Poverty Impacts of Changes in the International Prices of Agricultural Commodities: Recent Evidence for Argentina (An Ex-Ante Analysis)

Abstract

Argentina has benefited greatly from the increase in prices of agricultural commodities. With a large share of its population with low and medium-low incomes, however, a sizable part of households is likely to be adversely affected by the accompanying rise in the price of the consumption basket. An ex-ante analysis suggests that this is the case. Changes through a less obvious channel (i.e. in factor incomes) are likely to be more beneficial to middle-income households. In general, all households experience losses, with poorer households being the most affected. When accounting for transfers financed through the collection of export taxes, poorer households benefit. In the absence of compensatory measures, increases in the prices of agricultural commodities could potentially have an important impact in terms of indigence and poverty.

Price Levels and Poverty Nexus: A Case Study of Pakistan

“…The study explored that in nonproducing districts the impact of inflation was positive on poverty and inequality and the vice versa in case of producing districts due to better system of distribution. Moncarz et al (2016)…”

Rising commodity prices and welfare in Brazil

“…One of the most common spillovers included in the literature is the changes in wages, which generate first-order effects on households' welfare through changes in their income. Examples including this channel are Porto (2006Porto ( , 2010, Borraz et al (2012) and Moncarz et al (2017Moncarz et al ( , 2018, all looking at some members of MERCOSUR. Porto (2006) studies the effect brought by the signing of MERCOSUR on Argentina, whereas Borraz et al (2012) are interested in Paraguay and Uruguay.…”

“…The result is a decline in poverty, which could be attributed mostly to a large wage elasticity (up to 0.85) relative to the prices of agro-manufacture goods. Moncarz et al (2017Moncarz et al ( , 2018, more closely related to the current research, are interested in the effects of the increase in prices of agricultural commodities in Argentina and Uruguay. Their results show a reduction in welfare all over the entire income distribution, as well as an increase in poverty, but once the induced increase in government transfers is included, the results exhibit a less negative pattern.…”

“…Similarly, Nicita et al (2014), whose model includes consumption, agricultural income and labor income effects, find that trade policies tend to be biased in favor of poor households because protection increases the agricultural prices of goods that are sold by African households, and this effect dominates the impacts on both expenditures and wages. A second set of spillovers considered in the literature are those on other goods that are not directly affected by the exogenous shocks, in this group we have the above-mentioned contributions of Porto (2006Porto ( , 2010, Borraz et al (2012), Moncarz et al (2017Moncarz et al ( , 2018, among others. As can be expected, including goods and services whose prices are indirectly affected tends to increase (reduce) the losses (gains) experienced by households, with the effects showing a bias against richer households.…”

“…Also, this approach usually implies the estimation of reduced forms with a more or less lack of theoretical support, as well as they are in most cases not capable of accounting for second-order effects that work through the relations between different sectors of the economy. In spite of these potential shortcomings, several studies have resorted to this approach (Anderson and Tyers, 1992;Krivonos and Olarreaga, 2009;Moncarz et al, 2017Moncarz et al, , 2018.…”