Trade exposure and income volatility in cash-crop exporting developing countries

François Bourguignon, Sylvie Lambert, Akiko Suwa-Eisenmana

Research output: Contribution to journalReview article

Abstract

World commodity price volatility generates an aggregate macroeconomic risk for the many developing countries that are dependent on the export of a few agricultural commodities. Usual income indicators should therefore take into account the corresponding risk premium, especially for households close to subsistence level. A risk-augmented income distribution would yield a very different ranking of the policies often used to alleviate the domestic impact of world price volatility. This paper gives illustrative examples using simulations generated by a general equilibrium model with random prices for cash crops. Results show that policies that are similar in terms of expected average income can have quite different effects in terms of income variances.

Original languageEnglish (US)
Pages (from-to)369-387
Number of pages19
JournalEuropean Review of Agricultural Economics
Volume31
Issue number3
DOIs
StatePublished - Sep 2004

Keywords

  • Commodity price volatility
  • Computable general equilibrium
  • Risk
  • Trade and income distribution

ASJC Scopus subject areas

  • Agricultural and Biological Sciences (miscellaneous)
  • Economics and Econometrics

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