Trade exposure and income volatility in cash-crop exporting developing countries
AbstractWorld commodity price volatility generates an aggregate macroeconomic risk for the many developing countries that are dependent on the export of a few agricultural commodities. Usual income indicators should therefore take into account the corresponding risk premium, especially for households close to subsistence level. A risk-augmented income distribution would yield a very different ranking of the policies often used to alleviate the domestic impact of world price volatility. This paper gives illustrative examples using simulations generated by a general equilibrium model with random prices for cash crops. Results show that policies that are similar in terms of expected average income can have quite different effects in terms of income variances. Copyright 2004, Oxford University Press.
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Bibliographic InfoPaper provided by Laboratoire d'Economie Appliquee, INRA in its series Research Unit Working Papers with number 0408.
Length: 30 pages
Date of creation: Jun 2004
Date of revision:
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risk commodity price volatility; trade and income distribution; computable general equilibrium;
Other versions of this item:
- François Bourguignon, 2004. "Trade exposure and income volatility in cash-crop exporting developing countries," European Review of Agricultural Economics, Foundation for the European Review of Agricultural Economics, vol. 31(3), pages 369-387, September.
- O15 - Economic Development, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
- D80 - Microeconomics - - Information, Knowledge, and Uncertainty - - - General
- D58 - Microeconomics - - General Equilibrium and Disequilibrium - - - Computable and Other Applied General Equilibrium Models
This paper has been announced in the following NEP Reports:
- NEP-ALL-2004-07-18 (All new papers)
- NEP-DEV-2004-07-18 (Development)
- NEP-LTV-2004-07-18 (Unemployment, Inequality & Poverty)
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