Are Export Restrictions an Effective Instrument to Insulate Domestic Prices Against Skyrocketing World Market Prices? The Wheat Export Ban in Serbia

摘要

This article analyzes how the market interventions of the Serbian government, among them an export ban, affected the domestic wheat market during the global commodity price peak in 2007-2008. We choose a flexible Markov-switching error-correction model as the framework for our price transmission analysis. The results show that the price transmission regime was not changed by the export ban. Thus, the export controls were not successful in dampening the domestic wheat price level. We make evident that the expected price decreasing effects of the export ban were offset by inconsistent additional policy measures and their faulty sequencing. Further, the governmental market interventions had even long-lasting destabilizing market effects. Market instability was increased particularly after the cancellation of the export ban. [EconLit citation: C22, P22, Q18]. (C) 2014 Wiley Periodicals, Inc.