Global distortions to agricultural markets: indicators of trade and welfare impacts, 1960 to 2007

Abstract

Despite recent reforms, world agricultural markets remain highly distorted by government policies. Traditional indicators of those price distortions such as producer and consumer support estimates (PSEs and CSEs) can be poor guides to the policies' economic effects. Recent theoretical literature provides scalar index numbers of trade- and welfare-reducing effects of price and trade policies which this paper builds on to develop more-satisfactory indexes that can be generated using no more than the data used to generate PSEs and CSEs. We then exploit a new Agricultural Distortion database to provide time-series estimates of index numbers for 75 developing and high-income countries over the past half-century.