMIZATION SUBSTITUTION PRODUCTION MULTIPLIERS PRICE LEVELS PRICE STABILIZATION LAGS STOCK STABILIZATION POLICIES SALES INCOME INTEREST EXPECTATIONS MARGINAL COST TRADE BARRIERS INTEREST RATE EXCHANGE EXPORTS DOMESTIC MARKET ELASTICITY PRODUCER PRICES PRIVATE ENTITY WELFARE OPTIMIZATION INCENTIVES FAIR EQUILIBRIUM DISTRIBUTION VARIABLES DOMESTIC PRICE SUBSIDY PRICE REAL INCOME INPUTS PRICE UNCERTAINTY FREE TRADE CASH FLOWS RISK‐NEUTRAL TRENDS CHOICE STABILIZATION POLICY PUBLIC POLICY INFLUENCE SAVINGS COSTS DEVELOPMENT ECONOMICS DEMAND ELASTICITY PRICE VOLATILITY FOOD PRICE OUTPUTS SURPLUS PRODUCTS EXCHANGE RATES ECONOMETRICS INTEREST RATES LAISSEZ‐FAIRE FAILURES CRITERIA MARKETING MARKETS OPEN ECONOMY PRICE ELASTICITY PRICE POLICY TRADE POLICY PRODUCT PRICE BEHAVIOR UTILITY SUPPLY ELASTICITY SUBSIDIES COMMODITY PRICE TRADE POLICIES MARKET PRICE TAXES PRICE CHANGE MARKET ECONOMY INCOMPLETE MARKETS CONSUMPTION RISK NEUTRAL OPPORTUNITY COST FRAUD INTERNATIONAL TRADE VOLATILITY BARRIERS MARKET CONDITIONS MARKET FAILURES MARKET PRICES VALUE PRODUCER PRICE DEMAND AGGREGATE DEMAND PRICE RISK DEMAND FUNCTION FLOOR PRICE CONSUMER PRICE PRICE STABILITY TIME VALUE OF MONEY PRICE CHANGES AGRICULTURE CONSUMERS EQUATIONS EQUILIBRIUM VALUES RAPID EXPANSION MARKET BENCHMARK ECONOMIC THEORY MIDDLE-INCOME COUNTRY PRICE INSTABILITY CLOSED ECONOMY OUTPUT PRICE MOVEMENTS BIDDING TRADE DOMESTIC PRICES THEORY SECURITY STOCKS MARKET EQUILIBRIUM SHARE SUPPLY PURCHASING MARKET POWER RISK‐AVERSE CONSUMER PRICE INDEX WORLD TRADE COMMUNICATION COMMODITIES EXCHANGE RATE LAISSEZ FAIRE RISK AVERSION FOOD PRICES ARBITRAGE ACCELERATOR ECONOMICS RESEARCH PRICE INDEX BORDER PRICE OUTCOMES MARGINAL UTILITY COMMODITY WORLD MARKET PRICES VALUE OF MONEY CASH FLOW DEVELOPMENT POLICY STORAGE Gouel, Christophe Gautam, Madhur Martin, William J. `Martin, Will J. Managing Food Price Volatility in a Large Open Country : The Case of Wheat in India |
| geographic_facet |
South Asia India |
| relation |
Policy Research Working Paper;No. 7551 |
| description |
India has pursued an active food
security policy for many years, using a combination of trade
policy interventions, public distribution of food staples,
and assistance to farmers through minimum support prices
defended by public stocks. This policy has been quite
successful in stabilizing staple food prices, but at a high
cost, and with potential risks of unmanageable stock
accumulation. Based on a rational expectations storage model
representing the Indian wheat market and its relation to the
rest of the world, this paper analyzes the cost and welfare
implications of this policy and unpacks the contribution of
its different elements. To analyze alternative policies,
social welfare is assumed to include an objective of price
stabilization and optimal policies corresponding to this
objective are assessed. Considering fully optimal policies
under commitment as well as optimal simple rules, it is
shown that adopting simple rules can achieve most of the
gains from fully optimal policies, with both potentially
allowing for lower stockholding levels and costs. |
| format |
Working Paper |
| author |
Gouel, Christophe Gautam, Madhur Martin, William J. `Martin, Will J. |
| author_facet |
Gouel, Christophe Gautam, Madhur Martin, William J. `Martin, Will J. |
| author_sort |
Gouel, Christophe |
| title |
Managing Food Price Volatility in a Large Open Country : The Case of Wheat in India |
| title_short |
Managing Food Price Volatility in a Large Open Country : The Case of Wheat in India |
| title_full |
Managing Food Price Volatility in a Large Open Country : The Case of Wheat in India |
| title_fullStr |
Managing Food Price Volatility in a Large Open Country : The Case of Wheat in India |
| title_full_unstemmed |
Managing Food Price Volatility in a Large Open Country : The Case of Wheat in India |
| title_sort |
managing food price volatility in a large open country : the case of wheat in india |
| publisher |
World Bank, Washington, DC |
| publishDate |
2016 |
| url |
http://documents.worldbank.org/curated/en/2016/02/25860944/managing-food-price-volatility-large-open-country-case-wheat-india http://hdl.handle.net/10986/23728 |
| _version_ |
1764454649463570432 |