Household Responses to Shocks in Rural Ethiopia : Livestock as a Buffer Stock

This paper uses a stochastic dynamic programming model to characterize the optimal savings-consumption decisions and the role of livestock inventories as a buffer stock in rural Ethiopia. The results show that relatively land-rich households use ac...

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Main Author:	Ali, Daniel Ayalew
Format:	Working Paper
Language:	English en_US
Published:	World Bank, Washington, DC 2015
Subjects:	TRANSITORY INCOME CREDIT MARKETS POULTRY MANURE LIVE ANIMALS ANIMAL PRODUCTS PRODUCTION MULTIPLIERS LIQUIDATION STOCK FARMER INCOME MILK LIVESTOCK RESEARCH PORTFOLIO CHOICE EXCHANGE INCOME FROM LIVESTOCK ELASTICITY OF DEMAND BULLOCKS LIQUIDITY ANIMALS ELASTICITY POLITICAL ECONOMY PORTFOLIO OPTIMIZATION INCENTIVES DISTRIBUTION VARIABLES MARGINAL PRODUCTIVITY DAMAGES INPUTS RETURNS TO SCALE WEALTH RISK AVERSE GRAZING LAND INTERNATIONAL BANK DEVELOPMENT GRAZING LIVESTOCK MARKETING CHOICE SAVINGS ANIMAL DISEASES COSTS MILK PRODUCTION HERDING DEVELOPMENT ECONOMICS MAXIMUM LIKELIHOOD ESTIMATION EXOGENOUS VARIABLES RENT SHEEP CONSTANT RETURNS TO SCALE LIQUIDITY CONSTRAINTS EXPECTED RETURN FAILURES DRAFT POWER LIVESTOCK PRODUCTS LIVESTOCK PRICES UTILITY THEORY MARKETS LIVESTOCK MARKET SELECTION LIVESTOCK LIFE CYCLE HYPOTHESIS INVENTORIES UTILITY DISCOUNTED VALUE TAXES NORMAL GOOD TRANSACTIONS LIVESTOCK MARKETS TRANSACTION CONSUMPTION FOOD SECURITY GOOD LIVESTOCK SECTOR ECONOMETRIC ANALYSIS FUTURE VALUE INCOME SHOCKS RUMINANTS RETURNS CREDIT STOCK MANAGEMENT PURCHASING POWER INCOME VARIABILITY PERMANENT INCOME ANIMAL TRACTION UTILITY FUNCTION PRICE RISK LIVESTOCK PRODUCTIVITY WORKING CAPITAL AGRICULTURE CONSUMERS CATTLE HIGHLANDS CALVES MEASUREMENT ASSETS CASH HOLDINGS TRANSACTION COSTS ANIMAL HUSBANDRY MARKET BENCHMARK SMALL RUMINANTS RURAL MARKETS FOOD BULLS CATTLE OWNERSHIP CATTLE PRICES PRODUCTION FUNCTION HOLDINGS PERMANENT INCOME HYPOTHESIS TRADE CONSUMPTION SMOOTHING HERD SIZE MARGINAL PROPENSITY TO SAVE SLAUGHTERED ANIMALS GOODS THEORY LAND-RICH HOUSEHOLDS LIVESTOCK DURING DROUGHT STOCKS INVESTMENT EXPECTED UTILITY FARM FARMS MEAT TRANSACTIONS COSTS LIVESTOCK INVENTORIES ANIMAL INVESTMENTS RISK MANAGEMENT RISK AVERSION FARMING SYSTEMS GOATS CAPITAL FLIGHT MARGINAL UTILITY CATTLE SALES PRICES POVERTY ALLEVIATION DEVELOPMENT POLICY EXPECTED RETURNS
Online Access:	http://documents.worldbank.org/curated/en/2015/04/24407922/household-responses-shocks-rural-ethiopia-livestock-buffer-stock http://hdl.handle.net/10986/21858

id	okr-10986-21858
recordtype	oai_dc
