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

Daniel Lederman and Guido Porto

No 6858, Policy Research Working Paper Series from The World Bank

Abstract: This paper provides an overview of the impact of once-and-for-all changes in commodity prices and other prices 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 uncover strong commodity dependence in both continents: households typically allocate a large fraction of their budget to commodities and they often depend on commodities to earn their income. This income and expenditure dependency suggests sizable impacts and adjustments following commodity-price shocks. The paper explores these effects with a review of the literature. It studies consumption and income responses, labor-market responses, and spillovers across sectors. It ends up providing evidence on the relative magnitudes of various mechanisms through which commodity prices affect household (and national) welfare in developing economies.

Keywords: Markets and Market Access; Economic Theory&Research; Emerging Markets; Labor Policies; Access to Markets (search for similar items in EconPapers)
Date: 2014-05-01
New Economics Papers: this item is included in nep-afr, nep-agr and nep-lam
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Citations: View citations in EconPapers (3)

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Related works:
Journal Article: The Price Is Not Always Right: On the Impacts of Commodity Prices on Households (and Countries) (2016)
Working Paper: The price is not always right: on the impacts of commodity prices on households (and countries) (2016)
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Persistent link: https://EconPapers.repec.org/RePEc:wbk:wbrwps:6858

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