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Refereed/Peer-reviewed During the COVID-19 pandemic, countries applied trade restrictions to insulate their domestic markets from the world market. However, these trade policies could have amplified international market price fluctuations. This paper explores the effects of trade restrictions on international agricultural price volatility. A theoretical model is developed to quantify how trade policies amplify the initial shock. Using panel data covering 71 countries from January 2020 to July 2021, we examine empirically the effects of trade policies on world agricultural price volatility. The results show that trade distortions further induced volatility of world agricultural prices by around 22 percent during the COVID-19 pandemic. The multiplier effects are much more substantial in agricultural exporting countries than in importing countries. Large countries like China and the US could make significant contributions to stabilizing world prices by limiting the extent of unilateral trade policy interventions.

PurposeDuring world price spike periods, the government is more likely to apply trade distortions to stabilize domestic prices, but the trade distortions would amplify fluctuations of international market prices. Which type of policy may stabilize the domestic market price, but not disturb the international market? This paper answers the question by taking public storage policy as a case study in the context of trade policy. Specially, this paper tries to identify the effect of domestic public storage on the world market price.Design/methodology/approachThis article extends a standard theoretical model of trade policy through incorporating domestic public storage policy and makes the model more applicable in the context of China. The extended model is then applied to analysis how domestic public storage policy affects the international market price in the context of trade policy. Finally, a properly identified structural vector auto-regression technique is applied to test the effect of domestic public storage on the world market price by using cotton data from China.FindingsThe theoretical model indicates that China's public storage policy could stabilize the international market price. In order to test the working mechanisms, China's soaring public storage between 2010 and 2014 is employed to identify the effects of China's cotton storage on the volatility of the world price. The empirical findings show that China was able to stabilize the international price of cotton to a non-trivial extent through alteration of its public stockpile.Originality/valueThe first contribution is that this paper extends a standard theoretical model of trade policy to incorporate domestic public storage policy, which enables us to explore the effects of domestic public storage policy on the world price in the context of China. The second major contribution is that this paper provides evidence that, as a large player in the world market, China's public storage policy could stabilize the international agricultural price to a substantial degree.

Existing studies establish a strong correlation between income and democracy. Little, however, is known about whether income shocks driven by non-economic fundamentals matter for political transitions. This study employs trade uncertainty as a non-economic fundamental and examines the effect that trade uncertainty driven income variations have on democratic transitions over the period 1960–2013. We find that higher income fosters democratic transitions, but this effect works mainly for developing than developed countries. Specifically, using trade uncertainty as an instrument, we find that the Polity2 score, a measure of democracy, increases by at least 2.3 points following a 1 percentage point increase in GDP growth. This positive association is robust to exploiting conditional heteroskedasticity for identification, using different time periods, including lagged Polity2 as a regressor, and using alternative measures of GDP and democracy.

Although agricultural subsidies are usually seen in high‐income countries with small agricultural labour forces, China started to heavily subsidise agriculture when its per‐capita income was very low and more than half of its population was working in agriculture. A concern is that these abnormal agricultural subsidies may have significantly retarded China’s urbanisation process by reducing rural–urban migration. Based on a panel of county‐level data from 1,878 Chinese counties, we found that agricultural subsidies reduced China’s yearly outflow of agricultural labour by 0.68 million people (with a 95 per cent confidence interval of 0.67–0.69) – about 5.7 per cent of the annual rural–urban migration observed during the sample period. We concluded that abnormal agricultural subsidies are a significant cause of China’s widely observed under‐urbanisation.

This paper seeks to explore the motivations behind agricultural trade-related support policies through extending the two-sector specific factor production model to three sectors to make the model more relevant for a one-party state such as China. This model suggests that the switch from taxing to subsidizing the agricultural sector depends not only on changes in the economy’s structure but, more critically, on the underlying political support from heterogeneous interest groups in the course of economic development. The equilibrium agricultural protection level is determined by equating the marginal political returns from supporting farmers with the marginal political costs from opposing groups (including manufacturers).

