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The Welfare Impacts of Commodity Price Volatility: Evidence from Rural Ethiopia


  • Marc F. Bellemare
  • Christopher B. Barrett
  • David R. Just


How does commodity price volatility affect the welfare of rural households in developing countries, for whom hedging and consumption smoothing are often difficult? When governments choose to intervene in order to stabilize commodity prices, as they often do, who gains the most? This article develops an analytical framework and an empirical strategy to answer those questions, along with illustrative empirical results based on panel data from rural Ethiopian households. Contrary to conventional wisdom, we find that the welfare gains from eliminating price volatility are increasing in household income, making food price stabilization a distributionally regressive policy in this context. Copyright 2013, Oxford University Press.

Suggested Citation

  • Marc F. Bellemare & Christopher B. Barrett & David R. Just, 2013. "The Welfare Impacts of Commodity Price Volatility: Evidence from Rural Ethiopia," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 95(4), pages 877-899.
  • Handle: RePEc:oup:ajagec:v:95:y:2013:i:4:p:877-899

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