Lofgren, Hans2012-04-272012-04-272012-04https://hdl.handle.net/10986/6035In recent years, world food prices have increased and fluctuated widely. This paper explores the impact of international food prices and domestic policies on Millennium Development Goal (MDG) and macro indicators for two archetype low-income countries, a net food exporter and a net food importer, using Maquette for MDG Simulations (MAMS), a Computable General Equilibrium model. The simulations, which cover the period 2011-2025, indicate that the size of positive (negative) effects on macro and MDG indicators of a food export (import) price increase depend on the initial gross domestic product share for food exports (imports), leaving countries that are heavily involved in international food trade more exposed to international shocks. Given relatively low elasticity estimates, the impact of changes in food prices on undernourishment are relatively marginal. Flexible responses (in terms of production shares, whether output is exported or sold at home, and whether domestic demanders buy imports or domestic output) enable countries to benefit from or be less hurt by price changes. The case for policy responses to higher import prices is stronger for the net food importer. An untargeted food subsidy, financed by taxes or spending cuts, reduces undernourishment at the cost of a slight deterioration for most other indicators. By contrast, aid-financed food subsidies neutralize the negative impact of higher import prices whereas financing via domestic borrowing is counterproductive, leading to a deterioration across all indicators. If administered at moderate costs, tax-financed targeted transfers more effectively reduce headcount poverty and inequality with macroeconomic repercussions similar to those of tax-financed subsidies.CC BY 3.0 IGOACCOUNTINGACCUMULATION OF CAPITALAGRICULTURAL ACTIVITIESAGRICULTURAL SERVICESAGRICULTUREANNUAL GROWTHBALANCE OF PAYMENTSBALANCE OF PAYMENTS DEFICITBANK POLICYBASE YEARBENCHMARKBUDGET CONSTRAINTBUDGET CONSTRAINTSCAPITAL ACCUMULATIONCAPITAL STOCKCAPITAL STOCKSCHECKSCHILD LABORCOMMODITIESCOMMODITYCOMMODITY MARKETSCOMPARATIVE ANALYSISCONSUMERSCONSUMPTION BASKETSCONSUMPTION DECISIONSCONSUMPTION GROWTHCONSUMPTION SMOOTHINGCROSS-COUNTRY STUDIESCURRENT ACCOUNTDATA AVAILABILITYDEBTDEBT STOCKDEBT STOCKSDEMAND CURVESDEMAND FOR FOODDEPRECIATIONDEPRECIATION RATEDEPRECIATION RATESDEVELOPING COUNTRIESDEVELOPING COUNTRYDEVELOPING ECONOMYDEVELOPMENT ECONOMICSDEVELOPMENT POLICIESDEVELOPMENT POLICYDOMESTIC BORROWINGDOMESTIC DEBTSDOMESTIC DEMANDDOMESTIC MARKETDOMESTIC MARKETSDOMESTIC PRICEDOMESTIC PRICE LEVELSDOWNWARD PRESSUREECONOMETRIC ANALYSISECONOMETRIC EVIDENCEECONOMIC GROWTHECONOMIC PERFORMANCEECONOMIC POLICYECONOMIC SYSTEMSELASTICITYENVIRONMENTAL IMPACTEXCHANGE RATEEXISTING GOVERNMENTEXPENDITUREEXPORT GROWTHEXPORT SHAREEXPORTEREXPORTERSEXPORTSFACTOR DEMANDFACTOR MARKETFACTOR MARKETSFACTORS OF PRODUCTIONFIXED INVESTMENTFIXED SHAREFIXED SHARESFOOD CONSUMPTIONFOOD DEMANDFOOD EXPORTFOOD EXPORTSFOOD IMPORTSFOOD INDUSTRYFOOD OUTPUTFOOD PRICEFOOD PRICESFOOD PRODUCTIONFOOD PRODUCTSFOOD SUBSIDIESFOOD SUBSIDYFOOD SUPPLYFOREIGN CURRENCYFOREIGN DEBTFOREIGN DEBTSFOREIGN DIRECT INVESTMENTFOREIGN EXCHANGEFOREIGN EXCHANGE RATEFOREIGN GOVERNMENTFOREIGN INTERESTFULL EMPLOYMENTFUNCTIONAL FORMSGDPGDP PER CAPITAGENERAL EQUILIBRIUMGENERAL EQUILIBRIUM MODELGINI COEFFICIENTGLOBAL ECONOMICSGLOBAL ECONOMYGOVERNMENT ACTIONSGOVERNMENT BORROWINGGOVERNMENT BUDGETGOVERNMENT DEBTGOVERNMENT FINANCINGGOVERNMENT INVESTMENTGOVERNMENT SPENDINGGROSS DOMESTIC PRODUCTGROWTH RATEGROWTH RATESHOUSEHOLD SAVINGSHUMAN DEVELOPMENTIMPORTIMPORT GROWTHIMPORT PRICEIMPORT PRICESIMPORT TARIFFSINCOMEINCOME ELASTICITIESINCOMESINTEREST PAYMENTSINTERNAL RATES OF RETURNINTERNATIONAL BANKINTERNATIONAL MARKETINTERNATIONAL PRICEINTERNATIONAL PRICESINTERNATIONAL TRADEINVESTMENT FINANCINGINVESTMENT LEVELSINVESTMENT RATESLABOR FORCELABOR MARKETLIVING STANDARDSLOCAL CURRENCYLOW-INCOME COUNTRIESLOW-INCOME COUNTRYMARKET CONDITIONSMARKET PRICESOUTPUTSPAYMENT FLOWSPETROLEUM PRODUCTPOLICY RESPONSEPOLICY RESPONSESPOPULATION GROWTHPOSITIVE EFFECTSPOVERTY ALLEVIATIONPRICE CHANGEPRICE CHANGESPRICE INCREASEPRICE INCREASESPRICE INDICESPRICE LEVELSPRICE OF EXPORTSPRICE SUBSIDYPRIVATE CAPITALPRIVATE CAPITAL STOCKSPRIVATE CONSUMPTIONPRIVATE INVESTMENTPRIVATE SAVINGSPRODUCTION INCREASESPRODUCTION STRUCTUREPROFIT MAXIMIZATIONPROFIT RATEPUBLIC INVESTMENTRAPID GROWTHREAL CONSUMPTIONREAL EXCHANGE RATEREAL EXCHANGE RATE APPRECIATIONRELATIVE PRICERELATIVE PRICESREMITTANCESRETURNSSANITATION SERVICESSAVINGSSAVINGS RATESSMALL COUNTRYSTOCK CHANGESUBSIDY POLICYSUPPLY CURVESUPPLY CURVESSUPPLY SIDESURPLUSTAXTAX INCREASETAX INCREASESTAX RATETAX RATESTOTAL EXPORTTOTAL EXPORTSTOTAL FACTOR PRODUCTIVITYTRADE BALANCETRADE DEFICITTRADE LOSSTRADE POLICYTRADE SHARESTRADE SHOCKTRADE STATISTICSTRANSACTIONS COSTSTRANSFER PAYMENTSTRUST FUNDUNEMPLOYMENTUNEMPLOYMENT RATEUNEMPLOYMENT RATESVALUE ADDEDWAGE GROWTHWAGESWORLD DEVELOPMENT INDICATORSWORLD MARKETSWORLD PRICEWORLD PRICESWorld Bank10.1596/1813-9450-6033