Working Paper: CEPR ID: DP7160
Authors: Kym Anderson; Johanna L. Croser; Peter J. Lloyd
Abstract: 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.
Keywords: agricultural policies; trade policies; distorted incentives; trade restrictiveness index
JEL Codes: F13; F14; Q17; Q18
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| agricultural policy distortions (Q18) | trade outcomes (F10) |
| agricultural policy distortions (Q18) | welfare outcomes (I38) |
| traditional indicators of price distortions (P22) | understate market distortion (D40) |
| OECD's producer and consumer support estimates (PSEs and CSEs) (C80) | better indicators of trade impacts (F14) |
| trade reduction index (TRI) (F14) | comprehensive understanding of welfare costs (D69) |
| welfare reduction index (WRI) (I30) | welfare loss from distortions (D69) |
| NRAs and CTEs (H59) | trade and welfare impacts (F10) |
| level of distortion in global agricultural markets (F69) | higher than suggested by average NRAs or CTEs (C13) |