 Estimating household responses to trade reforms: Net consumers and net producers in rural MexicoInternational Economics, 2015, vol. 144, issue C, 116-142 Abstract: This paper explores an empirical methodology to assess the impacts of trade reforms in agriculture on household behavior in developing countries. I focus on consumption and income responses: when price reforms take place, households modify consumption and production decisions and local labor markets adjust. The paper proposes a joint estimator of demand and wage price elasticities from survey data. The method uses an empirical model of demand to extract price information from unit values, and uses this information to estimate the response of households to price reforms. By correcting unit values for quality effects and measurement error, the method overcomes the problem of the endogeneity of unit values. By endogeneizing household income, the model corrects potential biases in the estimation of own- and cross-price elasticities in consumption. I apply the method to an expenditure and income survey for rural Mexico. It is shown that the corrections suggested in this paper are empirically important. In particular, I show that allowing for consumption and income responses is a key element of an accurate empirical assessment of trade policy. Keywords: Agricultural trade reforms; Welfare and poverty impacts of trade policy (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:inteco:v:144:y:2015:i:c:p:116-142 DOI: 10.1016/j.inteco.2015.09.001 Access Statistics for this article International Economics is currently edited by Valerie Mignon and Marcelo Olarreaga More articles in International Economics from Elsevier |
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