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Title: Grain Price Spikes and Beggar-thy-neighbor Policy Responses: A Global Economywide Analysis

Author(s): Kym Anderson and Hans G. Jensen

Publication Date: July 2014

Keyword(s): commodity price stabilization, distorted incentives, domestic market insulation and international price transmission

Programme Area(s): International Trade and Regional Economics

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 world?s various countries. Our results support the conclusion from earlier studies that there is a need for stronger WTO disciplines on export restrictions.

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Bibliographic Reference

Anderson, K and Jensen, H. 2014. 'Grain Price Spikes and Beggar-thy-neighbor Policy Responses: A Global Economywide Analysis'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=10076