Description:

Utsav Manjeer (Northwestern University) - "Let the (P)rice Flow: The Local Economic Effects of India's Agricultural Export Ban"

Abstract: Restrictive and uncertain trade regimes are prevalent in developing countries. While trade restrictions are often intended to shield the economy from volatility in global markets, such distortions can have unintended consequences for economic agents across the supply chain in domestic markets. I investigate the local economic effects of India’s wheat and rice export ban during 2007-2011. Using data from almost 2 million transactions, I first show that farmers received lower prices particularly in, but not limited to, areas that the ban is more likely to affect. I then show that there is limited evidence of transmission of the low prices to consumers. Using a novel approach with trade routes, I argue that the export ban worsens domestic market integration. One driving force I find is that farmers restrict supply. I also discuss next steps and other potential mechanisms at play, including the uncertainty surrounding agriculture policy and grain procurement policies of the government.