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Abstract
This paper empirically explores the political-economic determinants of why governments
choose to tax or subsidize trade in agriculture. We use a new data set on nominal rates of
assistance (NRA) across a number of commodities spanning the last five decades for 64
countries. NRAs measure the effect on domestic (relative to world) price of the quantitative
and price-based instruments used to regulate agricultural markets. The data set admits
consideration of both taxes and subsidies on exports and imports. We find that both economic
and political variables play important roles in determining the within-variation in the NRA
data. Based on our results we offer a number of data-driven exploratory hypotheses that can
inform future theoretical and empirical research on why governments choose to tax or
subsidize agricultural products – an important policy question that is also one of the least
understood by scholars.