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The price is not always right : on the impacts of commodity prices on households (and countries)

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  • Lederman,Daniel
  • Porto,Guido

Abstract

This paper provides an overview of the impact that one-time changes in commodity and other prices have on household welfare. It begins with a collection of stylized facts related to commodities based on household survey data from Latin America and Africa. The data uncovers strong commodity dependence on both continents: households typically allocate a large fraction of their budget to commodities, and they often also depend on commodities to earn their income. This income and expenditure dependency suggests sizable impacts and adjustments following commodity price shocks. The article explores these effects with a review of the relevant literature. The authors study consumption and income responses, labor market responses, and spillovers across sectors. The paper provides evidence on the relative magnitudes of various mechanisms through which commodity prices affect household (and national) welfare in developing economies.

Suggested Citation

  • Lederman,Daniel & Porto,Guido, 2016. "The price is not always right : on the impacts of commodity prices on households (and countries)," Policy Research Working Paper Series 7583, The World Bank.
  • Handle: RePEc:wbk:wbrwps:7583
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    Cited by:

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    2. Tadesse Kuma & Mekdim Dereje & Kalle Hirvonen & Bart Minten, 2019. "Cash Crops and Food Security: Evidence from Ethiopian Smallholder Coffee Producers," Journal of Development Studies, Taylor & Francis Journals, vol. 55(6), pages 1267-1284, June.
    3. Will Martin, 2017. "Agricultural Trade and Food Security," Policy briefs 1744, Policy Center for the New South.
    4. Ulrik Beck & Saurabh Singhal & Finn Tarp, 2016. "Coffee price volatility and intra-household labour supply," WIDER Working Paper Series 016, World Institute for Development Economic Research (UNU-WIDER).
    5. Marianne Fay & Stephane Hallegatte & Adrien Vogt-Schilb & Julie Rozenberg & Ulf Narloch & Tom Kerr, 2015. "Decarbonizing Development," World Bank Publications - Books, The World Bank Group, number 21842.
    6. Chauvin, Nicolas & Porto, Guido & Mulangu, Francis, 2015. "Agricultural Prices, Household Wellbeing and Poverty Alleviation in Tanzania: The Role of Agricultural Supply Chains and Household Constraints," 2015 Conference, August 9-14, 2015, Milan, Italy 211569, International Association of Agricultural Economists.
    7. Nicolas Depetris-Chauvin & Guido Porto, 2014. "Agricultural Supply Chains and Farmers Constraints: Welfare Impacts in ECOWAS Countries," Working Papers 2014-20, CEPII research center.
    8. Ulrik Beck & Saurabh Singhal & Finn Tarp, 2016. "Coffee price volatility and intra-household labour supply: Evidence from Vietnam," WIDER Working Paper Series wp-2016-16, World Institute for Development Economic Research (UNU-WIDER).

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