The Short and Longer Term Potential Welfare Impact of Global Commodity Inflation in Tanzania

This paper uses a computable general equilibrium model to assess the welfare impact of commodity price inflation in Tanzania and possible tax policy responses in the short, medium, and long term. The results suggest that global commodity inflation...

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Bibliographic Details
Main Author:	Dessus, Sébastien
Format:	Policy Research Working Paper
Language:	English
Published:	World Bank, Washington, DC 2012
Subjects:	ADVERSE EFFECTS AGRICULTURAL COMMODITIES AGRICULTURAL DEVELOPMENT AGRICULTURAL LAND AGRICULTURAL OUTPUT AGRICULTURAL PRICES AGRICULTURAL PRODUCTION AGRICULTURAL PRODUCTS AGRICULTURAL YIELDS AGRICULTURE ASSETS ASSETS MARKETS BALANCE OF PAYMENTS BALANCE OF PAYMENTS CRISIS BENCHMARK BUFFER CAPITAL ACCUMULATION CAPITAL STOCK CAPITAL TRANSFERS CLIMATE CHANGE COMMODITIES COMMODITY COMMODITY MARKETS COMMODITY PRICE COMMODITY PRICE BOOM COMMODITY PRICES COMPARATIVE ADVANTAGES CONSUMER PRICE CONSUMER PRICE INDEX CONSUMER PRICES CONSUMERS CONSUMPTION BASKET CONSUMPTION BEHAVIOR COST EFFECTIVENESS COST OF LIVING DATA AVAILABILITY DECISION MAKING DEVELOPING COUNTRIES DEVELOPING ECONOMIES DEVELOPMENT ECONOMICS DISPOSABLE INCOME DISPOSABLE INCOMES DOMESTIC GOODS DOMESTIC MARKET DOMESTIC MARKETS DOMESTIC PRICE DOMESTIC PRICES DOWNWARD PRESSURE ECONOMIC CONSTRAINTS ECONOMIC COOPERATION ECONOMIC EFFECTS ECONOMIC IMBALANCES ELASTICITY ELASTICITY OF SUBSTITUTION ENERGY PRICES EQUILIBRIUM EQUILIBRIUMS EXCHANGE RATE EXCHANGE RATES EXCISE TAXES EXOGENOUS SHOCK EXPANSIONARY MONETARY POLICIES EXPENDITURE EXPENDITURES EXPORTER EXPORTERS EXPORTS EXTERNAL MARKETS FACTORS OF PRODUCTION FARMERS FARMLAND FINANCIAL MARKETS FISCAL BALANCE FISCAL DEFICIT FISCAL POLICIES FISCAL POLICY FIXED COSTS FLOATING EXCHANGE RATES FOOD BUYERS FOOD COMMODITIES FOOD CONSUMERS FOOD CONSUMPTION FOOD GRAINS FOOD ITEMS FOOD POVERTY FOOD POVERTY LINE FOOD PRICE FOOD PRICES FOOD PROCESSING FOOD PRODUCTS FOOD SELF-SUFFICIENCY FOREIGN MARKETS FOREIGN RELATIONS GDP GENERAL EQUILIBRIUM GENERAL EQUILIBRIUM MODEL GLOBAL INFLATION GLOBAL MACRO HIGH-INCOME COUNTRIES IMPORT IMPORT DEMAND IMPORT PRICES IMPORTS INCOME INCOMES INFLATION INFLATION RATE INTERNATIONAL MARKETS INTERNATIONAL PRICES INVESTMENT DECISIONS INVESTMENT EXPENDITURE IRRIGATION LOW-INCOME COUNTRIES MALNUTRITION MARKET LIBERALIZATION MARKET POWER MARKETING MONETARY POLICIES MULTIPLIER EFFECT MULTIPLIER EFFECTS NEW MARKETS NOMINAL EXCHANGE RATE OIL DEMAND OIL PRICE OIL PRICES POOR POOR FARMERS POOR HOUSEHOLDS POOR RURAL HOUSEHOLDS POVERTY ALLEVIATION POVERTY IMPACT POVERTY REDUCTION PRICE CHANGES PRICE INCREASES PRICE INFLATION PRICE OF OIL PRICE RISK PUBLIC DEFICIT PUBLIC EXPENDITURES PUBLIC SAVINGS PURCHASING PURCHASING POWER REAL INVESTMENT RELATIVE PRICE RELATIVE PRICES REMUNERATION RURAL RURAL HOUSEHOLDS RURAL POOR RURAL POVERTY SAVINGS SMALL COUNTRY SMALL ECONOMIES SOCIAL PROTECTION STATE CAPITAL STOCK SUBSTITUTE SUBSTITUTION SUPPLY RESPONSE SURPLUS TARGETED TRANSFERS TARGETING TAX TAX STRUCTURE TOTAL EXPORT TRADE BALANCE TRADE SHOCK UNCERTAINTY UPWARD PRESSURE UTILITY FUNCTION VALUE ADDED VOLATILITY WAGES WORLD MARKETS WORLD PRICE WORLD PRICES
Online Access:	http://documents.worldbank.org/curated/en/2008/10/9971928/short-longer-term-potential-welfare-impact-global-commodity-inflation-tanzania http://hdl.handle.net/10986/6919

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Summary:	This paper uses a computable general equilibrium model to assess the welfare impact of commodity price inflation in Tanzania and possible tax policy responses in the short, medium, and long term. The results suggest that global commodity inflation since 2006 may have had a significantly negative impact on all Tanzanian households. Most of the negative impact comes from the rise in the price of oil. In contrast, food price spikes are potentially welfare improving for all Tanzanian households in the medium to long run. In comparison with nonpoor households, poor households in Tanzania may be relatively shielded from global commodity inflation because they derive a larger share of their incomes from agricultural activity and consume less oil-intensive products. Finally, the results suggest that tax policies encouraging greater agricultural production and consumption may help to reduce poverty. In contrast, policies discouraging agricultural production (such as export bans) bear the risk of increasing poverty in the long run. However, such policies would only effect at the margin (in one direction or the other) the likely impact of global commodity inflation on poverty.

The Short and Longer Term Potential Welfare Impact of Global Commodity Inflation in Tanzania

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