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The impact of a large rice price increase on welfare and poverty in Bangladesh

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  • Syed Abul Hasan

Abstract

This paper studies the e ect of a sharp rice price increase on welfare and poverty in Bangladesh. We employ household expenditure information to estimate the welfare loss in- duced by the price increase. Our ndings suggest that we underestimate the proportionate welfare loss for the rice producing households and overestimate that of the households who do not produce rice, if we ignore indirect e ects arising from a change in household consump- tion and production behaviour. Our estimates further support the hypothesis of a quadratic relationship between welfare loss and permanent household income. We also demonstrate that higher rice prices either increase or decrease the poverty head-count ratio, depending on the choice of the poverty line. However, if we consider the per capita income gap as a measure of poverty, we always observe that higher rice prices unambiguously increase poverty.

Suggested Citation

  • Syed Abul Hasan, 2013. "The impact of a large rice price increase on welfare and poverty in Bangladesh," ASARC Working Papers 2013-11, The Australian National University, Australia South Asia Research Centre.
    • Handle: RePEc:pas:asarcc:2013-11
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    More about this item

    Keywords

    Welfare; Poverty; Rice Price Increase; Semiparametric Regression; Bangladesh;
    All these keywords.

    JEL classification:

    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • O53 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East
    • Q12 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Micro Analysis of Farm Firms, Farm Households, and Farm Input Markets
    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • I32 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Measurement and Analysis of Poverty

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