Managing food price volatility in a large open country: the case of wheat in India
基于理性预期存储模型分析印度小麦市场的价格稳定政策，评估其成本与福利影响，并比较完全最优政策与简单规则的效果。
India has pursued an active food security policy for many years by using a combination of trade policy interventions, public distribution of food staples, and assistance to farmers through minimum support prices defended by public stocks. This approach has been quite successful in stabilizing staple food prices, but comes at a high cost, and with potential risks of unmanageable stock accumulation. Based on a rational expectations storage model representing the Indian wheat market and its relation to the rest of the world, we analyse the cost and welfare implications of this policy, and unpack the contribution of its various elements. To analyse alternative policies, we assume that social welfare includes an objective of price stabilization and assess optimal policies corresponding to this objective. We consider fully optimal policies under commitment as well as optimal simple rules, and show that adopting simple rules can achieve most of the gains from fully optimal policies.