International Impacts of protection: model structure and results for FC agricultural policy

A dynamic international commodity trade model is introduced that combines stochastic production with three features: multimarket dynamics, endogenous trade policy behavior, and endogenous stock-holding behavior. The significance of these features is illustrated using versions of the model with each excluded in turn. Their role in policy analysis is examined by using each version to measure the impacts of the grain-meat components of the European Community's Common Agricultural Policy. The absence of each is found to alter significantly the estimated terms of trade, trade volume, and welfare effects. Endogenous stock holding is found to be especially important when insulating trade policies are reprented in the model.