Hostname: page-component-cd9895bd7-lnqnp Total loading time: 0 Render date: 2024-12-27T22:20:39.789Z Has data issue: false hasContentIssue false
  • English
  • Français

TAX POLICY AND FOOD SECURITY: A DYNAMIC ANALYSIS

Published online by Cambridge University Press:  28 June 2019

Pawan Gopalakrishnan  and
Anuradha Saha
Pawan Gopalakrishnan
Affiliation:
Strategic Research Unit, Reserve Bank of India
Anuradha Saha*
Affiliation:
Ashoka University
*
Address correspondence to: Ashoka University, Sonepat – 131029. E-mail: [email protected]. Telephone: +91 9582370588.
Get access Rights & Permissions [Opens in a new window]

Abstract

We investigate the sectoral and the distributional effects of a food subsidy program, where food consumption in the economy is subsidized by taxing the manufacturing good producers. In a two-agent model comprising of farmer and industrialist households, agents consume food to accumulate health. Simulations indicate that while the subsidy program increases food output and agents’ health both in the short run and the long run, manufacturing output and aggregate real GDP appear to fall in the short run and increase only in the long run. The program does not make both agents better off and exhibits social welfare gains for a limited range of subsidies.

Keywords

Allocative EfficiencyFiscal PolicyFood SecurityWelfareEconomic Growth
Type
Articles
Information
Macroeconomic Dynamics , Volume 25 , Issue 3 , April 2021 , pp. 795 - 823
Copyright
© Cambridge University Press 2019

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

Footnotes

We thank Chetan Ghate, Satya P. Das, Amartya Lahiri, Alok Johri, Thomas Seegmuller, Luca Gori, Mauro Sordini, Angelo Antoci, two anonymous referees, and participants from NED-CICSE 2017, the LKYSPP Development Economics and Policy (DeEP) Conference, the 2015 Australasian Development Economics Workshop, the 10th Annual Conference on Economic Growth and Development (ISI Delhi), and the 14th PET Meetings (Seattle) for insightful comments. Views expressed in this paper are personal.

