Import substitution and Russian food independence

Abstract We investigate whether Russia’s change in trade policy from increasingly WTO compliant, pre-WTO accession policy to being restrictive, discretionary and WTO non-compliant has changed price volatility on the domestic market. DCC-MGARCH model results suggest doubling of conditional volatility and volatility correlation between pork producer prices along Russia’s pork supply chain. A volatility regime switch is confirmed by the regime switching dynamic correlations model. Our findings show that contrary to their objective, discretionary trade restrictions may increase price volatility in the domestic market. Trade restrictions need to be redesigned such that rule-based, WTO-conform trade policies are implemented instead.