Working Paper: NBER ID: w19530
Authors: Kym Anderson; Maros Ivanic; Will Martin
Abstract: This paper first considers the impact on world food prices of the changes in restrictions on trade in staple foods during the 2008 world food price crisis. Those changes--reductions in import protection or increases in export restraints--were meant to partially insulate domestic markets from the spike in international prices. The authors find that this insulation added substantially to the spike in international prices for rice, wheat, maize, and oilseeds. As a result, although domestic prices rose less than they would have without insulation in some developing countries, in many other countries they rose more than they would have in the absence of such insulation. The paper's second purpose it to estimate the combined impact of such insulating behavior on poverty in various developing countries and globally. The analysis finds that the actual poverty-reducing impact of insulation is much less than its apparent impact, and that its net effect was to increase global poverty in 2008 by 8 million people, although this increase was not significantly different from zero. The paper examines the relative efficiency and equity of trade restrictions and domestic policies, such as conditional cash transfers, than are designed to provide social protection for the poor when international food prices spike. It also examines the potential consequences of multilateral agreements to limit changes in restrictions on trade during such times.
Keywords: food price spikes; price insulation; poverty; trade restrictions
JEL Codes: F13; Q02; Q17; Q18
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| insulation policies (G52) | international prices for rice, wheat, maize, and edible oils (Q11) |
| international prices for rice, wheat, maize, and edible oils (Q11) | poverty levels (I32) |
| insulation policies (G52) | domestic prices in developing countries (P22) |
| insulation policies (G52) | exacerbation of poverty impacts in net sellers of food staples (F63) |
| targeted domestic policies (F68) | alleviation of poverty (I32) |