Lampietti, JulianLarson, Donald F.Gouel, ChristopheCafiero, CarloRoberts, John2012-04-272012-04-272012-04https://hdl.handle.net/10986/6033In times of highly volatile commodity markets, governments often try to protect their populations from rapidly-rising food prices, which can be particularly harsh for the poor. A potential solution for food-deficit countries is to hold strategic reserves, which can be called on when international prices spike. But how large should strategic stockpiles be? This paper develops a dynamic storage model for wheat in the Middle East and North Africa (MENA) region, where imported wheat dominates the average diet. The paper uses the model to analyze a strategy that sets aside wheat stockpiles, which can be used when needed to keep domestic prices below a targeted price. This paper shows that if the target is set high and reserves are adequate, the strategy can be effective and robust. Contrary to most interventions, strategic storage policies are counter-cyclical and, when the importing region is sufficiently large, a regional policy can smooth global prices. This paper shows that this is the case for the MENA region. Nevertheless, the policy is more costly than the pro-cyclical policy of a targeted intervention that directly offsets high prices with a subsidy similar to food stamps.CC BY 3.0 IGOAGRICULTURAL ECONOMICSAGRICULTUREARBITRAGEAVERAGE COSTSAVERAGE PRICEBANKRUPTCYBENCHMARKBONDSCOCOACOMMODITIESCOMMODITYCOMMODITY PRICECOMMODITY PRICESCONSUMERSCONSUMPTION LEVELSCONSUMPTION RATESCORNCOST OF CAPITALCOST OF LIVINGCOUPONSCURRENCYDELIVERY MECHANISMSDEMAND CURVEDEMAND ELASTICITYDEVELOPING COUNTRIESDEVELOPING COUNTRYDEVELOPMENT ECONOMICSDEVELOPMENT POLICYDISCOUNT RATEDOMESTIC MARKETSDOMESTIC PRICEDOMESTIC PRICESDUMPINGECONOMETRICSECONOMIC DEVELOPMENTECONOMIC RESEARCHEDIBLE OILSEQUILIBRIUM PRICEEXCHANGE RATEEXPENDITURESEXPORTSFINANCIAL INSTRUMENTSFINANCIAL MARKETSFINANCIAL RISKFINANCING FACILITYFISCAL DEFICITSFOOD AIDFOOD COUPONSFOOD DELIVERYFOOD DELIVERY SYSTEMSFOOD FOR WORKFOOD INSECURITYFOOD MARKETSFOOD POLICYFOOD POLICY RESEARCHFOOD PRICEFOOD PRICESFOOD PRODUCTFOOD RELIEFFOOD RESERVESFOOD SAFETYFOOD SECURITYFOOD STAMPSFOOD STOCKSFOOD SUBSIDIESFOOD TRANSFERSFREE MARKETSFUTURE PRICESFUTURESGAME THEORYGDPGLOBAL ECONOMIC PROSPECTSGLOBAL MARKETGLOBAL MARKETSGOVERNMENT INTERVENTIONSGRAIN RESERVESGRAINSHOUSEHOLD FOOD INSECURITYIFPRIINCOMEINCOMESINFLATIONINPUT PRICESINSURANCEINTEREST RATEINTEREST RATESINTERNATIONAL FOOD POLICY RESEARCH INSTITUTEINTERNATIONAL MARKETSINVENTORIESINVENTORYLIQUIDITYMARGINAL COSTMARGINAL COSTSMARKET EQUILIBRIUMMARKET FAILUREMARKET PRICEMARKET REFORMSMARKET VOLATILITYMARKETINGMEATMILLSNATURAL DISASTEROUTPUTPOLITICAL ECONOMYPRICE CEILINGPRICE CHANGESPRICE INCREASESPRICE LEVELSPRICE RISKPRICE RISKSPRICE STABILITYPRICE STABILIZATIONPRICE SUPPORTPRICE VOLATILITYPRIVATE MARKETSPROTEINPURCHASE PRICEREMOTE AREASRESERVERISK AVERSIONRISK MANAGEMENTRISK PREMIUMSRUBBERSAFETY NETSSINGLE MARKETSOCIAL PROTECTIONSOCIAL SAFETY NETSPREADSTABILIZATION POLICYSTOCKSSTORAGE CAPACITYSUBSTITUTESSUGARSUPPLY CHAINSUPPLY CHAIN MANAGEMENTSUPPLY CHAINSSUPPLY ELASTICITYSUPPLY SHOCKSSURPLUSESSUSTAINABLE DEVELOPMENTTECHNOLOGICAL ADVANCESTIME VALUE OF MONEYTRADE POLICIESTRANSACTION COSTTRANSACTION COSTSWHEATWORLD MARKETWORLD MARKETSWorld Bank10.1596/1813-9450-6031