Back to Library

The Economics of Grain Price Volatility

Published by:
Document
Download
Publication date
30/12/2010
Number of Pages
27
Language:
English
Type of Publication:
Studies
Focus Region:
Global
Focus Topic:
Market / Trade
Commodity:
Crops
Author
Brian Wright
Organization
Department of Agricultural and Resource Economics, University of California Berkeley, California

Recent volatility of prices of major grains has generated a wide array of analyses and policy prescriptions that reveal the inability of economists to approach a consensus on the nature of the phenomenon and its implications for policy. This review of market events and their economic interpretations finds that recent price spikes are not as unusual as many discussions imply. Further, the balance between consumption, available supply, and stocks seems to be as relevant for our understanding of these markets as it was decades ago. Though there is much to be learned about commodity markets, the tools at hand are capable of explaining the main forces at work, and of giving good guidance to policymakers confronted with a bewildering variety of expensive policy prescriptions.