Working Paper: CEPR ID: DP7230
Authors: Peter J. Lloyd; Johanna L. Croser; Kym Anderson
Abstract: For decades the world?s agricultural markets have been highly distorted by national government policies, but very differently for different commodities. Hence a weighted average across countries of nominal rates of assistance or consumer tax equivalents for a product can be misleading as an indicator of the trade or welfare effects of policies affecting that product?s global market. This is especially the case when some countries tax and others subsidize its production or consumption. This article develops a new set of more-satisfactory indicators for that purpose, drawing on the recent literature on trade restrictiveness indexes. It then exploits a global agricultural distortions database recently compiled by the World Bank to generate the first set of estimates of those two indicators for each of 28 key agricultural commodities from 1960 to 2004, based on a sample of 75 countries that together account for more than three-quarters of the world?s production of those agricultural commodities. These reveal the considerable extent of reforms in agricultural policies of developing as well as high-income countries over the past two decades.
Keywords: agricultural price and trade policies; distorted commodity markets; 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 |
|---|---|
| nominal rates of assistance (NRA) or consumer tax equivalents (CTE) (H29) | trade or welfare effects (F10) |
| tariffs (F13) | welfare reductions (I38) |
| trade reduction index (TRI) (F14) | trade effects (F19) |
| welfare reduction index (WRI) (I30) | welfare implications (I30) |
| nominal rates of assistance (NRA) or consumer tax equivalents (CTE) (H29) | trade reduction index (TRI) (F14) |
| nominal rates of assistance (NRA) or consumer tax equivalents (CTE) (H29) | welfare reduction index (WRI) (I30) |