How Do Governments Respond to Food Price Spikes? Lessons from the Past
Journal of International Commerce, Economics and Policy (JICEP), World Scientific, 2010
Posted: 22 Aug 2011
Date Written: October 1, 2010
Food prices in international markets spiked upward in 2008, doubling or more in a matter of months. Evidence is still being compiled on policy responses over the following two years, but new time series estimates of government intervention for the previous five decades allow insights into past policy responses to price fluctuations and spikes. This paper reviews the distortionary impacts of policies used by governments attempting to stabilize their domestic food markets. It then focuses on policy responses in the mid-1970s, as reflected in domestic prices and various annual indicators of distortions to producer and consumer incentives, before drawing out some policy lessons.
Keywords: Commodity price stabilization policies, domestic market insulation, distorted incentives, agricultural and trade policies, trade restrictiveness indexes
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