Trade Barrier Volatility and Domestic Price Stabilization : Evidence from Agriculture

National barriers to trade are often varied to insulate domestic markets from international price variability, especially following a sudden spike. This paper explores the extent of that behavior by governments in the case of agricultural products,...

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Bibliographic Details
Main Authors:	Anderson, Kym, Nelgen, Signe
Format:	Policy Research Working Paper
Language:	English
Published:	2012
Subjects:	ADVERSE IMPACTS AGRICULTURAL ECONOMICS AGRICULTURAL OUTPUT AGRICULTURAL POLICY AGRICULTURAL PRICE AGRICULTURAL PRICES AGRICULTURE AVERAGE PRICE BARRIER BEEF BORDER PRICE CEREALS CLIMATE CLIMATE CHANGE COCOA COMMODITY COMMODITY MARKETS COMMODITY PRICE COMMODITY PRICES COMPARATIVE ADVANTAGE CONSUMER PRICE CONSUMER PRICES CONSUMERS COUNTRY FIXED EFFECTS DATES DEVELOPING COUNTRIES DEVELOPING COUNTRY DEVELOPMENT POLICY DOMESTIC MARKET DOMESTIC MARKETS DOMESTIC PRICE DOMESTIC PRICES ECONOMIC GROWTH ECONOMIC GROWTH RATES ECONOMIC WELFARE ELASTICITY EXCHANGE RATE EXOGENOUS SHOCK EXOGENOUS SUPPLY EXPENDITURE FINANCIAL SUPPORT FOOD EXPORTS FOOD IMPORTS FOOD MARKETS FOOD PRICE FOOD PRICES FOOD SECURITY FOOD STAPLES FREE TRADE GDP PER CAPITA GOVERNMENT INTERVENTIONS GROSS VALUE GROWTH RATES IMPORT BARRIERS INCOME INELASTIC DEMAND INFLATION INSURANCE INTERNATIONAL MARKET INTERNATIONAL MARKETS INTERNATIONAL TRADE JOBS LONG-TERM INVESTMENTS M1 M2 M3 MAIZE MARKET ACCESS MARKET POWER MIDDLE-INCOME COUNTRIES MONOPOLY OPEN ECONOMIES OUTPUT PER CAPITA INCOME POLICY IMPLICATIONS POLICY MAKERS POLICY RESPONSE POLITICAL ECONOMY PORK PRICE CHANGE PRICE CHANGES PRICE DISTORTIONS PRICE FORECASTS PRICE INSTABILITY PRICE LEVELS PRICE STABILIZATION PRODUCER PRICE PRODUCER PRICES PUBLIC GOOD PUBLICITY REAL GDP SALE SMALL COUNTRIES SOCIAL SAFETY NET SOYBEAN STOCKS SUBSTITUTE SUGAR SUPPLIERS SUPPLY SHOCKS SURPLUS TAX TRADE BARRIERS TRADE OPPORTUNITIES TRADE POLICIES TRADE POLICY TRADE REFORMS TRADE TAXES URUGUAY ROUND UTILITY THEORY VOLATILITY WAGES WHEAT WORLD TRADE WORLD TRADE ORGANIZATION WTO
Online Access:	http://www-wds.worldbank.org/external/default/main?menuPK=64187510&pagePK=64193027&piPK=64187937&theSitePK=523679&menuPK=64187510&searchMenuPK=64187283&siteName=WDS&entityID=000158349_20101222134538 http://hdl.handle.net/10986/3995

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Summary:	National barriers to trade are often varied to insulate domestic markets from international price variability, especially following a sudden spike. This paper explores the extent of that behavior by governments in the case of agricultural products, particularly food staples whose prices have spiked three times over the past four decades. It does so using new annual estimates since 1955 of agricultural price distortions in 75 countries, updated to 2008. Responses by food importers to upward price spikes are shown to be as substantial as those by food exporters, thereby weakening the domestic price-stabilizing effect of intervention by exporters. They also add to the transfer of welfare to food-surplus from food-deficit countries -- the opposite of what is usually thought of when considering inter-sector trade retaliation. Phasing down World Trade Organization-bound import tariffs toward their applied rates would help reduce the legal opportunities for food-deficit countries to raise their import restrictions when international prices slump. To date there is no parallel discipline in the World Trade Organization that limits increases in export restrictions when prices spike upward, however. Bringing such discipline through new World Trade Organization rules could help alleviate the extent to which government responses to exogenous price spikes exacerbate those spikes.

Trade Barrier Volatility and Domestic Price Stabilization : Evidence from Agriculture

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