World food prices and human development: Policy simulations for archetype low-income countries

Preprint, Unknown OPEN
Lofgren, Hans (2012)
  • Publisher: World Bank, Washington, DC
  • Subject: IMPORT PRICES | FOREIGN DEBTS | PRIVATE SAVINGS | GOVERNMENT SPENDING | FIXED SHARE | GOVERNMENT INVESTMENT | TAX INCREASES | TRADE LOSS | GROSS DOMESTIC PRODUCT | DEBT STOCK | PRIVATE CONSUMPTION | EXPORTERS | INCOMES | FOOD PRODUCTS | CHILD LABOR | FOREIGN DIRECT INVESTMENT | FACTOR MARKETS | FOREIGN GOVERNMENT | TAX RATE | RETURNS | WORLD PRICES | PRICE OF EXPORTS | COMMODITY | ECONOMETRIC EVIDENCE | FIXED SHARES | SMALL COUNTRY | FOREIGN INTEREST | COMMODITIES | GROWTH RATE | CAPITAL ACCUMULATION | PETROLEUM PRODUCT | PRICE INDICES | DOMESTIC BORROWING | POPULATION GROWTH | MARKET CONDITIONS | EXPORTER | DEMAND FOR FOOD | SUPPLY CURVES | FACTORS OF PRODUCTION | COMMODITY MARKETS | EXCHANGE RATE | DEPRECIATION | SURPLUS | FOOD PRODUCTION | REAL CONSUMPTION | PUBLIC INVESTMENT | DOMESTIC PRICE | BASE YEAR | CAPITAL STOCKS | DEBT STOCKS | PRODUCTION INCREASES | DEPRECIATION RATES | FOOD OUTPUT | AGRICULTURAL ACTIVITIES | LOW-INCOME COUNTRIES | CONSUMPTION BASKETS | GOVERNMENT DEBT | EXPENDITURE | INTERNATIONAL PRICE | FULL EMPLOYMENT | STOCK CHANGE | IMPORT TARIFFS | ACCOUNTING | ECONOMIC SYSTEMS | CONSUMPTION GROWTH | DOMESTIC PRICE LEVELS | TAX RATES | PRIVATE CAPITAL STOCKS | DATA AVAILABILITY | GDP PER CAPITA | FOOD CONSUMPTION | GLOBAL ECONOMICS | CAPITAL STOCK | DOMESTIC DEMAND | TOTAL FACTOR PRODUCTIVITY | FOREIGN EXCHANGE | INVESTMENT LEVELS | GOVERNMENT BORROWING | MARKET PRICES | ECONOMETRIC ANALYSIS | FACTOR MARKET | CROSS-COUNTRY STUDIES | FOOD SUBSIDY | CHECKS | FOOD SUPPLY | GOVERNMENT FINANCING | FOOD PRICES | DEBT | INTERNATIONAL TRADE | INCOME | GLOBAL ECONOMY | IMPORT | ELASTICITY | EXPORTS | TAX INCREASE | ENVIRONMENTAL IMPACT | HOUSEHOLD SAVINGS | TRADE SHOCK | GINI COEFFICIENT | AGRICULTURE | REAL EXCHANGE RATE | BALANCE OF PAYMENTS | POLICY RESPONSE | FOOD IMPORTS | TRADE BALANCE | AGRICULTURAL SERVICES | ANNUAL GROWTH | LABOR FORCE | PRODUCTION STRUCTURE | PRICE LEVELS | FOOD SUBSIDIES | WAGES | DEVELOPING COUNTRIES | CURRENT ACCOUNT | SUBSIDY POLICY | WORLD DEVELOPMENT INDICATORS | CONSUMPTION DECISIONS | GOVERNMENT BUDGET | SUPPLY CURVE | INTERNATIONAL BANK | PAYMENT FLOWS | FOREIGN DEBT | TRADE SHARES | INTERNAL RATES OF RETURN | FUNCTIONAL FORMS | SAVINGS | DEPRECIATION RATE | FOREIGN CURRENCY | TRANSFER PAYMENTS | INTERNATIONAL PRICES | DOWNWARD PRESSURE | GENERAL EQUILIBRIUM MODEL | BENCHMARK | GDP | UNEMPLOYMENT | WAGE GROWTH | SANITATION SERVICES | INTERNATIONAL MARKET | FOOD EXPORT | PRICE CHANGES | DOMESTIC MARKET | PROFIT RATE | REAL EXCHANGE RATE APPRECIATION | FIXED INVESTMENT | GOVERNMENT ACTIONS | ECONOMIC GROWTH | ACCUMULATION OF CAPITAL | TRADE STATISTICS | COMPARATIVE ANALYSIS | DEVELOPMENT POLICY | RELATIVE PRICES | FOOD INDUSTRY | SAVINGS RATES | FACTOR DEMAND | BALANCE OF PAYMENTS DEFICIT | GROWTH