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Citation Information

Type Working Paper
Title Short and Long-run Impacts of Food Price Changes on Poverty
Author(s)
Publication (Day/Month/Year) 2011
URL http://iatrc.software.umn.edu/activities/annualmeetings/themedays/pdfs2011/2011Dec-TD-IvanicMartin_p​aper.pdf
Abstract
There is now considerable evidence that rapid increases in food prices raise poverty in most
developing countries. Key reasons for this are that the poor spend large share of their incomes on
food, and that many poor farmers are net buyers of food. However, there are reasons to suspect
that high food prices may be less harmful for the poor in the longer run as producers and
consumers adjust to higher agricultural prices. Using expenditure and agricultural production
data for a sample of twenty-nine developing countries, and a household model designed for
broad consistency with and solved in parallel with the widely-used GTAP model, we evaluate
short and long-term consequences of increased food price changes on poverty. We find that high
food prices have sharply adverse impacts on poverty in the short run, but much smaller impacts
in the long run. However, bringing down food prices through raising productivity growth has
particularly large favorable impacts on poverty by lowering the costs of food to consumers,
raising agricultural incomes, and increasing wage rates for unskilled labor.

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