High Trade Costs and Their Consequences: An Estimated Dynamic Model of African Agricultural Storage and Trade
- (pp. 327-66)
Abstract
Using a new intranational dataset of monthly grain prices and production and a new approach to identify cost parameters, I estimate and solve a dynamic model of agricultural storage and trade covering all 42 countries of continental sub-Saharan Africa. I find median trade costs over five times higher than elsewhere in the world. The potential welfare gains from reducing these costs are substantial, are driven by lower food prices, and can be achieved efficiently by investing in well-targeted trade corridors. A static annual model underestimates trade costs and welfare effects by failing to identify when trade occurs.Citation
Porteous, Obie. 2019. "High Trade Costs and Their Consequences: An Estimated Dynamic Model of African Agricultural Storage and Trade." American Economic Journal: Applied Economics, 11 (4): 327-66. DOI: 10.1257/app.20170442Additional Materials
JEL Classification
- F14 Empirical Studies of Trade
- O13 Economic Development: Agriculture; Natural Resources; Energy; Environment; Other Primary Products
- O19 International Linkages to Development; Role of International Organizations
- Q11 Agriculture: Aggregate Supply and Demand Analysis; Prices
- Q13 Agricultural Markets and Marketing; Cooperatives; Agribusiness
- Q17 Agriculture in International Trade
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