World Price Uncertainty and Agricultural Policy Formulation under Rational Expectations

Jean-Marie Chauveau and Kathryn M Gordon

European Review of Agricultural Economics, 1988, vol. 15, issue 4, 437-56

Abstract: This paper presents a model of how different farm support mechanisms affect world price uncertainty. This issue is addressed within the framework of a rational expectations trade model for a storable commodity market. Here, absorption of physical production shocks are tracked separately and are found to be quite different. This model leads to the conclusion that the alleged variance-reducing impact of the free trade regime, while plausible, is a special case of a more general model in which the impact is ambiguous. Copyright 1988 by Oxford University Press.

Date: 1988
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