High Trade Costs and Their Consequences: An Estimated Dynamic Model of African Agricultural Storage and Trade

Obie Porteous

American Economic Journal: Applied Economics, 2019, vol. 11, issue 4, 327-66

Abstract: Using a new intranational dataset of monthly grain prices and production and a new approach to identify cost parameters, I estimate and solve a dynamic model of agricultural storage and trade covering all 42 countries of continental sub-Saharan Africa. I find median trade costs over five times higher than elsewhere in the world. The potential welfare gains from reducing these costs are substantial, are driven by lower food prices, and can be achieved efficiently by investing in well-targeted trade corridors. A static annual model underestimates trade costs and welfare effects by failing to identify when trade occurs.

JEL-codes: F14 O13 O19 Q11 Q13 Q17 (search for similar items in EconPapers)
Date: 2019
Note: DOI: 10.1257/app.20170442
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Citations: View citations in EconPapers (45)

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