The Price Is Not Always Right : On the Impacts of Commodity Prices on Households (and Countries)

This paper provides an overview of the impact that onetime changes in commodity and other prices have on household welfare. It begins with a collection of stylized facts related to commodities based on household survey data from Latin America and Africa. The data uncovers strong commodity depen...

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Main Authors:	Lederman, Daniel, Porto, Guido
Format:	Working Paper
Language:	English en_US
Published:	World Bank, Washington, DC 2016
Subjects:	LIVING STANDARDS RETAIL PRICE MARKET STRUCTURE SUBSTITUTION PRODUCTION PRICE INCREASES SUNK COSTS NATIONAL ECONOMY SALES INCOME PERFECT COMPETITION UTILITY MAXIMIZATION EXPORTS ELASTICITY PRICE INDICES WELFARE RISK PREMIUM LABOR” MARKET INCENTIVES EQUILIBRIUM DISTRIBUTION WAGE DETERMINATION VARIABLES TRADE REFORMS PRICING PRICE REAL INCOME INPUTS WEALTH INFLATION RETAIL TRENDS DEVELOPMENT EXPORT BARRIERS LABOR MARKET DEMAND ANALYSIS COSTS MARKET REFORMS DEVELOPMENT ECONOMICS PRICE VOLATILITY PRODUCTS EXCHANGE RATES ECONOMETRICS FAILURES IMPERFECT COMPETITION MARKET LIBERALIZATION PRICE DECLINES INCOME EFFECTS MARKETING MARKETS FINANCIAL CRISES AGRICULTURAL PRICES OPEN ECONOMY PRICE ELASTICITY TRADE POLICY PRODUCT UTILITY SUPPLY ELASTICITY PRICING POLICIES COMMODITY PRICE TRADE POLICIES TAXES PRICE INFLATION PRICE CHANGE EXPENDITURE CONSUMPTION OPPORTUNITY COST SUBSTITUTE AGGREGATE SUPPLY WAGES DOMESTIC MARKETS INTERNATIONAL TRADE MARKETING BOARD VOLATILITY MARKET FAILURES FINANCIAL CRISIS VALUE CREDIT PURCHASING POWER DEMAND NATIONAL INCOME UTILITY FUNCTION MARGINAL COSTS INEFFICIENCY FACTOR PRICES INTERMEDIATE GOODS PRICE CHANGES PRODUCTIVE ASSETS EXPENDITURES AGRICULTURE CONSUMERS PRICE FLUCTUATIONS PRICE EFFECT SALE MEASUREMENT SHARES MARKET TRADE LIBERALIZATION INCOME EFFECT ENERGY PRICES MARKET VALUE PRICE INCREASE ECONOMICS TRADE GDP GOODS THEORY SHADOW PRICE COMPARATIVE ANALYSIS MARKET FLUCTUATIONS MARKET EQUILIBRIUM CONSTANT MARGINAL COSTS TRANSACTIONS COSTS SUPPLY PURCHASING COMPETITIVE MARKETS CORN PRICES MARKET POWER PRODUCT MARKETS EQUILIBRIUM PRICES INVESTMENTS MARKET INTEGRATION CONSUMER PRICES PRICE VARIATIONS ARBITRAGE PROFITS LABOR MARKETS PRICE INDEX COMMODITY PRICES COMMERCIAL FARMING ADVERSE EFFECTS INTERNATIONAL MARKETS PRICES DEVELOPMENT POLICY
Online Access:	http://documents.worldbank.org/curated/en/2016/02/25994394/price-not-always-right-impacts-commodity-prices-households-countries http://hdl.handle.net/10986/23919

id	okr-10986-23919
recordtype	oai_dc
