TARIFF REFORMS, FOOD PRICES, AND CONSUMER WELFARE IN GHANA DURING THE 1990S

Abstract

In this paper, we analyse the effect of food price changes on household consumption in Ghana during the 1990s and assess the extent to which changes can be explained by trade and agricultural policy reforms. The measurement of the total household welfare effect, one that jointly considers first order effects as well as consumption responses, is the object of this study. Food consumption behaviour in Ghana is analyzed by estimating a complete food demand system using the linear approximate version of the AIDS model with household survey data for 1991/92 and 1998/99. The estimated price elasticities are then utilized to evaluate the distributional impacts of the relative food price changes in terms of compensating variation. The results indicate that the distributional burden of higher food prices fell mainly on the urban poor.