An African Demand System? Welfare Analysis Using Data from the ICP for Africa 2005

Abebe Shimeles, AfDB

This paper uses data from the International Comparison Program 2005 to recover complete own and cross-price and income elasticity estimates for the African continent using the Extended Linear Expenditure System for 12 broadly defined commodities. The results can be used for aggregate welfare comparison in such global models as GTAP (Global Trade Analysis Project) and exercises to infer welfare impact of price shocks at the continental level. In a heuristic way also, it is possible to derive a “utility-consistent” global poverty line from the demand function that could be compared with the popular international poverty lines.