spelling	okr-10986-239192021-04-23T14:04:18Z The Price Is Not Always Right : On the Impacts of Commodity Prices on Households (and Countries) Lederman, Daniel Porto, Guido LIVING STANDARDS RETAIL PRICE MARKET STRUCTURE SUBSTITUTION PRODUCTION PRICE INCREASES SUNK COSTS NATIONAL ECONOMY SALES INCOME PERFECT COMPETITION UTILITY MAXIMIZATION EXPORTS ELASTICITY PRICE INDICES WELFARE RISK PREMIUM LABOR” MARKET INCENTIVES EQUILIBRIUM DISTRIBUTION WAGE DETERMINATION VARIABLES TRADE REFORMS PRICING PRICE REAL INCOME INPUTS WEALTH INFLATION RETAIL TRENDS DEVELOPMENT EXPORT BARRIERS LABOR MARKET DEMAND ANALYSIS COSTS MARKET REFORMS DEVELOPMENT ECONOMICS PRICE VOLATILITY PRODUCTS EXCHANGE RATES ECONOMETRICS FAILURES IMPERFECT COMPETITION MARKET LIBERALIZATION PRICE DECLINES INCOME EFFECTS MARKETING MARKETS FINANCIAL CRISES AGRICULTURAL PRICES OPEN ECONOMY PRICE ELASTICITY TRADE POLICY PRODUCT UTILITY SUPPLY ELASTICITY PRICING POLICIES COMMODITY PRICE TRADE POLICIES TAXES PRICE INFLATION PRICE CHANGE EXPENDITURE CONSUMPTION OPPORTUNITY COST SUBSTITUTE AGGREGATE SUPPLY WAGES DOMESTIC MARKETS INTERNATIONAL TRADE MARKETING BOARD VOLATILITY MARKET FAILURES FINANCIAL CRISIS VALUE CREDIT PURCHASING POWER DEMAND NATIONAL INCOME UTILITY FUNCTION MARGINAL COSTS INEFFICIENCY FACTOR PRICES INTERMEDIATE GOODS PRICE CHANGES PRODUCTIVE ASSETS EXPENDITURES AGRICULTURE CONSUMERS PRICE FLUCTUATIONS PRICE EFFECT SALE MEASUREMENT SHARES MARKET TRADE LIBERALIZATION INCOME EFFECT ENERGY PRICES MARKET VALUE PRICE INCREASE ECONOMICS TRADE GDP GOODS THEORY SHADOW PRICE COMPARATIVE ANALYSIS MARKET FLUCTUATIONS MARKET EQUILIBRIUM CONSTANT MARGINAL COSTS TRANSACTIONS COSTS SUPPLY PURCHASING COMPETITIVE MARKETS CORN PRICES MARKET POWER PRODUCT MARKETS EQUILIBRIUM PRICES INVESTMENTS MARKET INTEGRATION CONSUMER PRICES PRICE VARIATIONS ARBITRAGE PROFITS LABOR MARKETS PRICE INDEX COMMODITY PRICES COMMERCIAL FARMING ADVERSE EFFECTS INTERNATIONAL MARKETS PRICES DEVELOPMENT POLICY This paper provides an overview of the impact that onetime changes in commodity and other prices have on household welfare. It begins with a collection of stylized facts related to commodities based on household survey data from Latin America and Africa. The data uncovers strong commodity dependence on both continents: households typically allocate a large fraction of their budget to commodities, and they often also depend on commodities to earn their income. This income and expenditure dependency suggests sizable impacts and adjustments following commodity price shocks. The article explores these effects with a review of the relevant literature. The authors study consumption and income responses, labor market responses, and spillovers across sectors. The paper provides evidence on the relative magnitudes of various mechanisms through which commodity prices affect household (and national) welfare in developing economies. 2016-03-09T22:51:11Z 2016-03-09T22:51:11Z 2016-02 Working Paper http://documents.worldbank.org/curated/en/2016/02/25994394/price-not-always-right-impacts-commodity-prices-households-countries http://hdl.handle.net/10986/23919 English en_US Policy Research Working Paper;No. 7583 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 Latin America & Caribbean Africa Latin America
