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Do rural households smooth their consumption? Applying an asset-based approach to the case of Malawi

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  • Makoka, Donald

Abstract

Smallholder farming households in most of the developing countries, live in environments that are characterized by substantial risk. They consequently develop a range of risk management strategies. However, analyzing household consumption smoothing behaviour requires the availability of both income and consumption data. Since household income data are usually unavailable in many developing countries, including Malawi, this paper develops an asset-based framework to analyze consumption smoothing behaviour at household and community levels using a two-period panel dataset on 259 rural households in Malawi. The results show that while consumption smoothing takes place at the household level, it is not perfect. Food consumption is protected more than non-food consumption. Risk sharing also takes place at the community level. The major policy implication is that social protection programmes should promote household asset accumulation to enable rural households manage livelihood risks better.

Suggested Citation

  • Makoka, Donald, 2009. "Do rural households smooth their consumption? Applying an asset-based approach to the case of Malawi," MPRA Paper 15398, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:15398
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    References listed on IDEAS

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    More about this item

    Keywords

    Consumption smoothing; risk; rural Malawi;
    All these keywords.

    JEL classification:

    • B21 - Schools of Economic Thought and Methodology - - History of Economic Thought since 1925 - - - Microeconomics

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