NASS Journal of Agricultural Sciences

Asymmetric Impacts of Rising Food Prices on Households’ Welfare in South West Ethiopia

Yekin Ahmed Ali

Department of Economics, Kotebe University of Education, Addis Ababa, Ethiopia

DOI: https://doi.org/10.36956/njas.v4i2.494

Received: 23 February 2022; Published: 6 June 2022

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Abstract

Food price inflation is pervasive effects to household welfare and macroeconomy. The study estimated Quadratic Almost Ideal Demand system of six food groups to simulate money costs of food prices inflation on households’ welfare and predict relative potency of income and price policies to counteract the effects in a particular context of South West Ethiopia. It drew on Household Income and Consumption Expenditure Survey data of 519 households collected by the Central Statistical Authority of Ethiopia. While response to income change of households is commodity specific, the rural dwellers respond more than urban counterparts to price changes. The welfare losses due to higher food prices fall heavily more on urban households than rural counterparts. On average, it requires resource allocation as large as percentage increases in prices which could be achieved through a mix of price and income policies to keep households’ welfare at pre-price change level.

Keywords: Censoring, Elaticities, Welfare, QUAIDS, CV, Simulation

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