Arnoldshain Seminar XV
“The EU and Latin America Facing Globalization”
September 4 – 6, 2017
Vienna


   
Moncarz, Pedro, Universidad Nacional de Córdoba, Rising commodity prices and poverty in Brazil: a short-run analysis using a SAM price model.
During the 2000's Brazil experienced an important benefit from a macro perspective because the increasing prices of agricultural commodities in world markets, as well as the price of oil, which the country exports them intensively. However, because the impacts these commodities might have on consumer prices, it is possible to envisage important redistributive effects, especially through changes in the incidence of poverty. The standard literature on this topic looks to obtain the elasticities from commodity prices to domestic ones trough the adoption of simple ad hoc rules or though the estimation of econometric models, where VAR and VEC models are the preferred alternatives. We depart from this approach adopting a pseudo general equilibrium perspective. Following Roland-Holst and Sancho (1995) we model the responses of consumer and factor prices using a Social Accounting Matrix model, which as the authors show can be adopted to develop a price model that captures the interdependence among activities, households and factors. An advantage of the proposed methodology is, among others, that it allow us to estimates a full set of effects, including changes in government revenues, which for the case at hand is quite important considering that Brazil is an important exporter of the commodities here considered, and thus the economy benefited greatly from the increase in their prices. The main drawback is that we can only look at the short-run impacts, which given the volatility of commodity prices, and in many cases their short-lived changes, is not a price too high to pay. Once the reactions of local prices have been obtained, we follow what is now standard procedure and analyze the effects on different measures of well-being using micro-simulations at the household level.