Description: Food Price Volatility and Domestic Stabilization Policies in Developing Countries

Food Price Volatility and Domestic Stabilization Policies in Developing Countries

When food prices spike in countries with large numbers of poor people, public intervention is essential to alleviate hunger and malnutrition. For governments, this is also a case of political survival. Government actions often take the form of dire...

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Bibliographic Details
Main Author:	Gouel, Christophe
Language:	English en_US
Published:	World Bank, Washington, DC 2013
Subjects:	AGRICULTURAL PRICES AGRICULTURE ARBITRAGE BENCHMARK BORDER PRICE BORROWING CAPITAL ACCUMULATION CEREAL PRICES CHILD LABOR CLOSED ECONOMIES CLOSED ECONOMY COLLECTIVE ACTION COMMODITIES COMMODITY COMMODITY PRICE COMPARATIVE ADVANTAGE COMPETITIVE MARKETS CONSUMERS CONSUMPTION LEVELS CRISES DEBT DEBTS DEMAND CURVE DEMAND FUNCTION DEVELOPING COUNTRIES DEVELOPMENT ECONOMICS DEVELOPMENT POLICY DIRECT MARKET DOMESTIC MARKET DOMESTIC PRICE DOMESTIC PRICES ECONOMIC EFFICIENCY ECONOMIC GROWTH ECONOMICS RESEARCH ELASTICITY EXCESS DEMAND EXCESS SUPPLY EXPECTED UTILITY EXPECTED VALUES EXPENDITURE EXPORTS EXTERNALITIES FINANCIAL ASSETS FLOOR PRICE FLOOR PRICES FOOD PRICE FOOD PRICES FOREIGN CURRENCY FORMAL ANALYSIS FREE MARKET FREE TRADE FUTURES GLOBAL MARKET GOVERNMENT ACTIONS HUMAN CAPITAL INCOME INCOME EFFECTS INCOMES INCOMPLETE MARKETS INELASTIC DEMAND INSURANCE INTANGIBLE INTERNATIONAL TRADE ITC LIQUIDITY LOW-INCOME COUNTRIES MACROECONOMICS MARGINAL BENEFITS MARGINAL COST MARGINAL UTILITY MARKET BEHAVIOR MARKET CONTROL MARKET EQUILIBRIUM MARKET FAILURE MARKET FAILURES MARKET INTEGRATION MARKET LIBERALIZATION MARKET PRICE MARKET STABILIZATION MARKET TRANSPARENCY MARKET VALUE MARKETING MOTIVATION MULTILATERAL TRADE NATIONAL INCOME NATURAL DISASTERS OPEN ECONOMIES OPEN ECONOMY OPPORTUNITY COST OPPORTUNITY COSTS PECUNIARY EXTERNALITIES PER CAPITA INCOME POLITICAL ECONOMY POLITICAL UNREST PORTFOLIO PRICE BAND PRICE BANDS PRICE CEILING PRICE CHANGE PRICE CHANGES PRICE FLUCTUATIONS PRICE INCREASE PRICE INCREASES PRICE INDEX PRICE INSTABILITY PRICE LEVEL PRICE MOVEMENTS PRICE POLICY PRICE RISK PRICE RISKS PRICE STABILITY PRICE STABILIZATION PRICE SUBSIDIES PRICE TRENDS PRICE UNCERTAINTY PRICE VARIATIONS PRICE VOLATILITY PRIVATE MARKETS PRODUCTION COSTS PRODUCTIVITY PRODUCTIVITY GROWTH PUBLIC POLICY PURCHASING PURCHASING POWER REDISTRIBUTIVE EFFECTS RISK AVERSE RISK AVERSION RISK EXPOSURE RISK MANAGEMENT RISK MARKETS RISK SHARING SAFETY SAFETY NET SAFETY NETS SALE SALES SAVINGS SECURITY CONCERNS SELLING PRICE SELLING PRICES SHARE OF STOCKS SOCIAL PROTECTION SPREAD STABILIZATION POLICIES STABILIZATION POLICY STOCK MANAGEMENT STOCK MARKET STOCKS SURPLUS SURPLUSES TAX TRADE POLICIES TRADE POLICY TRADES TRANSACTION COSTS URUGUAY ROUND VALUATION WAGE RATES WORLD MARKET WORLD MARKETS WORLD TRADE WORLD TRADE ORGANIZATION WTO
Online Access:	http://documents.worldbank.org/curated/en/2013/03/17493176/food-price-volatility-domestic-stabilization-policies-developing-countries http://hdl.handle.net/10986/13187

Description
Summary:	When food prices spike in countries with large numbers of poor people, public intervention is essential to alleviate hunger and malnutrition. For governments, this is also a case of political survival. Government actions often take the form of direct interventions in the market to stabilize food prices, which goes against most international advice to rely on safety nets and world trade. Despite the limitations of food price stabilization policies, they are widespread in developing countries. This paper attempts to untangle the elements of this policy conundrum. Price stabilization policies arise as a result of international and domestic coordination problems. At the individual country level, it is in the national interest of many countries to adjust trade policies to take ad-vantage of the world market in order to achieve domestic price stability. When countercyclical trade policies become widespread, the result is a thinner and less reliable world market, which further decreases the appeal of laissez-faire. A similar vicious circle operates in the domestic market: without effective policies to protect the poor, such as safety nets, food market liberalization lacks credibility and makes private actors reluctant to intervene, which in turn forces government to step in. The current policy challenge lies in designing policies that will build trust in world markets and increase trust between pub-lic and private agents.

Food Price Volatility and Domestic Stabilization Policies in Developing Countries

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