Publications [#141383] of Marc F Bellemare

Sanford Institute Working Papers

1. M.F. Bellemare, C.B. Barrett, and D.R. Just, The Welfare Impacts of Commodity Price Fluctuations: Evidence from Rural Ethiopia (December, 2010) [papers.cfm]
   (last updated on 2010/12/03)

   Abstract:
   We study household attitude with respect to price risk. Whereas price risk aversion has so far been studied empirically only for single staple commodities, we expand the analytical framework so as to derive an estimable matrix of own- and cross-price risk aversion coefficients. This imposes strong restrictions on the matrix of price risk aversion coefficients, which has a complex relation to the household’s Slutsky substitution matrix. Using a panel of rural Ethiopian households, we test whether the restrictions implied by the theory hold empirically, as well as whether distinct patterns of price risk aversion emerge. We ultimately find strong empirical support for the theory and widespread support for the hypothesis that households are on average risk-averse over own- and cross-price fluctuations.