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Poverty and Price Transmission

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  • Elleby, Christian

Abstract

A key parameter determining the welfare impact from a world market shock is the price transmission elasticity. This paper proposes a model which explains a country's domestic price response to world market shocks in terms of its demand structure. The model delivers two testable predictions; price transmission is increasing in per capita food expenditure and in income inequality. In the empirical analysis of domestic price changes during the food crises I find significant inverse U-shaped relationships between domestic food price growth and per capita food expenditure. Unequal countries also experienced higher price growth but the relationship is less significant.

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  • Elleby, Christian, 2015. "Poverty and Price Transmission," 2015 Conference, August 9-14, 2015, Milan, Italy 211621, International Association of Agricultural Economists.
  • Handle: RePEc:ags:iaae15:211621
    DOI: 10.22004/ag.econ.211621
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    More about this item

    Keywords

    Consumer/Household Economics; Food Security and Poverty;

    JEL classification:

    • D11 - Microeconomics - - Household Behavior - - - Consumer Economics: Theory
    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • Q11 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Aggregate Supply and Demand Analysis; Prices
    • Q12 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Micro Analysis of Farm Firms, Farm Households, and Farm Input Markets

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