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Impacts and Policy Responses to a commodity price boom. The case of Malawi

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  • Conforti, Piero
  • Ferrari, Emanuele
  • Sarris, Alexander

Abstract

This work analyzes the medium term effects of the recent commodity price spike in a typical Low-Income-Food-Deficit country, Malawi, as well as a set of possible policy responses. Simulations were performed with a single-country static Computable General Equilibrium model, based on the 2004 Malawi Social Accounting Matrix provided by IFPRI, modified with data from the 2004 household budget survey. Results indicate that the increase in agricultural domestic prices was mainly driven by the raise in the cost of imported oil and chemical products. Reductions in tariff and domestic taxes, as well as subsidies on chemicals inputs, appear capable of counteracting the terms of trade shocks to some extent. However, tackling structural constraints, such as those affecting the size of agricultural marketing margins, would produce wider benefits, and improve the resilience of the economy to external shocks.

Suggested Citation

  • Conforti, Piero & Ferrari, Emanuele & Sarris, Alexander, 2009. "Impacts and Policy Responses to a commodity price boom. The case of Malawi," Conference papers 331873, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    • Handle: RePEc:ags:pugtwp:331873
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    References listed on IDEAS

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    1. Nadim Ahmad & Andrew Wyckoff, 2003. "Carbon Dioxide Emissions Embodied in International Trade of Goods," OECD Science, Technology and Industry Working Papers 2003/15, OECD Publishing.
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