The Impacts of Trade Restrictions on World Agricultural Price Volatility during the COVID‐19 Pandemic. Issue 6 (23rd November 2021)

• Record Type: Journal Article
• Authors: Yan, Wenshou; Cai, Yan; Lin, Faqin; Ambaw, Dessie Tarko
• Other Names: Fan Shenggen guestEditor.; Chen Kevin Z. guestEditor.
• Is Part Of: China & world economy. Volume 29:Issue 6(2021)
• Page Start: 139
• Page End: 158
• Publication Date: 2021-11-23
• Subjects: agricultural price volatility -- COVID‐19 -- multiplier effect -- trade restrictions; Economic indicators -- China -- Periodicals; China -- Economic conditions -- 1976- -- Periodicals; China -- Economic policy -- 1976- -- Periodicals; China -- Commerce -- Periodicals; Economics -- China -- Periodicals; 337.951
• DOI: 10.1111/cwe.12398
• Languages: English
• ISSNs: 1671-2234

Abstract

Abstract: During the COVID‐19 pandemic, countries applied trade restrictions to insulate their domestic markets from the world market. However, these trade policies could have amplified international market price fluctuations. This paper explores the effects of trade restrictions on international agricultural price volatility. A theoretical model is developed to quantify how trade policies amplify the initial shock. Using panel data covering 71 countries from January 2020 to July 2021, we examine empirically the effects of trade policies on world agricultural price volatility. The results show that trade distortions further induced volatility of world agricultural prices by around 22 percent during the COVID‐19 pandemic. The multiplier effects are much more substantial in agricultural exporting countries than in importing countries. Large countries like China and the US could make significant contributions to stabilizing world prices by limiting the extent of unilateral trade policy interventions.