There has been limited effort to explore whether non-gravity trade, as not driven by standard variables entering an augmented gravity model, matters for firms’ corruption. To fill this gap, this paper explores the effect of non-gravity trade on firms’ corruption in 141 developing countries during the period 2006–2017. Our results show that non-gravity trade does matter for the firms’ corruption behavior. Specifically, we find that firms’ corruption decreases by 0.09–0.23% following a unit increase in non-gravity trade (e.g. 19.7 million dollars’ increase in real trade), and the effect is much larger during the world financial crisis period. The result is robust to exploiting conditional heteroskedasticity for identification, constructing a Bartik-type instrument variable, applying different econometric technics, and using alternative measures of firm corruption.

This paper examines why the Chinese government has distorted its agricultural sector more than elsewhere, in both its antiagricultural and proagricultural periods. The updated panel data on agricultural distortions from 1981 to 2010, compiled by Anderson and Nelgen (2013), are adopted. We find that the different effects of arable land per capita, food self‐sufficiency ratios, poverty, and inequality on agricultural distortions in China and the rest of the world explain why China has distorted its agricultural sector more than elsewhere.

Purpose The innovative rural land property right mortgage loan program (RLPRMLP) provides a new channel for farmers to secure borrowing from microfinance institutions. Farmers’ land property right could be used as collateral to deal with moral hazard and adverse selection issues. The purpose of this paper is to document the effects of the RLPRMLP on households’ income using a unique data set from 1,279 households’ survey in Western China during 2012–2014. Design/methodology/approach At the first stage, the authors evaluate the impacts of RLPRMLP on households’ income to get the benchmark results when the authors control household’s observed and unobserved characteristics. To address the potential endogeneity issue resulting from the self-selection of farmers into the rural financial market, the authors apply the treatment effect model to identify the csusal effects of the innovative loan approach on a household’s income. Findings The empirical results favor the belief that participating in the RLPRMLP helps the households improve their total income (at least by 20.2 percent) and income per capita. This income-improving channel is only through agricultural sector, rather than through non-agricultural sector which potentially helps to deal with the inequality issue within poor regions. The results are robust when the authors control households’ characteristics, including observed and unobserved, and solve the endogeneity issue. Participating in the RLPRMLP could encourage farmers to invest more in the agricultural sector and increase agricultural productivity, which is the main mechanism of the income-improving effect of the RLPRMLP. Originality/value The innovative mortgage loan program provides a new channel for farmers to get loan. Land property right reform is being currently applied in rural China. Testing the effectiveness of combining land property right and microfinance loan method is necessary for the government policy making and development of rural areas. The findings are striking. The income improvement mechanism mainly works through agricultural sector, potentially because of the reform of land property, contributing to the increase of marginal product of land, i.e., the increase of agricultural productivity. These could help the development of microfinance theory, and the innovative loan method could be applied to other developing countries.

This paper incorporates exogenous production shocks into short‐run policy making process, and altruism is introduced into government utility functions under cooperative policy making scenario. The results reveal that the noisy signal from production shocks and government's self‐interested behaviors consist of the main barriers to make cooperative trade negotiations between agricultural importers and exporters. Finally, the project puts forward that domestic public storage policy is a feasible way for storable agricultural products to buffer production shocks and to stabilize domestic price in the context of agricultural price fluctuations with high frequency, and limited function of the WTO with respect to restricting governments' trade policies.

This article documents that African leaders’ state visits to China could stimulate China's exports to Africa in capital intensive manufacturing goods. We further find that state visits significantly increase official aid and exports by state-owned enterprises to African countries which contribute to the trade growth after state visits.

In the context of rising anti-globalization sentiments, countries tend to trade with superior government institutions for a longer period and with a higher volume of exports. This phenomenon hinders sustainable trade between countries with different regulatory qualities, resulting in negative effects for developing countries that have poor institutional quality. Using a large panel dataset covering 192 countries during the period 1996&ndash, 2017, this paper investigates the effect of relatively better government quality on exports. This quality is measured by said government&rsquo, s regulatory quality relative to its trade partner. The empirical results indicate that a country with relatively better institutional quality receives at least 4% higher exports (dubbed as a premium gain), keeping other factors constant. The empirical result remains the same when solving the endogeneity issue and when applying alternative estimation methods. This paper thus proposes a new channel for sustainable trade for countries characterized by different institutional qualities.