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	LIVING STANDARDS RETAIL PRICE MARKET STRUCTURE SUBSTITUTION PRODUCTION PRICE INCREASES SUNK COSTS NATIONAL ECONOMY SALES INCOME PERFECT COMPETITION UTILITY MAXIMIZATION EXPORTS ELASTICITY PRICE INDICES WELFARE RISK PREMIUM LABOR” MARKET INCENTIVES EQUILIBRIUM DISTRIBUTION WAGE DETERMINATION VARIABLES TRADE REFORMS PRICING PRICE REAL INCOME INPUTS WEALTH INFLATION RETAIL TRENDS DEVELOPMENT EXPORT BARRIERS LABOR MARKET DEMAND ANALYSIS COSTS MARKET REFORMS DEVELOPMENT ECONOMICS PRICE VOLATILITY PRODUCTS EXCHANGE RATES ECONOMETRICS FAILURES IMPERFECT COMPETITION MARKET LIBERALIZATION PRICE DECLINES INCOME EFFECTS MARKETING MARKETS FINANCIAL CRISES AGRICULTURAL PRICES OPEN ECONOMY PRICE ELASTICITY TRADE POLICY PRODUCT UTILITY SUPPLY ELASTICITY PRICING POLICIES COMMODITY PRICE TRADE POLICIES TAXES PRICE INFLATION PRICE CHANGE EXPENDITURE CONSUMPTION OPPORTUNITY COST SUBSTITUTE AGGREGATE SUPPLY WAGES DOMESTIC MARKETS INTERNATIONAL TRADE MARKETING BOARD VOLATILITY MARKET FAILURES FINANCIAL CRISIS VALUE CREDIT PURCHASING POWER DEMAND NATIONAL INCOME UTILITY FUNCTION MARGINAL COSTS INEFFICIENCY FACTOR PRICES INTERMEDIATE GOODS PRICE CHANGES PRODUCTIVE ASSETS EXPENDITURES AGRICULTURE CONSUMERS PRICE FLUCTUATIONS PRICE EFFECT SALE MEASUREMENT SHARES MARKET TRADE LIBERALIZATION INCOME EFFECT ENERGY PRICES MARKET VALUE PRICE INCREASE ECONOMICS TRADE GDP GOODS THEORY SHADOW PRICE COMPARATIVE ANALYSIS MARKET FLUCTUATIONS MARKET EQUILIBRIUM CONSTANT MARGINAL COSTS TRANSACTIONS COSTS SUPPLY PURCHASING COMPETITIVE MARKETS CORN PRICES MARKET POWER PRODUCT MARKETS EQUILIBRIUM PRICES INVESTMENTS MARKET INTEGRATION CONSUMER PRICES PRICE VARIATIONS ARBITRAGE PROFITS LABOR MARKETS PRICE INDEX COMMODITY PRICES COMMERCIAL FARMING ADVERSE EFFECTS INTERNATIONAL MARKETS PRICES DEVELOPMENT POLICY
spellingShingle	LIVING STANDARDS RETAIL PRICE MARKET STRUCTURE SUBSTITUTION PRODUCTION PRICE INCREASES SUNK COSTS NATIONAL ECONOMY SALES INCOME PERFECT COMPETITION UTILITY MAXIMIZATION EXPORTS ELASTICITY PRICE INDICES WELFARE RISK PREMIUM LABOR” MARKET INCENTIVES EQUILIBRIUM DISTRIBUTION WAGE DETERMINATION VARIABLES TRADE REFORMS PRICING PRICE REAL INCOME INPUTS WEALTH INFLATION RETAIL TRENDS DEVELOPMENT EXPORT BARRIERS LABOR MARKET DEMAND ANALYSIS COSTS MARKET REFORMS DEVELOPMENT ECONOMICS PRICE VOLATILITY PRODUCTS EXCHANGE RATES ECONOMETRICS FAILURES IMPERFECT COMPETITION MARKET LIBERALIZATION PRICE DECLINES INCOME EFFECTS MARKETING MARKETS FINANCIAL CRISES AGRICULTURAL PRICES OPEN ECONOMY PRICE ELASTICITY TRADE POLICY PRODUCT UTILITY SUPPLY ELASTICITY PRICING POLICIES COMMODITY PRICE TRADE POLICIES TAXES PRICE INFLATION PRICE CHANGE EXPENDITURE CONSUMPTION OPPORTUNITY COST SUBSTITUTE AGGREGATE SUPPLY WAGES DOMESTIC MARKETS INTERNATIONAL TRADE MARKETING BOARD VOLATILITY MARKET FAILURES FINANCIAL CRISIS VALUE CREDIT PURCHASING POWER DEMAND NATIONAL INCOME UTILITY FUNCTION MARGINAL COSTS INEFFICIENCY FACTOR PRICES INTERMEDIATE GOODS PRICE CHANGES PRODUCTIVE ASSETS EXPENDITURES AGRICULTURE