Trade Insulation as Social Protection

In a world with volatile food prices, countries have an incentive to shelter their populations from induced real income shocks. When some agents are net food producers while others are net consumers, there is scope for insurance between the two gro...

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Main Authors:	Do, Quy-Toan, Levchenko, Andrei A., Ravallion, Martin
Format:	Policy Research Working Paper
Language:	English en_US
Published:	World Bank, Washington, DC 2013
Subjects:	ADVERSE SELECTION AGGREGATE DEMAND AGGREGATE SUPPLY AGRICULTURAL ECONOMICS AGRICULTURE ASSET MARKET ASSET MARKETS BENCHMARK BUDGET CONSTRAINTS CLASSICAL ECONOMISTS COMMERCIAL POLICY COMMODITIES COMMODITY COMMODITY PRICE CONSUMERS DEMAND FOR FOOD DEMAND FUNCTIONS DEVELOPING COUNTRIES DEVELOPING COUNTRY DEVELOPMENT POLICY DOMESTIC MARKET DOMESTIC MARKETS DOMESTIC PRICES ECONOMIC HISTORY EQUILIBRIUM EQUILIBRIUM PRICE EQUILIBRIUM PRICES EQUILIBRIUM VALUES EXPENDITURE EXPORTS EXTERNAL TRADE EXTERNALITY EXTREME POVERTY FAIR FAMINE FAMINES FEED FINANCIAL CRISIS FINANCIAL INTEGRATION FOOD AVAILABILITY FOOD CONSUMPTION FOOD CRISIS FOOD EXPORT FOOD POLICY FOOD POLICY RESEARCH FOOD PRICE FOOD PRICE STABILIZATION FOOD PRICES FOOD PRODUCERS FOOD PRODUCTION FOOD SECURITY FOOD SHORTAGE FOREIGN MARKET FREE TRADE GLOBAL FOOD SECURITY GLOBALIZATION GOVERNMENT INTERVENTION GOVERNMENT INTERVENTIONS GRAIN MARKETS GRAIN RESERVES GRAINS HAZARD HUNGER IFPRI INCOME INCOMES INSURANCE INSURANCE MARKET INSURANCE MARKETS INSURANCE POLICIES INSURANCE POLICY INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE INTERNATIONAL MARKETS INTERNATIONAL TRADE LIBERALIZATION MORAL HAZARD OPTIMIZATION OUTPUT PRICE DISTORTION PRICE DISTORTIONS PRICE INCREASES PRICE LEVELS PRICE POLICY PRICE STABILIZATION PRICE SUBSIDY PRICE TAKERS PRICE VOLATILITY REAL INCOME REAL INCOME DECLINES RICE RISK SHARING SECURITIES SOCIAL PROTECTION SPOT MARKET STABILIZATION POLICIES STARVATION SUBSTITUTE SUBSTITUTION SUPPLY CURVE SUPPLY SHOCK SUPPLY SHOCKS TRADE BALANCE TRADE POLICIES TRADE POLICY TRANSACTION COSTS VULNERABLE GROUPS WAGES WEALTH WORLD ECONOMY WORLD FOOD SUPPLY
Online Access:	http://documents.worldbank.org/curated/en/2013/05/17721206/trade-insulation-social-protection http://hdl.handle.net/10986/15588

