Policy Response to a Commodity Price Boom Under Structural Constraints. The Case of Tanzania

Piero Conforti and Alexander Sarris

No 331773, Conference papers from Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project

Abstract: This paper explores the impact of possible responses to the recent soar in world commodity prices on economic activity and household welfare in Tanzania, on the basis of a single country computable general equilibrium model that includes considerable factor market and household details. The focus is on the impact of different types of trade policies, as well as of the large marketing margins between producers, consumers and the foreign markets existing in the country. Scenario results are computed under a number of different assumptions in terms of the degree of substitutability of domestic products with imported goods, and flexibility in the allocation between exports and the domestic market. Results indicate that the Tanzanian economy may fail to benefit from the opportunities arising from the increase in world agricultural prices, and that trade policy does not appear to be capable of counteracting this risk. Rather, even a partial removal of a key structural bottleneck, such as the reduction of marketing margins, generates desirable results in terms of both production and distribution.

Keywords: Agricultural and Food Policy; Consumer/Household Economics (search for similar items in EconPapers)
Pages: 21
Date: 2008
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Persistent link: https://EconPapers.repec.org/RePEc:ags:pugtwp:331773

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