Welfare Impacts of Food Price Inflation in Ethiopia

Jeni Klugman and Josef Loening

MPRA Paper from University Library of Munich, Germany

Abstract: In Ethiopia, changes in the prices of teff, wheat and maize tend to affect more the people at the higher income quintile in rural areas, while in urban areas they tend to affect those at the lower income quintiles. The hike in relative prices from 2006-2007 has increased the urban cost of living by 8-12 percent in urban areas. Inflation could worsen urban income inequality significantly. Demand for teff, maize and wheat tends to be elastic, with evidence of substitutability, especially between teff and wheat. In urban areas, all three types of cereals tended to be necessities, with inelastic price responses. Measuring the rural welfare impact of inflation for households is challenging, given the simultaneous production and consumption decisions and responsiveness of consumption decisions to price and incomes. Overall, it appears that rises in the relative price of food tends to benefit rural households in Ethiopia, though the exact magnitude needs to be investigated further.

Keywords: Poverty; food prices; Ethiopia (search for similar items in EconPapers)
JEL-codes: E31 I32 O55 (search for similar items in EconPapers)
Date: 2007-12-15
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (11)

Downloads: (external link)
https://mpra.ub.uni-muenchen.de/24892/1/MPRA_paper_24892.pdf original version (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:24892

Access Statistics for this paper

More papers in MPRA Paper from University Library of Munich, Germany Ludwigstraße 33, D-80539 Munich, Germany. Contact information at EDIRC.
Bibliographic data for series maintained by Joachim Winter ().