HOW DO GOVERNMENTS RESPOND TO FOOD PRICE SPIKES? LESSONS FROM THE PAST
Abstract
Food prices in international markets spiked upward in 2008, doubling or more in a matter of months. Evidence is still being compiled on policy responses over the following two years, but new time series estimates of government intervention for the previous five decades allow insights into past policy responses to price fluctuations and spikes. This paper reviews the distortionary impacts of policies used by governments attempting to stabilize their domestic food markets. It then focuses on policy responses in the mid-1970s, as reflected in domestic prices and various annual indicators of distortions to producer and consumer incentives, before drawing out some policy lessons.
This is a product of a World Bank research project on Distortions to Agricultural Incentives. The authors are grateful for funding from World Bank Trust Funds provided by the governments of the Netherlands (BNPP) and the United Kingdom (DFID) and from the Australian Research Council. The views expressed in this paper are the authors' alone and not necessarily those of the World Bank and its Executive Directors, nor the countries they represent, nor of the institutions funding this research.
