Novel indicators of the trade and welfare effects of agricultural distortions in OECD countries

Kym Anderson, Johanna L. Croser

    Research output: Contribution to journalArticle

    Abstract

    Agricultural markets in OECD countries have long been highly distorted by government policies. Traditional weighted average aggregates of the price distortions involved, such as producer and consumer support estimates (PSEs and CSEs), can be poor indicators of the trade restrictiveness and economic welfare losses associated with them, especially if a country's support estimates vary a lot across the product range. Certainly estimates of trade and welfare effects of price supports can be obtained from sectoral or economywide models using price elasticity estimates, but the results can be contentious if there is no consensus on what model specification and elasticity parameters to use. This paper shows that, if there is a willingness to accept simple assumptions about elasticities, it is possible to generate indicators of the welfare and trade restrictiveness of agricultural policies using no more than the price and quantity data needed to generate PSEs and CSEs. These new indexes thus provide an attractive supplement to the current policy monitoring regime developed by the OECD Secretariat.
    Original languageEnglish
    Pages (from-to)269-302pp
    JournalReview of World Economics
    Volume147
    Issue number2
    DOIs
    Publication statusPublished - 2011

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