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Trade exposure and income volatility in cash-crop exporting developing countries

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Abstract

World commodity price volatility generates an aggregate macroeconomic risk for the many developing countries that are dependent on the export of a few agricultural commodities. Usual income indicators should therefore take into account the corresponding risk premium, especially for households close to subsistence level. A risk-augmented income distribution would yield a very different ranking of the policies often used to alleviate the domestic impact of world price volatility. This paper gives illustrative examples using simulations generated by a general equilibrium model with random prices for cash crops. Results show that policies that are similar in terms of expected average income can have quite different effects in terms of income variances. Copyright 2004, Oxford University Press.

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  • François Bourguignon, 2004. "Trade exposure and income volatility in cash-crop exporting developing countries," European Review of Agricultural Economics, Oxford University Press and the European Agricultural and Applied Economics Publications Foundation, vol. 31(3), pages 369-387, September.
    • Handle: RePEc:oup:erevae:v:31:y:2004:i:3:p:369-387
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    Cited by:

    1. Sulamaa, Pekka & Widgrén, Mika, 2005. "Asian Regionalism versus Global Free Trade: A Simulation Study on Economic Effects," Discussion Papers 985, The Research Institute of the Finnish Economy.
    2. Valenzuela, Ernesto & Hertel, Thomas W., 2006. "Poverty Vulnerability and Trade Policy: Are the Likely Impacts Discernable?," 2006 Annual meeting, July 23-26, Long Beach, CA 21397, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    3. Charles, Michael B. & Ryan, Rachel & Oloruntoba, Richard & Heidt, Tania von der & Ryan, Neal, 2009. "The EU-Africa Energy Partnership: Towards a mutually beneficial renewable transport energy alliance?," Energy Policy, Elsevier, vol. 37(12), pages 5546-5556, December.
    4. Mihai MUTASCU & Nicolae-Bogdan IANC & Albert LESSOUA, 2021. "Public debt and inequality in Sub-Saharan Africa: the case of EMCCA and WAEMU countries," LEO Working Papers / DR LEO 2911, Orleans Economics Laboratory / Laboratoire d'Economie d'Orleans (LEO), University of Orleans.
    5. Monika Verma & Thomas W. Hertel & Ernesto Valenzuela, 2011. "Are The Poverty Effects of Trade Policies Invisible?," The World Bank Economic Review, World Bank, vol. 25(2), pages 190-211, May.
    6. George Rapsomanikis & Alexander Sarris, 2006. "The Impact of Domestic and International Commodity Price Volatility on Agricultural Income Instability: Ghana, Vietnam and Peru," WIDER Working Paper Series DP2006-04, World Institute for Development Economic Research (UNU-WIDER).
    7. Antonio Lopolito & Maurizio Prosperi & Roberta Sisto, 2009. "Socio-Economic Implications Of The Development Of A Bio-Refinery: An Analysis With Fuzzy Cognitive Maps," Quaderni DSEMS 19-2009, Dipartimento di Scienze Economiche, Matematiche e Statistiche, Universita' di Foggia.
    8. Pierre-Emmanuel Darpeix, 2019. "Literature review on the consequences of food price spikes and price volatility," PSE Working Papers hal-02072329, HAL.
    9. May, Daniel E., 2013. "PR - Export Instability When International Agricultural Markets Operate Under Oligopoly," 19th Congress, Warsaw, Poland, 2013 345682, International Farm Management Association.
    10. Pierre-Emmanuel Darpeix, 2019. "Literature review on the consequences of food price spikes and price volatility," Working Papers hal-02072329, HAL.
    11. Charles, Michael B. & Ryan, Rachel & Ryan, Neal & Oloruntoba, Richard, 2007. "Public policy and biofuels: The way forward?," Energy Policy, Elsevier, vol. 35(11), pages 5737-5746, November.

    More about this item

    JEL classification:

    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
    • D80 - Microeconomics - - Information, Knowledge, and Uncertainty - - - General
    • D58 - Microeconomics - - General Equilibrium and Disequilibrium - - - Computable and Other Applied General Equilibrium Models

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