Shocks in Agricultural Markets: Implications for International Trade

Abstract

A computational experiment using a numerical model demonstrates that demand shocks in the Russian dairy and meat markets can significantly influence global prices for these products. Consequently, in the absence of responsive measures by Russia’s trade partners, the burden of these shocks falls not so much on Russians as on the populations of those countries. The study employs an equilibrium model for agricultural markets across Russian regions. Production technologies in the model are represented by non-parametric frontier production functions, while the global market is modeled through multivariate functions of Russian export and import volumes depending on their respective border prices.