On the Relevance of Economic Modelling for Analysis of Food Price Policy

On the Relevance of Economic Modelling for Analysis of Food Price Policy IT is, by now, well known that any movement in agricultural prices has extraordinarily complex repercussions on the allocation of resources in agriculture and in the rest of the economy, on the levels of income and the incidence of absolute poverty, and on the distribution of income and equity. These repercussions occur differentially across commodities in agriculture, across sectors of the economy, across socioeconomic groups, and over time. Even the best-trained mind cannot be relied upon to trace out the maze of effects and trade-offs involved, even less to place quantitative values to the derived changes. And this is where economists have a role to play. Ever though modelling tools are imperfect and the data base they use is approximate, quantitative simulation of movements in agricultural prices in mpdels that attempt to capture the essential structural features of the economy should be of invaluable assistance to policymakers