Commodity Price Changes and Their Impacts on Poverty in Developing Countries: The Brazilian Case

Authors:

Carlos Roberto Azzoni – University of Sao Paulo

Joaquim Guilhoto – University of Sao Paulo

Eduardo A. Haddad – University of Sao Paulo

Fernando Gaiger Silveira – Institute of Applied Economic Research (IPEA)

Tatiane A. de Menezes – University of Sao Paulo

Marcos M. Hasegawa

Abstract: The objective of the paper is to provide an estimative of the impacts that changes in international prices of agricultural commodities will have on income distribution and poverty in Brazil. To do so, a Social Accounting Matrix is constructed and applied, using a Leontief-Miyazawa model framework. The SAM is defined for 40 products, and households are allocated into 10 groups, being 6 agricultural and 4 urban. Demand elasticities (price and income) for the products defined in the SAM are considered, as well as limitations on the supply of agricultural inputs. The results indicate that a 50% reduction in tariffs across the board, by all countries and for all products, will produce minor impacts in Brazil: national GDP would increase by up to 1.6%, and the impacts on poverty and income inequality, although positive, would be very small.

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