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How Do World Agricultural Commodity Price Spikes Affect The Income Distribution In Israel?


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  • Grethe, Harald
  • Siddig, Khalid H.A.
  • Goetz, Linde
  • Ihle, Rico


We assess the distributional effects of the transmission of world market price shocks for the highly import dependent economy of Israel. We combine a CGE simulation with an empirical cointegration analysis for assessing the direction and extent of the connectedness of Israeli and world market prices. The Israeli and the world market for wheat are found to be integrated. Price shocks are completely transmitted from the world market to the domestic Israeli market. We find negative effects on the amount of domestic household income, on consumption and on welfare. Regressive expenditure effects dominate progressive income effects so that the resulting domestic income distribution appears to be more unequal.

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Bibliographic Info

Paper provided by German Association of Agricultural Economists (GEWISOLA) in its series 52nd Annual Conference, Stuttgart, Germany, September 26-28, 2012 with number 137154.

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Date of creation: 2012
Date of revision:
Handle: RePEc:ags:gewi12:137154

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Keywords: Agricultural trade; CGE; commodity prices; income distribution; Israel; Middle East; price transmission; Agrarhandel; CGE; Agrarpreise; Einkommensverteilung; Israel; Naher Osten; Preistransmission; Agricultural and Food Policy; International Relations/Trade;

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  1. Ivanic, Maros & Martin, Will, 2008. "Implications of higher global food prices for poverty in low-income countries," Policy Research Working Paper Series 4594, The World Bank.
  2. Siddig, Khalid H.A. & Grethe, Harald, 2012. "International Price Transmission In Cge Models: How To Reconcile Econometric Evidence And Endogenous Model Response?," 52nd Annual Conference, Stuttgart, Germany, September 26-28, 2012 137388, German Association of Agricultural Economists (GEWISOLA).
  3. Goodwin, Barry K. & Piggott, Nicholas E., 1999. "Spatial Market Integration In The Presence Of Threshold Effects," 1999 Annual meeting, August 8-11, Nashville, TN 21489, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
  4. Meyer, Jochen & von Cramon-Taubadel, Stephan, 2002. "Asymmetric Price Transmission: A Survey," 2002 International Congress, August 28-31, 2002, Zaragoza, Spain 24822, European Association of Agricultural Economists.
  5. Cudjoe, Godsway & Breisinger, Clemens & Diao, Xinshen, 2009. "Local Impacts of a Global Crisis - Food Price Transmission and Poverty Impacts in Ghana," 2009 Conference, August 16-22, 2009, Beijing, China 51089, International Association of Agricultural Economists.
  6. Nicita, Alessandro, 2005. "Multilateral trade liberalization and Mexican households : the effect of the Doha development agenda," Policy Research Working Paper Series 3707, The World Bank.
  7. Johansen, Soren, 1995. "Likelihood-Based Inference in Cointegrated Vector Autoregressive Models," OUP Catalogue, Oxford University Press, number 9780198774501.
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Cited by:
  1. Siddig, Khalid H.A. & Grethe, Harald, 2012. "International Price Transmission In Cge Models: How To Reconcile Econometric Evidence And Endogenous Model Response?," 52nd Annual Conference, Stuttgart, Germany, September 26-28, 2012 137388, German Association of Agricultural Economists (GEWISOLA).


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