Analyzing Collective Trade Policy Actions in Response to Cyclical Risk in Agricultural Production: The Case of International Wheat
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This study shows how cyclical risk and collective trade policy actions can cumulatively worsen international food price spikes. By using spatial Computable General Equilibrium (CGE) and Eaton and Kortum’s trade model, this study offers the following conclusions. At first, the cyclical shock in agricultural production might cause agricultural and food price spikes in the international agricultural and food markets. Second, export restrictions and import responses can worsen food price spikes and disrupt trade flows in international agricultural and food markets. Finally, the effect of these collective trade policy actions and resulting food price spikes in international agricultural and food markets do not dissipate even after agricultural production has recovered.