commodity prices and welfare in Brazil. A short-run analysis using a SAM price model

Viena

Congreso; Arnoldshain Seminar XV. The EU and Latin America Facing Globalization?; 2017

Wirtschaftsuniversität Wien

During the 2000´s, and from a macro perspective, Brazil benefited greatly because of the increasing prices of agricultural commodities in world markets, as well as the price of oil and other primary commodities, which the country exports intensively. However, because the impacts these commodities might have on consumer prices, it is possible to envisage redistributive effects.We model the responses of consumer and factor prices using a Social Accounting Matrix model, which can be adapted to develop a price model that captures theinterdependences among activities, households, and factors. An advantage of theproposed methodology is, among others, that it allows us to estimates a full set of effects, including changes in government transfers and payments by social security. The results show that following an increase in the international prices of primary commodities, the responses of internal prices, of goods and factors, mean a welfare loss over the entire household per capita expenditure distribution, with those in the middle being the least affected. However, the differences among households are not very important. Inequality indices show little responsiveness to the simulated shocks.