CONSUMERS PRICE FLUCTUATIONS PRICE EFFECT SALE MEASUREMENT SHARES MARKET TRADE LIBERALIZATION INCOME EFFECT ENERGY PRICES MARKET VALUE PRICE INCREASE ECONOMICS TRADE GDP GOODS THEORY SHADOW PRICE COMPARATIVE ANALYSIS MARKET FLUCTUATIONS MARKET EQUILIBRIUM CONSTANT MARGINAL COSTS TRANSACTIONS COSTS SUPPLY PURCHASING COMPETITIVE MARKETS CORN PRICES MARKET POWER PRODUCT MARKETS EQUILIBRIUM PRICES INVESTMENTS MARKET INTEGRATION CONSUMER PRICES PRICE VARIATIONS ARBITRAGE PROFITS LABOR MARKETS PRICE INDEX COMMODITY PRICES COMMERCIAL FARMING ADVERSE EFFECTS INTERNATIONAL MARKETS PRICES DEVELOPMENT POLICY Lederman, Daniel Porto, Guido The Price Is Not Always Right : On the Impacts of Commodity Prices on Households (and Countries)
geographic_facet	Africa Latin America & Caribbean Africa Latin America
relation	Policy Research Working Paper;No. 7583
description	This paper provides an overview of the impact that onetime changes in commodity and other prices have on household welfare. It begins with a collection of stylized facts related to commodities based on household survey data from Latin America and Africa. The data uncovers strong commodity dependence on both continents: households typically allocate a large fraction of their budget to commodities, and they often also depend on commodities to earn their income. This income and expenditure dependency suggests sizable impacts and adjustments following commodity price shocks. The article explores these effects with a review of the relevant literature. The authors study consumption and income responses, labor market responses, and spillovers across sectors. The paper provides evidence on the relative magnitudes of various mechanisms through which commodity prices affect household (and national) welfare in developing economies.
format	Working Paper
author	Lederman, Daniel Porto, Guido
author_facet	Lederman, Daniel Porto, Guido
author_sort	Lederman, Daniel
title	The Price Is Not Always Right : On the Impacts of Commodity Prices on Households (and Countries)
title_short	The Price Is Not Always Right : On the Impacts of Commodity Prices on Households (and Countries)
title_full	The Price Is Not Always Right : On the Impacts of Commodity Prices on Households (and Countries)
title_fullStr	The Price Is Not Always Right : On the Impacts of Commodity Prices on Households (and Countries)
title_full_unstemmed	The Price Is Not Always Right : On the Impacts of Commodity Prices on Households (and Countries)
title_sort	price is not always right : on the impacts of commodity prices on households (and countries)
publisher	World Bank, Washington, DC
publishDate	2016
url	http://documents.worldbank.org/curated/en/2016/02/25994394/price-not-always-right-impacts-commodity-prices-households-countries http://hdl.handle.net/10986/23919
_version_	1764455167422365696

The Price Is Not Always Right : On the Impacts of Commodity Prices on Households (and Countries)

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