spelling	okr-10986-218582021-04-23T14:04:05Z Household Responses to Shocks in Rural Ethiopia : Livestock as a Buffer Stock Ali, Daniel Ayalew TRANSITORY INCOME CREDIT MARKETS POULTRY MANURE LIVE ANIMALS ANIMAL PRODUCTS PRODUCTION MULTIPLIERS LIQUIDATION STOCK FARMER INCOME MILK LIVESTOCK RESEARCH PORTFOLIO CHOICE EXCHANGE INCOME FROM LIVESTOCK ELASTICITY OF DEMAND BULLOCKS LIQUIDITY ANIMALS ELASTICITY POLITICAL ECONOMY PORTFOLIO OPTIMIZATION INCENTIVES DISTRIBUTION VARIABLES MARGINAL PRODUCTIVITY DAMAGES INPUTS RETURNS TO SCALE WEALTH RISK AVERSE GRAZING LAND INTERNATIONAL BANK DEVELOPMENT GRAZING LIVESTOCK MARKETING CHOICE SAVINGS ANIMAL DISEASES COSTS MILK PRODUCTION HERDING DEVELOPMENT ECONOMICS MAXIMUM LIKELIHOOD ESTIMATION EXOGENOUS VARIABLES RENT SHEEP CONSTANT RETURNS TO SCALE LIQUIDITY CONSTRAINTS EXPECTED RETURN FAILURES DRAFT POWER LIVESTOCK PRODUCTS LIVESTOCK PRICES UTILITY THEORY MARKETS LIVESTOCK MARKET SELECTION LIVESTOCK LIFE CYCLE HYPOTHESIS INVENTORIES UTILITY DISCOUNTED VALUE TAXES NORMAL GOOD TRANSACTIONS LIVESTOCK MARKETS TRANSACTION CONSUMPTION FOOD SECURITY GOOD LIVESTOCK SECTOR ECONOMETRIC ANALYSIS FUTURE VALUE INCOME SHOCKS RUMINANTS RETURNS CREDIT STOCK MANAGEMENT PURCHASING POWER INCOME VARIABILITY PERMANENT INCOME ANIMAL TRACTION UTILITY FUNCTION PRICE RISK LIVESTOCK PRODUCTIVITY WORKING CAPITAL AGRICULTURE CONSUMERS CATTLE HIGHLANDS CALVES MEASUREMENT ASSETS CASH HOLDINGS TRANSACTION COSTS ANIMAL HUSBANDRY MARKET BENCHMARK SMALL RUMINANTS RURAL MARKETS FOOD BULLS CATTLE OWNERSHIP CATTLE PRICES PRODUCTION FUNCTION HOLDINGS PERMANENT INCOME HYPOTHESIS TRADE CONSUMPTION SMOOTHING HERD SIZE MARGINAL PROPENSITY TO SAVE SLAUGHTERED ANIMALS GOODS THEORY LAND-RICH HOUSEHOLDS LIVESTOCK DURING DROUGHT STOCKS INVESTMENT EXPECTED UTILITY FARM FARMS MEAT TRANSACTIONS COSTS LIVESTOCK INVENTORIES ANIMAL INVESTMENTS RISK MANAGEMENT RISK AVERSION FARMING SYSTEMS GOATS CAPITAL FLIGHT MARGINAL UTILITY CATTLE SALES PRICES POVERTY ALLEVIATION DEVELOPMENT POLICY EXPECTED RETURNS This paper uses a stochastic dynamic programming model to characterize the optimal savings-consumption decisions and the role of livestock inventories as a buffer stock in rural Ethiopia. The results show that relatively land-rich households use accumulation and liquidation of cattle and other animal inventories for partial consumption smoothing, while low-income households appear not to do so. The results highlight the need for improvement in livestock markets, which are often affected by high transaction costs and price risk, and for investigation of other approaches to risk management. 2015-05-04T20:57:53Z 2015-05-04T20:57:53Z 2015-04 Working Paper http://documents.worldbank.org/curated/en/2015/04/24407922/household-responses-shocks-rural-ethiopia-livestock-buffer-stock http://hdl.handle.net/10986/21858 English en_US Policy Research Working Paper;No. 7244 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ World Bank World Bank, Washington, DC Publications & Research Publications & Research :: Policy Research Working Paper Africa Ethiopia
repository_type	Digital Repository
