Welfare and Distributional Impacts of Price Shocks in Malawi: A Non-Parametric Approach
This analysis uses measures of Compensating Variation (CV) and Net Benefit Ratios (NBR) to assess the short-run effects of higher prices on different income groups in rural and urban areas of Malawi. Compensating Variation analysis indicates that urban households, particularly the poorest are the most severely affected both in the aggregate consumption and also in terms of food consumption. In rural areas, relatively better off households are more negatively affected by overall price increases, but the poorest are the group that suffers the most with food price shocks. A fifty percent supply response of agricultural production would result in significant positive effects on rural household welfare. A significantly larger response would be required in maize production to yield significant benefits among households. Results are translated into tangible policy and programmatic recommendations to inform the design of interventions aimed at mitigating those effects and promoting economic growth and poverty reduction. This analysis suggest that policies should be oriented towards facilitating a supply response by households resulting in a significant increase in maize, other staple food and non-food production, supporting household livelihoods diversification, while putting in place programs to assist the most vulnerable groups.
|Date of creation:||2012|
|Date of revision:|
|Contact details of provider:|| Web page: http://www.iaae-agecon.org/|
More information through EDIRC
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Klugman, Jeni & Loening, Josef, 2007. "Welfare Impacts of Food Price Inflation in Ethiopia," MPRA Paper 24892, University Library of Munich, Germany.
When requesting a correction, please mention this item's handle: RePEc:ags:iaae12:125394. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (AgEcon Search)
If references are entirely missing, you can add them using this form.