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

MONCARZ, PEDRO ESTEBAN; BARONE, SERGIO

Bariloche

Congreso; LII Reunión Anual de la AAEP; 2017

Asociación Argentina de Economía Política

During  the  2000´s,  and  from  a  macro  perspective,  Brazil benefited greatly because 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  the  interdependences  among  activities,  households  and factors. An advantage of the proposed 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.