GTAP Resources: Resource Display
|GTAP Resource #4276|
"Evaluating Policy Options for Strengthening the Resilience of the Zimbabwean Economy to Higher Food and Fuel Prices"
by Mahofa, Godfrey and Anna Strutt
After experiencing a decade-long recession, the Zimbabwean economy is now on a recovery path. However, economic recovery efforts in the country may be hampered by international market shocks particularly increases in global food and fuel prices. Since Zimbabwe is a net importer, higher food and fuel prices are likely to have a negative impact on the economy. This paper aims to identify potential policy responses to help mitigate the negative impacts of higher food and fuel prices in Zimbabwe. Understanding the impact of economic policies in the presence of external market shocks is critical for the design of policies aimed at strengthening the economy’s resilience to these kinds of international commodity price rises. We analyse the impact of higher international prices on the Zimbabwean economy using a multi-region, multi- sector computable general equilibrium model, known as the Global Trade Analysis Project (GTAP) model. We enhance the standard GTAP model using MyGTAP to incorporate household survey data for Zimbabwe into the model, facilitating richer and more comprehensive analysis on different households within the economy. Our preliminary model results suggest that some macroeconomic variables such as real GDP are likely to decline as a result of the food and fuel price shocks, with urban households tending to suffer more from such shocks. To the extent that there is unemployment of unskilled labour, sensitivity analysis of our results suggests that the overall adverse impacts of the international price increases may be even more severe. Policies that remove tariffs, improve agricultural productivity, or reduce trade transaction costs appear potentially important for cushioning the Zimbabwean economy from higher world prices.
|Resource Details (Export Citation)||GTAP Keywords|
- Food prices and food security
- Other data bases and data issues
- The GTAP Data Base and extensions
- Africa (Southern)
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