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

Daniel Lederman and Guido Porto

No 7583, Policy Research Working Paper Series from The World Bank

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.

Keywords: Labor Markets; Rural Labor Markets; Commodity Risk Management (search for similar items in EconPapers)
Date: 2016-02-28
New Economics Papers: this item is included in nep-agr and nep-lam
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Citations: View citations in EconPapers (6)

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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) (2014)
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Persistent link: https://EconPapers.repec.org/RePEc:wbk:wbrwps:7583

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