institution_category	Foreign Institution
institution	Digital Repositories
building	World Bank Open Knowledge Repository
collection	World Bank
language	English en_US
topic	TRANSITORY INCOME CREDIT MARKETS POULTRY MANURE LIVE ANIMALS ANIMAL PRODUCTS PRODUCTION MULTIPLIERS LIQUIDATION STOCK FARMER INCOME MILK LIVESTOCK RESEARCH PORTFOLIO CHOICE EXCHANGE INCOME FROM LIVESTOCK ELASTICITY OF DEMAND BULLOCKS LIQUIDITY ANIMALS ELASTICITY POLITICAL ECONOMY PORTFOLIO OPTIMIZATION INCENTIVES DISTRIBUTION VARIABLES MARGINAL PRODUCTIVITY DAMAGES INPUTS RETURNS TO SCALE WEALTH RISK AVERSE GRAZING LAND INTERNATIONAL BANK DEVELOPMENT GRAZING LIVESTOCK MARKETING CHOICE SAVINGS ANIMAL DISEASES COSTS MILK PRODUCTION HERDING DEVELOPMENT ECONOMICS MAXIMUM LIKELIHOOD ESTIMATION EXOGENOUS VARIABLES RENT SHEEP CONSTANT RETURNS TO SCALE LIQUIDITY CONSTRAINTS EXPECTED RETURN FAILURES DRAFT POWER LIVESTOCK PRODUCTS LIVESTOCK PRICES UTILITY THEORY MARKETS LIVESTOCK MARKET SELECTION LIVESTOCK LIFE CYCLE HYPOTHESIS INVENTORIES UTILITY DISCOUNTED VALUE TAXES NORMAL GOOD TRANSACTIONS LIVESTOCK MARKETS TRANSACTION CONSUMPTION FOOD SECURITY GOOD LIVESTOCK SECTOR ECONOMETRIC ANALYSIS FUTURE VALUE INCOME SHOCKS RUMINANTS RETURNS CREDIT STOCK MANAGEMENT PURCHASING POWER INCOME VARIABILITY PERMANENT INCOME ANIMAL TRACTION UTILITY FUNCTION PRICE RISK LIVESTOCK PRODUCTIVITY WORKING CAPITAL AGRICULTURE CONSUMERS CATTLE HIGHLANDS CALVES MEASUREMENT ASSETS CASH HOLDINGS TRANSACTION COSTS ANIMAL HUSBANDRY MARKET BENCHMARK SMALL RUMINANTS RURAL MARKETS FOOD BULLS CATTLE OWNERSHIP CATTLE PRICES PRODUCTION FUNCTION HOLDINGS PERMANENT INCOME HYPOTHESIS TRADE CONSUMPTION SMOOTHING HERD SIZE MARGINAL PROPENSITY TO SAVE SLAUGHTERED ANIMALS GOODS THEORY LAND-RICH HOUSEHOLDS LIVESTOCK DURING DROUGHT STOCKS INVESTMENT EXPECTED UTILITY FARM FARMS MEAT TRANSACTIONS COSTS LIVESTOCK INVENTORIES ANIMAL INVESTMENTS RISK MANAGEMENT RISK AVERSION FARMING SYSTEMS GOATS CAPITAL FLIGHT MARGINAL UTILITY CATTLE SALES PRICES POVERTY ALLEVIATION DEVELOPMENT POLICY EXPECTED RETURNS
spellingShingle	TRANSITORY INCOME CREDIT MARKETS POULTRY MANURE LIVE ANIMALS ANIMAL PRODUCTS PRODUCTION MULTIPLIERS LIQUIDATION STOCK FARMER INCOME MILK LIVESTOCK RESEARCH PORTFOLIO CHOICE EXCHANGE INCOME FROM LIVESTOCK ELASTICITY OF DEMAND BULLOCKS LIQUIDITY ANIMALS ELASTICITY POLITICAL ECONOMY PORTFOLIO OPTIMIZATION INCENTIVES DISTRIBUTION VARIABLES MARGINAL PRODUCTIVITY DAMAGES INPUTS RETURNS TO SCALE WEALTH RISK AVERSE GRAZING LAND INTERNATIONAL BANK DEVELOPMENT GRAZING LIVESTOCK MARKETING CHOICE SAVINGS ANIMAL DISEASES COSTS MILK PRODUCTION HERDING DEVELOPMENT ECONOMICS MAXIMUM LIKELIHOOD ESTIMATION EXOGENOUS VARIABLES RENT SHEEP CONSTANT RETURNS TO SCALE LIQUIDITY CONSTRAINTS EXPECTED RETURN FAILURES DRAFT POWER LIVESTOCK PRODUCTS LIVESTOCK PRICES UTILITY THEORY MARKETS LIVESTOCK MARKET SELECTION LIVESTOCK LIFE CYCLE HYPOTHESIS