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recordtype	oai_dc
spelling	okr-10986-155882021-04-23T14:03:19Z Trade Insulation as Social Protection Do, Quy-Toan Levchenko, Andrei A. Ravallion, Martin ADVERSE SELECTION AGGREGATE DEMAND AGGREGATE SUPPLY AGRICULTURAL ECONOMICS AGRICULTURE ASSET MARKET ASSET MARKETS BENCHMARK BUDGET CONSTRAINTS CLASSICAL ECONOMISTS COMMERCIAL POLICY COMMODITIES COMMODITY COMMODITY PRICE CONSUMERS DEMAND FOR FOOD DEMAND FUNCTIONS DEVELOPING COUNTRIES DEVELOPING COUNTRY DEVELOPMENT POLICY DOMESTIC MARKET DOMESTIC MARKETS DOMESTIC PRICES ECONOMIC HISTORY EQUILIBRIUM EQUILIBRIUM PRICE EQUILIBRIUM PRICES EQUILIBRIUM VALUES EXPENDITURE EXPORTS EXTERNAL TRADE EXTERNALITY EXTREME POVERTY FAIR FAMINE FAMINES FEED FINANCIAL CRISIS FINANCIAL INTEGRATION FOOD AVAILABILITY FOOD CONSUMPTION FOOD CRISIS FOOD EXPORT FOOD POLICY FOOD POLICY RESEARCH FOOD PRICE FOOD PRICE STABILIZATION FOOD PRICES FOOD PRODUCERS FOOD PRODUCTION FOOD SECURITY FOOD SHORTAGE FOREIGN MARKET FREE TRADE GLOBAL FOOD SECURITY GLOBALIZATION GOVERNMENT INTERVENTION GOVERNMENT INTERVENTIONS GRAIN MARKETS GRAIN RESERVES GRAINS HAZARD HUNGER IFPRI INCOME INCOMES INSURANCE INSURANCE MARKET INSURANCE MARKETS INSURANCE POLICIES INSURANCE POLICY INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE INTERNATIONAL MARKETS INTERNATIONAL TRADE LIBERALIZATION MORAL HAZARD OPTIMIZATION OUTPUT PRICE DISTORTION PRICE DISTORTIONS PRICE INCREASES PRICE LEVELS PRICE POLICY PRICE STABILIZATION PRICE SUBSIDY PRICE TAKERS PRICE VOLATILITY REAL INCOME REAL INCOME DECLINES RICE RISK SHARING SECURITIES SOCIAL PROTECTION SPOT MARKET STABILIZATION POLICIES STARVATION SUBSTITUTE SUBSTITUTION SUPPLY CURVE SUPPLY SHOCK SUPPLY SHOCKS TRADE BALANCE TRADE POLICIES TRADE POLICY TRANSACTION COSTS VULNERABLE GROUPS WAGES WEALTH WORLD ECONOMY WORLD FOOD SUPPLY In a world with volatile food prices, countries have an incentive to shelter their populations from induced real income shocks. When some agents are net food producers while others are net consumers, there is scope for insurance between the two groups. A domestic social protection scheme would therefore transfer resources away from the former group to the latter in times of high food prices, and do the reverse otherwise. This paper shows that in the presence of consumer preference heterogeneity, implementing the optimal social protection policy can potentially induce higher food price volatility. Such policy indeed generates a counter-cyclical demand shock that amplifies the effects of the underlying food shortage. The results call for a reassessment of food stabilization policies. In particular, the authors urge caution against the systematic condemnation of trade insulation practices. 2013-09-04T18:00:35Z 2013-09-04T18:00:35Z 2013-05 http://documents.worldbank.org/curated/en/2013/05/17721206/trade-insulation-social-protection http://hdl.handle.net/10986/15588 English en_US Policy Research Working Paper;No. 6448 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ World Bank World Bank, Washington, DC Publications & Research :: Policy Research Working Paper Publications & Research
repository_type	Digital Repository
institution_category	Foreign Institution
institution	Digital Repositories
building	World Bank Open Knowledge Repository
collection	World Bank
language	English en_US
topic	ADVERSE SELECTION AGGREGATE DEMAND AGGREGATE SUPPLY AGRICULTURAL ECONOMICS AGRICULTURE ASSET MARKET ASSET MARKETS BENCHMARK BUDGET CONSTRAINTS CLASSICAL ECONOMISTS COMMERCIAL POLICY COMMODITIES COMMODITY COMMODITY PRICE CONSUMERS DEMAND FOR FOOD DEMAND FUNCTIONS DEVELOPING COUNTRIES DEVELOPING COUNTRY DEVELOPMENT POLICY DOMESTIC MARKET DOMESTIC MARKETS DOMESTIC PRICES ECONOMIC HISTORY EQUILIBRIUM EQUILIBRIUM PRICE EQUILIBRIUM PRICES EQUILIBRIUM VALUES EXPENDITURE EXPORTS EXTERNAL TRADE EXTERNALITY EXTREME POVERTY FAIR FAMINE FAMINES FEED FINANCIAL CRISIS FINANCIAL INTEGRATION FOOD AVAILABILITY FOOD CONSUMPTION FOOD CRISIS FOOD EXPORT FOOD POLICY FOOD POLICY RESEARCH FOOD PRICE FOOD PRICE STABILIZATION FOOD PRICES FOOD PRODUCERS FOOD PRODUCTION FOOD SECURITY FOOD SHORTAGE FOREIGN MARKET FREE TRADE GLOBAL FOOD SECURITY GLOBALIZATION GOVERNMENT INTERVENTION GOVERNMENT INTERVENTIONS GRAIN MARKETS GRAIN