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Abstract
The purpose of this study is to measure the sensitivity of trade to agricul-
tural productivity shocks, using country-level data on yield and production
combined with bilateral trade data for a wide range of countries and products
for the years 2000-2010. We find that traded quantities react in the expected
direction but that the magnitudes are smaller than predicted by theory. The
results suggest that trade frictions, product differentiation and storage limit
the role of international trade as way of coping with production volatility. We
find that import unit values increase in years when domestic production is
relatively high. We consider alternative explanations for this such as quality
sorting or economies of scale in international shipping. Import price declines
in years when importers have a poor domestic production may act as a coping
mechanism for countries that suffer from adverse food production conditions.