INVENTORIES UTILITY DISCOUNTED VALUE TAXES NORMAL GOOD TRANSACTIONS LIVESTOCK MARKETS TRANSACTION CONSUMPTION FOOD SECURITY GOOD LIVESTOCK SECTOR ECONOMETRIC ANALYSIS FUTURE VALUE INCOME SHOCKS RUMINANTS RETURNS CREDIT STOCK MANAGEMENT PURCHASING POWER INCOME VARIABILITY PERMANENT INCOME ANIMAL TRACTION UTILITY FUNCTION PRICE RISK LIVESTOCK PRODUCTIVITY WORKING CAPITAL AGRICULTURE CONSUMERS CATTLE HIGHLANDS CALVES MEASUREMENT ASSETS CASH HOLDINGS TRANSACTION COSTS ANIMAL HUSBANDRY MARKET BENCHMARK SMALL RUMINANTS RURAL MARKETS FOOD BULLS CATTLE OWNERSHIP CATTLE PRICES PRODUCTION FUNCTION HOLDINGS PERMANENT INCOME HYPOTHESIS TRADE CONSUMPTION SMOOTHING HERD SIZE MARGINAL PROPENSITY TO SAVE SLAUGHTERED ANIMALS GOODS THEORY LAND-RICH HOUSEHOLDS LIVESTOCK DURING DROUGHT STOCKS INVESTMENT EXPECTED UTILITY FARM FARMS MEAT TRANSACTIONS COSTS LIVESTOCK INVENTORIES ANIMAL INVESTMENTS RISK MANAGEMENT RISK AVERSION FARMING SYSTEMS GOATS CAPITAL FLIGHT MARGINAL UTILITY CATTLE SALES PRICES POVERTY ALLEVIATION DEVELOPMENT POLICY EXPECTED RETURNS Ali, Daniel Ayalew Household Responses to Shocks in Rural Ethiopia : Livestock as a Buffer Stock
geographic_facet	Africa Ethiopia
relation	Policy Research Working Paper;No. 7244
description	This paper uses a stochastic dynamic programming model to characterize the optimal savings-consumption decisions and the role of livestock inventories as a buffer stock in rural Ethiopia. The results show that relatively land-rich households use accumulation and liquidation of cattle and other animal inventories for partial consumption smoothing, while low-income households appear not to do so. The results highlight the need for improvement in livestock markets, which are often affected by high transaction costs and price risk, and for investigation of other approaches to risk management.
format	Working Paper
author	Ali, Daniel Ayalew
author_facet	Ali, Daniel Ayalew
author_sort	Ali, Daniel Ayalew
title	Household Responses to Shocks in Rural Ethiopia : Livestock as a Buffer Stock
title_short	Household Responses to Shocks in Rural Ethiopia : Livestock as a Buffer Stock
title_full	Household Responses to Shocks in Rural Ethiopia : Livestock as a Buffer Stock
title_fullStr	Household Responses to Shocks in Rural Ethiopia : Livestock as a Buffer Stock
title_full_unstemmed	Household Responses to Shocks in Rural Ethiopia : Livestock as a Buffer Stock
title_sort	household responses to shocks in rural ethiopia : livestock as a buffer stock
publisher	World Bank, Washington, DC
publishDate	2015
url	http://documents.worldbank.org/curated/en/2015/04/24407922/household-responses-shocks-rural-ethiopia-livestock-buffer-stock http://hdl.handle.net/10986/21858
_version_	1764449456866983936

Household Responses to Shocks in Rural Ethiopia : Livestock as a Buffer Stock

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