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Commodity price shocks and the distribution of income in commodity-dependent least-developed countries

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  • von Arnim, Rudiger
  • Tröster, Bernhard
  • Staritz, Cornelia
  • Raza, Werner

Abstract

Many least developed countries (LDCs) face commodity dependence on the export and import side. This paper develops a structuralist computable general equilibrium model for commodity-dependent LDCs and simulates global commodity price shocks for Burkina Faso, Ethiopia and Mozambique. Results show important macroeconomic and distributional effects. Although increasing export commodity prices are beneficial, the high correlation with import commodity prices causes low or even negative combined effects. The magnitude of effects depends on the degree of import and export dependence, the production structure of the key commodity sectors and policies that determine the distribution of windfall profits.

Suggested Citation

  • von Arnim, Rudiger & Tröster, Bernhard & Staritz, Cornelia & Raza, Werner, 2018. "Commodity price shocks and the distribution of income in commodity-dependent least-developed countries," Journal of Policy Modeling, Elsevier, vol. 40(2), pages 434-451.
    • Handle: RePEc:eee:jpolmo:v:40:y:2018:i:2:p:434-451
    DOI: 10.1016/j.jpolmod.2018.02.008
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    7. Mekasha, Tseday J. & Molla, Kiflu G. & Tarp, Finn & Aikaeli, Jehovaness, 2022. "Commodity price fluctuations and child malnutrition," World Development, Elsevier, vol. 158(C).

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    More about this item

    Keywords

    Economic development; Primary commodities; Commodity dependence; Price volatility; Africa;
    All these keywords.

    JEL classification:

    • E12 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Keynes; Keynesian; Post-Keynesian; Modern Monetary Theory
    • E27 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Forecasting and Simulation: Models and Applications
    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics

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