DP7160 Global Distortions to Agricultural Markets: New Indicators of Trade and Welfare Impacts, 1955 to 2007

Author(s): Kym Anderson, Johanna L. Croser, Peter J Lloyd
Publication Date: February 2009
Keyword(s): agricultural and trade policies, Distorted incentives, trade restrictiveness index
JEL(s): F13, F14, Q17, Q18
Programme Areas: International Trade and Regional Economics
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=7160

Despite recent reforms, world agricultural markets remain highly distorted by government policies. Traditional indicators of those price distortions can be poor guides to the policies? economic effects. Recent theoretical literature provides indicators of trade- and welfare-reducing effects of price and trade policies which this paper builds on to develop more-satisfactory indexes. We then exploit a new Agricultural Distortion database to generate estimates of them for developing and high-income countries over the past half century. These better approximations of the trade and welfare effects of sectoral policies are generated without a formal model of global markets or even price elasticity estimates.