RESERVES GRAINS HAZARD HUNGER IFPRI INCOME INCOMES INSURANCE INSURANCE MARKET INSURANCE MARKETS INSURANCE POLICIES INSURANCE POLICY INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE INTERNATIONAL MARKETS INTERNATIONAL TRADE LIBERALIZATION MORAL HAZARD OPTIMIZATION OUTPUT PRICE DISTORTION PRICE DISTORTIONS PRICE INCREASES PRICE LEVELS PRICE POLICY PRICE STABILIZATION PRICE SUBSIDY PRICE TAKERS PRICE VOLATILITY REAL INCOME REAL INCOME DECLINES RICE RISK SHARING SECURITIES SOCIAL PROTECTION SPOT MARKET STABILIZATION POLICIES STARVATION SUBSTITUTE SUBSTITUTION SUPPLY CURVE SUPPLY SHOCK SUPPLY SHOCKS TRADE BALANCE TRADE POLICIES TRADE POLICY TRANSACTION COSTS VULNERABLE GROUPS WAGES WEALTH WORLD ECONOMY WORLD FOOD SUPPLY
spellingShingle	ADVERSE SELECTION AGGREGATE DEMAND AGGREGATE SUPPLY AGRICULTURAL ECONOMICS AGRICULTURE ASSET MARKET ASSET MARKETS BENCHMARK BUDGET CONSTRAINTS CLASSICAL ECONOMISTS COMMERCIAL POLICY COMMODITIES COMMODITY COMMODITY PRICE CONSUMERS DEMAND FOR FOOD DEMAND FUNCTIONS DEVELOPING COUNTRIES DEVELOPING COUNTRY DEVELOPMENT POLICY DOMESTIC MARKET DOMESTIC MARKETS DOMESTIC PRICES ECONOMIC HISTORY EQUILIBRIUM EQUILIBRIUM PRICE EQUILIBRIUM PRICES EQUILIBRIUM VALUES EXPENDITURE EXPORTS EXTERNAL TRADE EXTERNALITY EXTREME POVERTY FAIR FAMINE FAMINES FEED FINANCIAL CRISIS FINANCIAL INTEGRATION FOOD AVAILABILITY FOOD CONSUMPTION FOOD CRISIS FOOD EXPORT FOOD POLICY FOOD POLICY RESEARCH FOOD PRICE FOOD PRICE STABILIZATION FOOD PRICES FOOD PRODUCERS FOOD PRODUCTION FOOD SECURITY FOOD SHORTAGE FOREIGN MARKET FREE TRADE GLOBAL FOOD SECURITY GLOBALIZATION GOVERNMENT INTERVENTION GOVERNMENT INTERVENTIONS GRAIN MARKETS GRAIN RESERVES GRAINS HAZARD HUNGER IFPRI INCOME INCOMES INSURANCE INSURANCE MARKET INSURANCE MARKETS INSURANCE POLICIES INSURANCE POLICY INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE INTERNATIONAL MARKETS INTERNATIONAL TRADE LIBERALIZATION MORAL HAZARD OPTIMIZATION OUTPUT PRICE DISTORTION PRICE DISTORTIONS PRICE INCREASES PRICE LEVELS PRICE POLICY PRICE STABILIZATION PRICE SUBSIDY PRICE TAKERS PRICE VOLATILITY REAL INCOME REAL INCOME DECLINES RICE RISK SHARING SECURITIES SOCIAL PROTECTION SPOT MARKET STABILIZATION POLICIES STARVATION SUBSTITUTE SUBSTITUTION SUPPLY CURVE SUPPLY SHOCK SUPPLY SHOCKS TRADE BALANCE TRADE POLICIES TRADE POLICY TRANSACTION COSTS VULNERABLE GROUPS WAGES WEALTH WORLD ECONOMY WORLD FOOD SUPPLY Do, Quy-Toan Levchenko, Andrei A. Ravallion, Martin Trade Insulation as Social Protection
relation	Policy Research Working Paper;No. 6448
description	In a world with volatile food prices, countries have an incentive to shelter their populations from induced real income shocks. When some agents are net food producers while others are net consumers, there is scope for insurance between the two groups. A domestic social protection scheme would therefore transfer resources away from the former group to the latter in times of high food prices, and do the reverse otherwise. This paper shows that in the presence of consumer preference heterogeneity, implementing the optimal social protection policy can potentially induce higher food price volatility. Such policy indeed generates a counter-cyclical demand shock that amplifies the effects of the underlying food shortage. The results call for a reassessment of food stabilization policies. In particular, the authors urge caution against the systematic condemnation of trade insulation practices.
format	Publications & Research :: Policy Research Working Paper
author	Do, Quy-Toan Levchenko, Andrei A. Ravallion, Martin
author_facet	Do, Quy-Toan Levchenko, Andrei A. Ravallion, Martin
author_sort	Do, Quy-Toan
title	Trade Insulation as Social Protection
title_short	Trade Insulation as Social Protection
title_full	Trade Insulation as Social Protection
title_fullStr	Trade Insulation as Social Protection
title_full_unstemmed	Trade Insulation as Social Protection
title_sort	trade insulation as social protection
publisher	World Bank, Washington, DC
publishDate	2013
url	http://documents.worldbank.org/curated/en/2013/05/17721206/trade-insulation-social-protection http://hdl.handle.net/10986/15588
_version_	1764429493345189888

Trade Insulation as Social Protection

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