Trade Policy Coordination and Food Price Volatility
Christophe Gouel
American Journal of Agricultural Economics, 2016, vol. 98, issue 4, 1018-1037
Abstract:
Many countries adjust their trade policies counter-cyclically with food prices, to the extent that the use of restrictions by food-exporting countries has occasionally threatened the food security of food-importing countries. These trade policies are inconsistent with the terms-of-trade motivation often retained to characterize the payoff frontier of self-enforcing trade agreements, as they can worsen the terms of trade of the countries that apply them. This article analyzes trade policy coordination when trade policies are driven by terms-of-trade effects and a desire to reduce domestic food price volatility. This framework implies that importing and exporting countries have incentives to deviate from cooperation at different periods: the latter when prices are high and the former when prices are low. Since staple food prices tend to have asymmetric distributions, with more prices below than above the mean but with occasional spikes, a self-enforcing agreement generates asymmetric outcomes. Without cooperation, an importing country uses its trade policy more frequently because of the concentration of prices below the mean, but an exporting country has a greater incentive to deviate from a cooperative trade policy because positive deviations from the mean price are larger than negative ones. Thus, the asymmetry of the distribution of commodity prices can make it more difficult to discipline export taxes than tariffs in trade agreements.
Date: 2016
References: Add references at CitEc
Citations: View citations in EconPapers (18)
Downloads: (external link)
http://hdl.handle.net/10.1093/ajae/aaw020 (application/pdf)
Access to full text is restricted to subscribers.
Related works:
Working Paper: Trade policy coordination and food price volatility (2016) 
Working Paper: Trade Policy Coordination and Food Price Volatility (2015) 
Working Paper: Trade policy coordination and food price volatility (2014) 
Working Paper: Trade Policy Coordination and Food Price Volatility (2014) 
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:oup:ajagec:v:98:y:2016:i:4:p:1018-1037.
Access Statistics for this article
American Journal of Agricultural Economics is currently edited by Madhu Khanna, Brian E. Roe, James Vercammen and JunJie Wu
More articles in American Journal of Agricultural Economics from Agricultural and Applied Economics Association Contact information at EDIRC.
Bibliographic data for series maintained by Oxford University Press ().