Abstract
International prices of storable foods tend to be volatile, with occasionally
intense but short-lived spikes and relatively long periods of below-average
prices. Because movements in the domestic prices of staple foods are politically
sensitive – not the least because they may push more households into poverty –
many governments intervene to reduce the volatility of these prices by insulat
ing their markets from changes in international prices. While this action can
be effective in reducing the volatility of domestic prices in reactive countries,
the collective impact of these interventions is to increase the volatility of world
prices (Anderson and Nelgen 2012; Martin and Anderson 2012; Jensen and
Anderson 2015), thereby increasing domestic price volatility in some more open
countries. Thus, the only way that price insulation can be effective in reducing
poverty is if the countries that insulate most are those in which the poor are
most vulnerable to price spikes, something which Anderson, Ivanic, and Martin
(2014) found not to be the case during the food price crisis of 2007–8.
Original language | English |
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Title of host publication | Agriculture and Rural Development in a Globalizing World: Challenges and Opportunities |
Editors | Prabhu Pingali and Gershon Feder |
Place of Publication | London |
Publisher | Routledge, London |
Pages | 181-192 |
Edition | 1st edition |
ISBN (Print) | 9781138231825 |
Publication status | Published - 2017 |