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Cash or Food Aid? A General Equilibrium Analysis for Ethiopia

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  • Ayele Gelan

Abstract

This article examines the relative effectiveness of cash and in-kind food aid, using an economy-wide modelling framework and a social accounting matrix constructed for Ethiopia. It argues that cash aid has larger positive effects on household welfare, with multiplier effects on households other than direct recipients, and that food aid provides a disincentive to local food production. However, where cash transfers cause food prices to rise, welfare losses may be suffered by those who are neither targeted nor beneficiaries. The highly aggregated nature of the model allows only a tentative policy recommendation in favour of cash transfers. Copyright 2006 Overseas Development Institute.

Suggested Citation

  • Ayele Gelan, 2006. "Cash or Food Aid? A General Equilibrium Analysis for Ethiopia," Development Policy Review, Overseas Development Institute, vol. 24(5), pages 601-624, September.
  • Handle: RePEc:bla:devpol:v:24:y:2006:i:5:p:601-624
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    Cited by:

    1. Caria, A. Stefano & Tamru, Seneshaw & Bizuneh, Gera, 2011. "Food security without food transfers?: A CGE analysis for Ethiopia of the different food security impacts of fertilizer subsidies and locally sourced food transfers," ESSP working papers 29, International Food Policy Research Institute (IFPRI).
    2. Juan M. Villa, 2014. "Social Transfers and Growth: The Missing Evidence from Luminosity Data," WIDER Working Paper Series wp-2014-090, World Institute for Development Economic Research (UNU-WIDER).
    3. Alem-meta Assefa Agidew & K. N. Singh, 2018. "Determinants of food insecurity in the rural farm households in South Wollo Zone of Ethiopia: the case of the Teleyayen sub-watershed," Agricultural and Food Economics, Springer;Italian Society of Agricultural Economics (SIDEA), vol. 6(1), pages 1-23, December.
    4. Villegas, Laura & Smith, Vincent H. & Atwood, Joe & Belasco, Eric, 2016. "Does Participation In Public Works Programs Encourage Fertilizer Use In Rural Ethiopia?," International Journal of Food and Agricultural Economics (IJFAEC), Alanya Alaaddin Keykubat University, Department of Economics and Finance, vol. 4(2), pages 1-24, April.
    5. Phouphet Kyophilavong & Xaignasack Lassachack & Thanouxay Volavong, 2016. "Do cash transfers help the poor during trade liberalization? Evidence from Laos," International Area Studies Review, Center for International Area Studies, Hankuk University of Foreign Studies, vol. 19(4), pages 355-371, December.
    6. Nguyen Viet, Cuong, 2010. "The Impact of Social Security on Household Welfare: Evidence from a Transition Country," MPRA Paper 40777, University Library of Munich, Germany.
    7. Ferrière, Nathalie & Suwa-Eisenmann, Akiko, 2015. "Does Food Aid Disrupt Local Food Market? Evidence from Rural Ethiopia," World Development, Elsevier, vol. 76(C), pages 114-131.
    8. Villa, Juan M., 2014. "Social transfers and growth: The missing evidence from luminosity data," WIDER Working Paper Series 090, World Institute for Development Economic Research (UNU-WIDER).
    9. Jeni Klugman, 2007. "Ethiopia : Explaining Food Price Inflation," World Bank Publications - Reports 19539, The World Bank Group.
    10. Caria, A. Stefano & Tamru, Seneshaw & Bizuneh, Gera, 2011. "Food security without food transfers?: A CGE analysis for Ethiopia of the different food security impacts of fertilizer subsidies and locally sourced food transfers," IFPRI discussion papers 1106, International Food Policy Research Institute (IFPRI).
    11. Mariano, Marc Jim M. & Giesecke, James A., 2014. "The macroeconomic and food security implications of price interventions in the Philippine rice market," Economic Modelling, Elsevier, vol. 37(C), pages 350-361.
    12. Sabates-Wheeler, Rachel & Devereux, Stephen, 2010. "Cash transfers and high food prices: Explaining outcomes on Ethiopia's Productive Safety Net Programme," Food Policy, Elsevier, vol. 35(4), pages 274-285, August.
    13. Jayson L. Lusk & Rock Andre, 2017. "Aid relief in Haiti after the earthquake: Haitians’ preferences for food and other basic commodities," Development Policy Review, Overseas Development Institute, vol. 35, pages 303-321, October.
    14. Zsófia Benedek & Imre Fertő & Viktória Szente, 2020. "The Multiplier Effects of Food Relocalization: A Systematic Review," Sustainability, MDPI, vol. 12(9), pages 1-18, April.
    15. Wodon, Quentin & Zaman, Hassan, 2008. "Rising food prices in Sub-Saharan Africa : poverty impact and policy responses," Policy Research Working Paper Series 4738, The World Bank.

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