Novel Indicators of the Trade and Welfare Effects of Agricultural Distortions in OECD Countries

45 Pages Posted: 24 Aug 2010

See all articles by Kym Anderson

Kym Anderson

University of Adelaide - Centre for International Economic Studies (CIES); Centre for Economic Policy Research (CEPR); Australian National University

Johanna L. Croser

University of Adelaide

Multiple version iconThere are 2 versions of this paper

Date Written: August 2010

Abstract

Agricultural markets in OECD countries have long been highly distorted by government policies. Traditional weighted average aggregates of the price distortions involved, such as producer and consumer support estimates (PSEs and CSEs), can be poor indicators of the trade restrictiveness and economic welfare losses associated with them, especially if a country’s support estimates vary a lot across the product range. Certainly estimates of trade and welfare effects of price supports can be obtained from sectoral or economywide models using price elasticity estimates, but the results can be contentious if there is no consensus on what model specification and elasticity parameters to use. This paper shows that, if there is a willingness to accept simple assumptions about elasticities, it is possible to generate indicators of the welfare and trade restrictiveness of agricultural policies using no more than the price and quantity data needed to generate PSEs and CSEs. These new indexes thus provide an attractive supplement to the current policy monitoring regime developed by the OECD Secretariat.

Keywords: agricultural price and trade policies, Distorted incentives, trade restrictiveness index

JEL Classification: F13, F14, Q17, Q18

Suggested Citation

Anderson, Kym and Croser, Johanna L., Novel Indicators of the Trade and Welfare Effects of Agricultural Distortions in OECD Countries (August 2010). CEPR Discussion Paper No. DP7971, Available at SSRN: https://ssrn.com/abstract=1661574

Kym Anderson (Contact Author)

University of Adelaide - Centre for International Economic Studies (CIES) ( email )

School of Economics
Adelaide SA 5005
Australia
+61 8 8313 4712 (Phone)
+61 8 8223 1460 (Fax)

Centre for Economic Policy Research (CEPR)

London
United Kingdom

Australian National University ( email )

Arndt-Corden Dept of Economics
Coombs Building
Canberra, AK ACT 2600
Australia
+61 8 8313 4712 (Phone)

HOME PAGE: http://publicpolicy.anu.edu.au/crawford_people/content/staff/acde/kanderson.php

Johanna L. Croser

University of Adelaide ( email )

No 233 North Terrace, School of Commerce
Adelaide, South Australia 5005
Australia

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