Journal
EUROPEAN REVIEW OF AGRICULTURAL ECONOMICS
Volume 47, Issue 3, Pages 1094-1132Publisher
OXFORD UNIV PRESS
DOI: 10.1093/erae/jbz013
Keywords
food production volatility; trade costs; agricultural trade; gravity model
Categories
Funding
- Jan Wallander and Tom Hedelius Foundation
- Marianne and Marcus Wallenberg Foundation
- Erling-Persson Family Foundation
- Ragnar Soderberg Foundation
Ask authors/readers for more resources
The purpose of this study is to measure the sensitivity of traded quantities and trade unit values to agricultural production shocks. We develop a general equilibrium model of trade in which production shocks in exporting countries affect both traded quantities and trade unit values. The model includes per-unit trade costs and develops a methodology to quantify their size exploiting the trade unit value data. Using bilateral trade flow data for a large sample of countries and agricultural commodities, we find that the intensive margin of trade is relatively inelastic to production shocks, with a 1 per cent increase in production leading to a 0.5 per cent increase in exports. We also find that per-unit trade costs are large, comprising 15-20 per cent of import unit values on average. Overall, our results suggest that there is room for improving trade as a mechanism for coping with food production volatility.
Authors
I am an author on this paper
Click your name to claim this paper and add it to your profile.
Reviews
Recommended
No Data Available