D. Del Prete, L. Forastiere, V. Leone Sciabolazza, On the spillover effects of trade distortions in agricultural markets, in preparation.

A large literature has been devoted to measuring and explaining the cost-effectiveness of governments’ interventions in the agricultural sector, showing that both excessive taxation and support may be detrimental for consumers’ welfare at a local level. Yet, little is known about the extent to which agricultural incentives/disincentives propagate through the international trade network, and spill over into the global economy. Against this background, we investigate whether and how policy interventions in partner countries affect domestic food security. To this aim, we develop a joint propensity score method that corrects for the bias resulting from both treatment selection and interference, and it allows estimating both direct and network effects of policy interventions in the primary sector. Our results show that commercial partners’ distortions can either boost or counteract national policies, and it is therefore crucial to assess a country’s level of trade integration when designing evidence-based policy interventions.

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