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Government market intervention: an econometric study of Tanzanian food grain markets


, : Government market intervention: an econometric study of Tanzanian food grain markets. Staff paper P University of Minnesota Dept of Agricultural and Applied Economics: 981 (P81-24)

Intervention in a developing country requires the manipulation of policy instruments, the motivation and affects of which are often complex and difficult to understand. An econometric model is used to investigate this problem for the case of maize, wheat and rice markets in Tanzania. The model contains six econometric equations for each crop, four of which are government behavioral equations. The model succeeds in explaining government intervention and in isolating four major constraints that impinge on its behavior in the short run. The analysis suggests that the government, through instruments at its disposal, has followed a food self-sufficiency strategy that has insulated the domestic market from the international market. A simulation analysis shows that the producer pricing component of this strategy has had a substantial impact on food grain production and external trade.

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