Abstract
This paper evaluates the effects of pricing policy on the distribution of agricultural prices, with an application to China. It investigates the effects of China s price support programs on price enhancement and price stabilization in two key Chinese markets: rice and corn. The analysis relies on Quantile autoregression (QAR) which provides a refined and flexible way to capture the effects of pricing policy on price distributions (including mean, variance, skewness and kurtosis). Based on monthly data over the period 2000-2014, the econometric analysis documents the price effects of policy interventions and shows how such effects can vary across markets. The paper finds slow adjustments in the price distribution and important differences between short run and long run effects. The empirical evidence shows that the Chinese price support program increased the price of corn and shifted its price distribution to the right. The analysis also finds that China s price support for rice contributed to stabilizing the domestic rice market without much price enhancement for rice. Acknowledgement :
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