Description: This repository performs a general equilibrium welfare analysis derived from a gravity model of domestic and international food flows between all U.S. states and from eight international sources. Then, it describes the results from a counterfactual that emulates the temporary closure of the Suez Canal on food security in U.S. states.
Counterfactual results: A simulation creates a counterfactual that doubles bilateral trade costs from three Asian regions possibly affected by the Suez Canal temporary closure to study welfare distributions in U.S. states. I find that most U.S. states will be affected by the food supply chain disruption, but with significant heterogeneity likely derived from the U.S. state's ability to substitute food imports for own production (Dall'Erba, Chen, Nava 2021) or the states reliance on food imports from Asian regions (Nava, Ridley and Dall'Erba submitted in AJAE). Moreover, a handful of U.S. states benefit from the temporary closure of the Suez Canal, suggesting that some U.S. food producers can gain market share. The picture below shows my counterfactual results.
Further consideration and caveats: Counterfactual results from this analysis rely on assumptions and simplifications to prioritize the timely study of the effects of the temporary closure of the Suez Canal on food security in the U.S. In addition, little consideration is done to the magnitude of the effect. An appropriate analysis should consider the magnitude. Despite its limitations, counterfactual results are informative about the welfare distributions of the simulations. For example, not only there is significant heterogeneity in welfare losses, but there will be states that may benefit from the temporary food supply chain disruption.
The author is open to collaborations and suggestions.
All mistakes are my own.
References:
Baier, Yotov, and Zylkin .2019. On the Widely Differing Effects of Free Trade Agreements: Lessons from Twenty Years of Trade Integration, Journal of International Economics 116: 206-226.
Dall'Erba Sandy, Chen Zhangliang, Nava Noé J. 2021. U.S. interstate trade will mitigate the negative impact of climate change on crop profit, American Journal of Agricultural Economics 00(00): 1-22.
Nava Noé J, Ridley Bill, Dall'Erba Sandy. Who benefits from local agriculture?, submitted for publication consideration in the American Journal of Agricultural Economics
Suggested citation
Nava Noé J, Ridley Bill, Dall'Erba Sandy. Who benefits from local agriculture?, submitted for publication consideration in the American Journal of Agricultural Economics