Woldie, Getachew Abebe and Siddig, Khalid (2009): Do subsidies matter in food price stabilization? Evidences from Ethiopia in a computable general equilibrium framework.
Download (377Kb) | Preview
In the poorest countries like Ethiopia the spillover effects of a soaring food price is unbearable. To mitigate the recent rise in food prices and the burden on urban poor consumers, policy makers have considered various measures. A recent shift from subsidizing oil to grain to ease the spiraling cost of food is one attempt the Ethiopian government has made so far. To this end, the government has removed an $800m annual subsidy on petroleum products and used the money to combat rising grain prices. Using the standard GTAP model and the recent GTAP Africa database, this paper simulates the overall implication of 5 and 10 percent increase of subsidy on wheat. Regarding the impact on prices, the simulation result tells us that prices have indeed fall. At macro level, the result reveals subsidy on wheat leads to a decline in the overall trade balance. In terms of welfare, the intervention is likely to have a positive impact.
|Item Type:||MPRA Paper|
|Original Title:||Do subsidies matter in food price stabilization? Evidences from Ethiopia in a computable general equilibrium framework|
|Keywords:||Food policy; price policy; WTO; Ethiopia; GTAP|
|Subjects:||E - Macroeconomics and Monetary Economics > E6 - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, Macroeconomic Policy, and General Outlook > E64 - Incomes Policy; Price Policy
C - Mathematical and Quantitative Methods > C6 - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling > C68 - Computable General Equilibrium Models
R - Urban, Rural, Regional, Real Estate, and Transportation Economics > R1 - General Regional Economics > R13 - General Equilibrium and Welfare Economic Analysis of Regional Economies
F - International Economics > F1 - Trade > F17 - Trade Forecasting and Simulation
Q - Agricultural and Natural Resource Economics; Environmental and Ecological Economics > Q1 - Agriculture > Q18 - Agricultural Policy; Food Policy
|Depositing User:||Getachew Abebe Woldie|
|Date Deposited:||05. Mar 2011 19:48|
|Last Modified:||12. Feb 2013 14:28|
Central Statistical Agency of Ethiopia. (2009). Country and Regional Level Consumer Price Indices: for the Month of Januray 2009. Information No. 16, Addis Ababa.
Fortune. (2008). Soft Heart Hard Head. Vol.9 No. 441. October 12 edition, Addis Ababa.
Harrison, W Jill & Pearson, K R. (1996). Computing Solutions for Large General Equilibrium Models Using GEMPACK. Computational Economics, vol. 9(2): 83-127.
Hertel, T.W. (1997). Global Trade Analysis: Modeling and Applications, Cambridge University Press.
International Monetary Fund ( 2008a). Food and Fuel Prices-Recent developments, Macroeconomic Impact, and Policy Responses. Washington DC: http://www.imf.org/external/np/pp/eng/2008/091908.pdf
International Monetary Fund.(2008b). Fuel and Food Price Subsidies: Issues and Reform Options, Washington DC. http://www.imf.org/external/np/pp/eng/2008/090808a.pdf
Ulimwengu, J., Workneh, S., & Paulos, Z. (2009). Impact of Soaring Food Price in Ethiopia: Does Location Matter? IFPRI Discussion paper 00846. International Food Policy Research Institute.
Villoria. N. (2008). Estimation of Missing Intra-African Trade: GTAP Research Memorandum No. 12, Purde University. von Braun, J., Ahmed, A., Asenso-Okyere, K., Fan, S., Gulati, A., Hoddingott, J., et al. (2008). High Food Prices: The What, Who, and How of Proposed Policy Actions. Policy Brief. International Food Policy Research Institute, Waschnigton.
World Bank. (2008). Rising food prices:Policy options and World Bank response. A note http://siteresources.worldbank.org/NEWS/Resources/risingfoodprices_backgroundnote_apr08.pdf.
World Food Program.(2008). Ethiopia Market Watch, October Edition.