RATES | INVESTMENT FINANCING | IMPORT GROWTH | VALUE ADDED | DEVELOPMENT POLICIES | TRUST FUND | INCOME ELASTICITIES | FOOD PRICE | OUTPUTS | TRADE DEFICIT | UNEMPLOYMENT RATES | WORLD MARKETS | POLICY RESPONSES | DEVELOPING ECONOMY | BUDGET CONSTRAINT | FOOD DEMAND | REMITTANCES | BANK POLICY | LOW-INCOME COUNTRY | IMPORT PRICE | GENERAL EQUILIBRIUM | POSITIVE EFFECTS | EXISTING GOVERNMENT | TRANSACTIONS COSTS | RAPID GROWTH | UNEMPLOYMENT RATE | TRADE POLICY | PRICE SUBSIDY | EXPORT SHARE | PRIVATE CAPITAL | TAX | DEVELOPMENT ECONOMICS | WORLD PRICE | LOCAL CURRENCY | FOREIGN EXCHANGE RATE | TOTAL EXPORTS | SUPPLY SIDE | DOMESTIC DEBTS | PROFIT MAXIMIZATION | ECONOMIC PERFORMANCE | POVERTY ALLEVIATION | LABOR MARKET | DEVELOPING COUNTRY | INTEREST PAYMENTS | BUDGET CONSTRAINTS | EXPORT GROWTH | INVESTMENT RATES | CONSUMERS | DOMESTIC MARKETS | CONSUMPTION SMOOTHING | PRICE INCREASE | TOTAL EXPORT | FOOD EXPORTS | PRICE INCREASES | DEMAND CURVES | PRIVATE INVESTMENT | LIVING STANDARDS | HUMAN DEVELOPMENT | RELATIVE PRICE | ECONOMIC POLICY | PRICE CHANGE | Economic Theory&Research,Food&Beverage Industry,Emerging Markets,Debt Markets,Currencies and Exchange Rates

In recent years, world food prices have increased and fluctuated widely. This paper explores the impact of international food prices and domestic policies on Millennium Development Goal (MDG) and macro indicators for two archetype low-income countries, a net food exporter and a net food importer, using Maquette for MDG Simulations (MAMS), a Computable General Equilibrium model. The simulations, which cover the period 2011-2025, indicate that the size of positive (negative) effects on macro and MDG indicators of a food export (import) price increase depend on the initial gross domestic product share for food exports (imports), leaving countries that are heavily involved in international food trade more exposed to international shocks. Given relatively low elasticity estimates, the impact of changes in food prices on undernourishment are relatively marginal. Flexible responses (in terms of production shares, whether output is exported or sold at home, and whether domestic demanders buy imports or domestic output) enable countries to benefit from or be less hurt by price changes. The case for policy responses to higher import prices is stronger for the net food importer. An untargeted food subsidy, financed by taxes or spending cuts, reduces undernourishment at the cost of a slight deterioration for most other indicators. By contrast, aid-financed food subsidies neutralize the negative impact of higher import prices whereas financing via domestic borrowing is counterproductive, leading to a deterioration across all indicators. If administered at moderate costs, tax-financed targeted transfers more effectively reduce headcount poverty and inequality with macroeconomic repercussions similar to those of tax-financed subsidies.
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