02090cas a2200265 a 4500 AALejournalIMF014744 230101c9999 xx r poo 0 0eng d 5.00 USD 9781498320382 1018-5941 BD-DhAAL BD-DhAAL Giordani, Paolo. Food Prices and the Multiplier Effect of Trade Policy / Paolo Giordani, Nadia Rocha, Michele Ruta. Washington, D.C. : International Monetary Fund, 2014. 1 online resource (48 pages) IMF Working Papers <strong>Off-Campus Access:</strong> No User ID or Password Required <strong>On-Campus Access:</strong> No User ID or Password Required Electronic access restricted to authorized BRAC University faculty, staff and students This paper studies the relationship between trade policy and food prices. We show that, when individuals are loss averse, governments may use trade policy to shield the domestic economy from large food price shocks. This creates a complementarity between the price of food in international markets and trade policy. Specifically, unilateral actions give rise to a "multiplier effect": when a shock drives up the price of food, exporters respond by imposing restrictions while importers wind down protection, thus exacerbating the initial shock and soliciting further trade policy activism. We test the key prediction of the theory with a new dataset that comprises monthly information on trade measures across 77 countries and 33 food products for the period 2008-11, finding evidence of a multiplier effect in food trade policy. These findings contribute to inform the broader debate on the proper regulation of food trade policy within the multilateral trading system. Mode of access: Internet Rocha, Nadia. Ruta, Michele. IMF Working Papers; Working Paper ; No. 2014/182 Full text available on IMF http://elibrary.imf.org/view/journals/001/2014/182/001.2014.issue-182-en.xml IMF e-Library