Export Restrictions and Price Insulation During Commodity Price Booms

Kym Anderson and Will Martin

No 8494, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: For individual countries, variable trade barriers can be used to reduce the volatility of domestic relative to world prices. If this is done by countries accounting for a large share of the market, its effect is offset by increases in world price volatility. This study shows the nature of the resulting collective action problem, with the policy being ineffective on average in stabilizing domestic prices while increasing the volatility of the income transfers from terms-of-trade changes. A simple approach to assessing the contribution of insulation to the price increases is developed and used with new estimates of agricultural distortions to assess its contribution to the price spikes in 1972-4 and 2006-8 for rice and wheat. The analysis suggests that 45 percent of the increase in rice prices in 2006-8, and 30 percent of the increase in wheat prices, was due to insulating behavior. One sign of progress since 1972-74 was a substantial reduction in the extent of price-insulating behavior by the industrial countries. This provides little stabilizing benefit in the rice market because countries not classifying themselves at WTO as developing account for only 3 percent of world rice consumption, but it does offer some benefit for the wheat market where non-developing countries account for 27 percent of consumption.

Keywords: Food price volatility; Insulating trade policies; Food security (search for similar items in EconPapers)
JEL-codes: F13 Q02 Q17 Q18 (search for similar items in EconPapers)
Date: 2011-07
New Economics Papers: this item is included in nep-agr
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (106)

Downloads: (external link)
https://cepr.org/publications/DP8494 (application/pdf)
CEPR Discussion Papers are free to download for our researchers, subscribers and members. If you fall into one of these categories but have trouble downloading our papers, please contact us at subscribers@cepr.org

Related works:
Journal Article: Export Restrictions and Price Insulation During Commodity Price Booms (2012)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:cpr:ceprdp:8494

Ordering information: This working paper can be ordered from
https://cepr.org/publications/DP8494

Access Statistics for this paper

More papers in CEPR Discussion Papers from C.E.P.R. Discussion Papers Centre for Economic Policy Research, 33 Great Sutton Street, London EC1V 0DX.
Bibliographic data for series maintained by ().