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The Macroeconomic Repercussions of Agricultural Shocks and their Implications for Insurance

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  • Paul Collier

Abstract

The paper considers the macroeconomic impact of shocks to agricultural output and of negative and positive price shocks. It is shown that negative price shocks have particularly large externalities: it is estimated that the overall impact of these negative shocks on GDP may well be double their direct impact. In terms of policy, the presence of externalities justifies subsidising the provision of insurance. If insurance is not feasible, then foreign aid may be helpful.

Suggested Citation

  • Paul Collier, 2002. "The Macroeconomic Repercussions of Agricultural Shocks and their Implications for Insurance," WIDER Working Paper Series DP2002-46, World Institute for Development Economic Research (UNU-WIDER).
    • Handle: RePEc:unu:wpaper:dp2002-46
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    File URL: https://www.wider.unu.edu/sites/default/files/dp2002-46.pdf
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    References listed on IDEAS

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    1. Angus Deaton & Guy Laroque, 1992. "On the Behaviour of Commodity Prices," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 59(1), pages 1-23.
    2. Jan Dehn, 2000. "Commodity price uncertainty and shocks: implications for economic growth," CSAE Working Paper Series 2000-10, Centre for the Study of African Economies, University of Oxford.
    3. David Dollar & Craig Burnside, 2000. "Aid, Policies, and Growth," American Economic Review, American Economic Association, vol. 90(4), pages 847-868, September.
    4. Collier, Paul & Dehn, Jan, 2001. "Aid, shocks, and growth," Policy Research Working Paper Series 2688, The World Bank.
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    Cited by:

    1. AfDB AfDB, 2005. "Working Paper 75 - External Shocks and the HIPC Initiative: Impacts on Growth and Poverty in Africa," Working Paper Series 2289, African Development Bank.
    2. Julie Subervie, 2008. "The Variable Response of Agricultural Supply to World Price Instability in Developing Countries," Journal of Agricultural Economics, Wiley Blackwell, vol. 59(1), pages 72-92, February.
    3. Nureldin Hussain & Bernard Gunter, 2005. "Working Paper 75 - External Shocks and the HIPC Initiative: Impacts on Growth and Poverty in Africa," Working Paper Series 210, African Development Bank.
    4. Ngepah, Nicholas, 2010. "Inequality and agricultural production: Evidence from aggregate agriculture and sugarcane farms in South Africa," African Journal of Agricultural and Resource Economics, African Association of Agricultural Economists, vol. 5(2), pages 1-19, December.
    5. AfDB AfDB, 2005. "Working Paper 75 - External Shocks and the HIPC Initiative: Impacts on Growth and Poverty in Africa," Working Paper Series 2209, African Development Bank.

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