Projects Funded for Thibault Fally

2018-2019

The Cost of Gluten Avoidance: Evidence from US Scanner Data

  • Thibault Fally

2017-2018

International Trade in Commodities Matters

  • Thibault Fally

Abstract

Specific Objectives of the Project::
-Compile data on the production, trade, input-output linkages, and supply and
demand elasticities for many commodities, including agricultural commodities; no one
has previously gathered these statistics about commodities within one dataset,
particularly one that features commodities listed at the Harmonized System level and
countries listed using a standardized code system (ISO)
- Review the vast, but highly scattered, existing literature examining the
sensitivity of supply and demand for these commodities in response to changes in prices
- Develop a general-equilibrium model of consumption, production and inputoutput
linkages to determine role of crucial primary commodities in international trade
-Quantify the welfare gains from trade and the winners and losers from the
distribution of natural resources across space
- Publish data on website so they can be used by researchers and practitioners
interested in studying the importance of price sensitivities of supply and demand for
agricultural commodities and their implications for foreign and domestic agricultural
producers and consumers, including those in California
- Publish the final article(s) in a top refereed journal, as well as a summary in the ARE update.

Project Report/Summary of Results
Primary commodities account for approximately 16 percent of world trade, yet they are
used extensively as intermediate inputs into many production processes. We show that
ignoring several key features of trade in commodities leads to a large understatement of
aggregate gains from trade despite their relatively small share of world trade. We
quantify the welfare gains from international trade when we account for specific
characteristics of most primary commodities: i) a low price elasticity of demand as a
result of difficulty in finding substitutes, ii) a low price elasticity of supply, and iii) a high
concentration of natural resources and production among a few countries. For instance,
copper is difficult to replace in the electronic equipment industry, the supply and demand
for copper vary only slightly with changes in prices, a large share of its supply comes
from Chile and copper accounts for half of Chilean total export revenues. We explicitly
account for these features in a general-equilibrium model of consumption, production,
and input-output linkages. In our simulations, we confirm that ignoring these specific
features of commodities leads to a wide understatement of the aggregate gains from trade.

2016-2017

Trade and Food Grocery Shopping Across the U.S.

  • Thibault Fally

Abstract

Specific Objectives of the Project:
Examine consumption choices of US consumers for food products from California versus products from other states and countries, and how trade costs and income affect these choices, using home and store scanner data.

Project Report/Summary of Results (this will be posted on the Giannini Foundation website):
• Relative to our initial proposal, we have worked until now on a simpler way to approximate the location of production using the distribution of sales across counties and states. Our method can be applied to a wide range of product, except those with high import penetration ratios.
• Thus, we are focusing on goods that are mainly produced in the US, focusing on the geography of sales and prices within the US. Most of our preliminary results focus on dairy products.
• Our method works well for medium-sized producers, but not as well for the largest producers. To our surprise, we found that sales by the largest producers are geographically very dispersed (for the largest producers, we will manually search for the actual location(s) of production).
• Based on our estimate of the location of production, we then examine how prices and sales vary with distance (current work in progress).
• We also examine within-US trade across households. We find that richer households tend to purchase products that are distributed more widely, across regions and distributors.