Liberalized trade and domestic price stability. The case of rice and wheat in India
This paper analyzes the effects of liberalizing foodgrain trade on domestic price stability using a multi-market equilibrium model in which the direction of trade is determined endogenously and world prices are sensitive to the amount traded by India. Simulation results demonstrate that contrary to...
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| Veröffentlicht in: | Journal of development economics 2001-08, Vol.65 (2), p.417-441 |
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| container_title | Journal of development economics |
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| creator | Srinivasan, P.V Jha, Shikha |
| description | This paper analyzes the effects of liberalizing foodgrain trade on domestic price stability using a multi-market equilibrium model in which the direction of trade is determined endogenously and world prices are sensitive to the amount traded by India. Simulation results demonstrate that contrary to popular belief, freeing of trade by India leads to greater domestic price stability even though world prices are more volatile. Freeing of trade by India also leads to higher world price stability. Under liberalized trade, variable levies/subsidies are more effective in stabilizing domestic prices compared to buffer stocks. It is therefore in India's interest to argue for non-zero binding on import tariffs and export subsidies at the WTO negotiations. |
| doi_str_mv | 10.1016/S0304-3878(01)00143-2 |
| format | Article |
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The case of rice and wheat in India</atitle><jtitle>Journal of development economics</jtitle><date>2001-08-01</date><risdate>2001</risdate><volume>65</volume><issue>2</issue><spage>417</spage><epage>441</epage><pages>417-441</pages><issn>0304-3878</issn><eissn>1872-6089</eissn><coden>JDECDF</coden><abstract>This paper analyzes the effects of liberalizing foodgrain trade on domestic price stability using a multi-market equilibrium model in which the direction of trade is determined endogenously and world prices are sensitive to the amount traded by India. Simulation results demonstrate that contrary to popular belief, freeing of trade by India leads to greater domestic price stability even though world prices are more volatile. Freeing of trade by India also leads to higher world price stability. Under liberalized trade, variable levies/subsidies are more effective in stabilizing domestic prices compared to buffer stocks. 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| ispartof | Journal of development economics, 2001-08, Vol.65 (2), p.417-441 |
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| source | RePEc; Elsevier ScienceDirect Journals |
| subjects | Buffer stocks Development economics Economic theory Food prices Foodgrain price stabilization GATT India Market equilibrium Price stability Price stabilization Prices Rational expectations Rice Studies Subsidies Tariff bindings Tariffs Trade liberalization Variable levies Wheat WTO |
| title | Liberalized trade and domestic price stability. The case of rice and wheat in India |
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