The welfare impacts of commodity price volatility: Evidence from rural ethiopia

Marc F. Bellemare, Christopher B. Barrett, David R. Just

Research output: Contribution to journalArticlepeer-review

78 Scopus citations


How does commodity price volatility affect the welfare of rural households in developing countries, for whom hedging and consumption smoothing are often difficult? When governments choose to intervene in order to stabilize commodity prices, as they often do, who gains the most? This article develops an analytical framework and an empirical strategy to answer those questions, along with illustrative empirical results based on panel data from rural Ethiopian households. Contrary to conventional wisdom, we find that the welfare gains from eliminating price volatility are increasing in household income, making food price stabilization a distributionally regressive policy in this context.

Original languageEnglish (US)
Pages (from-to)877-899
Number of pages23
JournalAmerican Journal of Agricultural Economics
Issue number4
StatePublished - Jul 2013


  • Ethiopia
  • commodity prices
  • price risk
  • price stabilization
  • price volatility
  • risk
  • uncertainty

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