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

ADVERSE EFFECTS AGGREGATE SUPPLY AGRICULTURAL PRICES AGRICULTURE ARBITRAGE BARRIER COMMERCIAL FARMING COMMODITIES COMMODITY COMMODITY PRICE COMMODITY PRICES COMPARATIVE ANALYSIS COMPETITIVE MARKETS CONSTANT MARGINAL COSTS CONSUMER GOODS CONSUMER PRICES CONSUMERS CORN PRICES CUSTOMS UNION DEMAND ANALYSIS DEVELOPING COUNTRIES DEVELOPING COUNTRY DEVELOPING ECONOMIES DEVELOPMENT ECONOMICS DEVELOPMENT POLICY DISTRIBUTION OF INCOME DOMESTIC ECONOMY DOMESTIC MARKETS DOMESTIC PRICE DOMESTIC PRICES ECONOMETRICS ECONOMIC CONDITIONS ECONOMIC CRISIS ECONOMIC DEVELOPMENT ECONOMIC REFORM ECONOMICS ELASTICITY EMPLOYMENT ENERGY PRICES EQUILIBRIUM PRICES EQUILIBRIUM WAGES EXCHANGE RATE EXCHANGE RATES EXPENDITURE EXPENDITURES EXPORT BARRIERS EXPORT SECTOR EXPORTS FACTOR PRICES FACTORS OF PRODUCTION FINANCIAL CRISES FINANCIAL CRISIS FOOD PRICE FOOD PRICES GDP GENERAL EQUILIBRIUM GLOBAL MARKET GLOBAL MARKETS GLOBALIZATION IMPERFECT COMPETITION INCOME INCOME EFFECT INCOME EFFECTS INCOMES INEFFICIENCY INFANT MORTALITY INSURANCE INTERMEDIATE GOODS INTERNATIONAL MARKETS INTERNATIONAL TRADE LABOR DEMAND LABOR FORCE LABOR MARKET LABOR MARKETS LABOR REGULATIONS LABOR SUPPLY LIVING STANDARDS LOCAL CURRENCY LOW-INCOME COUNTRIES MARKET EFFICIENCY MARKET EQUILIBRIUM MARKET FAILURES MARKET FLUCTUATIONS MARKET INTEGRATION MARKET LIBERALIZATION MARKET POWER MARKET REFORMS MARKET STRUCTURE MARKET VALUE MARKET WAGE MARKETING MARKETING BOARD MIDDLE-INCOME ECONOMIES NATIONAL ECONOMY NATIONAL INCOME NATURAL RESOURCE OPEN ECONOMY OPPORTUNITY COST OUTPUT OUTPUTS POVERTY ALLEVIATION PRICE CHANGE PRICE CHANGES PRICE DECLINES PRICE EFFECT PRICE ELASTICITY PRICE FLUCTUATIONS PRICE INCREASE PRICE INCREASES PRICE INDEX PRICE INDICES PRICE INFLATION PRICE VARIATIONS PRICE VOLATILITY PRICING POLICIES PRODUCT MARKETS PRODUCTIVE ASSETS PRODUCTIVITY PURCHASING PURCHASING POWER RATE OF RETURN REAL WAGES REGIONAL TRADE RETAIL RISK PREMIUM RURAL LABOR SALE SALES SAVINGS SHADOW PRICE SKILLED LABOR SKILLED WORKERS SOCIAL PROTECTION SUBSTITUTE SUBSTITUTION SUNK COSTS TAX THIRD WORLD TRADE LIBERALIZATION TRADE POLICIES TRADE POLICY TRADE REFORMS TRANSACTION COSTS TRANSACTIONS COSTS UNSKILLED WORKERS UTILITY FUNCTION UTILITY MAXIMIZATION VOLATILITY WAGE DETERMINATION WAGES WEALTH WORKING CAPITAL
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World Bank, Washington, DC
Africa | Latin America & Caribbean | Africa | Latin America
2014-05-15T16:05:50Z | 2014-05-15T16:05:50Z | 2014-05

This paper provides an overview of the impact of once-and-for-all changes in commodity prices and other prices 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 uncover strong commodity dependence in both continents: households typically allocate a large fraction of their budget to commodities and they often depend on commodities to earn their income. This income and expenditure dependency suggests sizable impacts and adjustments following commodity-price shocks. The paper explores these effects with a review of the literature. It studies consumption and income responses, labor-market responses, and spillovers across sectors. It ends up providing evidence on the relative magnitudes of various mechanisms through which commodity prices affect household (and national) welfare in developing economies.

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