Grain Price Spikes and Beggar-Thy-Neighbor Policy Responses: A Global Economywide Analysis

36 Pages Posted: 25 Sep 2014

See all articles by Hans Grinsted Jensen

Hans Grinsted Jensen

European Commission's Joint Research Centre

Kym Anderson

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

Multiple version iconThere are 2 versions of this paper

Date Written: July 2014

Abstract

When prices spike in international grain markets, national governments often reduce the extent to which that spike affects their domestic food markets. Those actions exacerbate the price spike and international welfare transfer associated with that terms of trade change. Several recent analyses have assessed the extent to which those policies contributed to the 2006-08 international price rise, but only by focusing on one commodity or using a back-of-the envelope (BOTE) method. This paper provides a more-comprehensive analysis using a global economy-wide model that is able to take account of the interactions between markets for farm products that are closely related in production and/or consumption, and able to estimate the impacts of those insulating policies on grain prices and on the grain trade and economic welfare of the worldÂ’s' various countries. Our results support the conclusion from earlier studies that there is a need for stronger WTO disciplines on export restrictions.

Keywords: commodity price stabilization, distorted incentives, domestic market insulation, international price transmission

JEL Classification: F14, Q17, Q18

Suggested Citation

Jensen, Hans Grinsted and Anderson, Kym, Grain Price Spikes and Beggar-Thy-Neighbor Policy Responses: A Global Economywide Analysis (July 2014). CEPR Discussion Paper No. DP10076, Available at SSRN: https://ssrn.com/abstract=2501550

Hans Grinsted Jensen

European Commission's Joint Research Centre ( email )

Seville
Spain

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

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