References

REFERENCES

Arora, Suchit (2001) Health, human productivity, and long-term economic growth. The Journal of Economic History, 61, 699–749.Google Scholar
Azam, Mehtabul (2013) Intergenerational occupational mobility in India. Available at SSRN 2287215.CrossRefGoogle Scholar
Banerjee, Abhijit, Hanna, Rema, Kyle, Jordan, Olken, Benjamin A., Sumarto, Sudarno. (2018) Tangible information and citizen empowerment: Identification cards and food subsidy programs in Indonesia. Journal of Political Economy, 126, 451–491.CrossRefGoogle Scholar
Barrett, Christopher B (2002) Chapter 40 food security and food assistance programs. In Agricultural and Food Policy, In Handbook of Agricultural Economics, Volume 2, 2103–2190. Elsevier.Google Scholar
Barro, Robert J (2013) Health and economic growth. Annals of Economics and Finance, 14, 329–366.Google Scholar
Besley, Timothy, Kanbur, Ravi (1988) Food subsidies and poverty alleviation. The Economic Journal, 98, 701–719.CrossRefGoogle Scholar
Bhattacharya, Rudrani, Patnaik, Ila (2016) Financial inclusion, productivity shocks, and consumption volatility in emerging economies. The World Bank Economic Review, 30, 171–201.Google Scholar
Blanden, Jo (2013) Cross-country rankings in intergenerational mobility: A comparison of approaches from economics and sociology. Journal of Economic Surveys, 27, 38–73.CrossRefGoogle Scholar
Bloom, David E, Canning, David, Sevilla, Jaypee (2004) The effect of health on economic growth: A production function approach. World Development, 32, 1–13.CrossRefGoogle Scholar
Bo, Simona, Ciccone, Giovannino, Guidi, Sabrina, Gambino, Roberto, Durazzo, Marilena, Gentile, Luigi, Cassader, Maurizio, Cavallo-Perin, Paolo, Pagano, Gianfranco (2008) Diet or exercise: What is more effective in preventing or reducing metabolic alterations? European Journal of Endocrinology, 159, 685–691.CrossRefGoogle ScholarPubMed
Chakraborty, Shankha, Papageorgiou, Chris, Fidel Pérez Sebastián. (2016) Health cycles and health transitions. Macroeconomic Dynamics, 20, 189–213.CrossRefGoogle Scholar
Curioni, C C, Lourenco, P M (2005) Long-term weight loss after diet and exercise: A systematic review. International Journal Of Obesity, 29, 1168–1174.CrossRefGoogle ScholarPubMed
Demeke, Mulat, Pangrazio, Guendalina, Maetz, Materne (2009) Country responses to the food security crisis: Nature and preliminary implications of the policies pursued.Google Scholar
Deolalikar, Anil B (1988) Nutrition and labor productivity in agriculture: Estimates for rural South India. The Review of Economics and Statistics, 70, 406–413.CrossRefGoogle Scholar
Dholakia, Ravindra H, Agarwalla, Astha, Bashir Bazaz, Amir, Agarwal, Prasoon. (2009) Trends in technical progress in India analysis of input-output tables from 1968 to 2003. Working Paper No. 2009-11-02, Indian Institute of Management, Ahmedabad.Google Scholar
Dutta, Bhaskar, Ramaswami, Bharat (2004) Reforming food subsidy schemes: Estimating the gains from self-targeting in India. Review of Development Economics, 8, 309–324.CrossRefGoogle Scholar
Edwards, Terri (2018) Healthy Weight Loss = 80% Nutrition + 20% Exercise. URL: https://nutritionstudies.org/healthy-weight-loss-80-nutrition-20-exercise/.Google Scholar
FAO, IFAD, UNICEF, WFP, WHO (2017) The State of Food Security and Nutrition in the World 2017. Building resilience for peace and food security. Food and Agriculture Organization of the United Nations, Rome.Google Scholar
Fogel, Robert W (2004) Health, nutrition, and economic growth. Economic Development and Cultural Change, 52, 643–658.CrossRefGoogle Scholar
Gabriel, Vasco, Levine, Paul, Pearlman, Joseph, Yang, Bo (2012) An estimated DSGE model of the Indian economy. In The Oxford Handbook of the Indian Economy (ed. Ghate, Chetan), Oxford University Press, Chap. 29.Google Scholar
Gentilini, Ugo (2015) Revisiting the “Cash versus food” debate: New evidence for an old puzzle? The World Bank Research Observer, 31, 135–167.Google Scholar
Ghate, Chetan, Glomm, Gerhard, Liu Streeter, Jialu (2016) Sectoral infrastructure investments in an unbalanced growing economy: The case of potential growth in India. Asian Development Review, 33, 144–166.CrossRefGoogle Scholar
Honohan, Patrick (2006) Household Financial Assets in the Process of Development. The World Bank.CrossRefGoogle Scholar
Honohan, Patrick (2008) Cross-country variation in household access to financial services. Journal of Banking & Finance, 32, 2493–2500.CrossRefGoogle Scholar
India Budget (2018) Expenditure Profile. URL: https://www.indiabudget.gov.in/ub2018-19/eb/stat2b.pdf.Google Scholar
Jiny, Yi, Zengz, Zhixiong (2007) Real estate and optimal public policy in a credit-constrained economy. Journal of Housing Economics, 16, 143–166.CrossRefGoogle Scholar
Kelly, Mark (2017) Health capital accumulation, health insurance, and aggregate outcomes: A neoclassical approach. Journal of Macroeconomics, 52, 1–22.CrossRefGoogle Scholar
Knuth, Lidija, Vidar, Margaret (2011) Constitutional and Legal Protection of the Right to Food around the World. Food and Agriculture Organization of the United Nations, Rome. Available at http://www.fao.org/docrep/016/ap554e/ap554e.pdf.Google Scholar
Kotwal, Ashok, Murugkar, Milind, Ramaswami, Bharat (2014) The political economy of food subsidy in India. The Copenhagen Journal of Asian Studies, 30, 100–121.CrossRefGoogle Scholar
Kozicka, Marta, Kalkuhl, Matthias, Brockhaus, Jan (2017) Food grain policies in India and their implications for stocks and fiscal costs: A dynamic partial equilibrium analysis. Journal of Agricultural Economics, 68, 98–122.CrossRefGoogle Scholar
Lawler, Moira (2017) Preventing prediabetes: Is diet or exercise more important? URL: https://www.everydayhealth.com/type-2-diabetes/diet/preventing-prediabetes-diet-exercise-more-important/.Google Scholar
Leal, Darla (2018) Is nutrition more important than exercise? URL: https://www.verywellfit.com/nutrition-vs-exercise-80-nutrition-wins-3121406.Google Scholar
Madsen, Jakob B. (2018) Health-led growth since 1800. Macroeconomic Dynamics, 22, 961–1000.CrossRefGoogle Scholar
Mayer, David (2001) The long-term impact of health on economic growth in Latin America. World Development, 29, 1025–1033.CrossRefGoogle Scholar
Mitnitski, Arnold B., Mogilner, Alexander J., MacKnight, Chris, Rockwood, Kenneth. (2002) The accumulation of deficits with age and possible invariants of aging. The Scientific World Journal, 2, 1816–1822.CrossRefGoogle ScholarPubMed
Motiram, Sripad, Singh, Ashish (2012) How close does the apple fall to the tree? some evidence from India on intergenerational occupational mobility. Economic and Political Weekly, 47.Google Scholar
Ramaswami, Bharat (2002) Efficiency and equity of food market interventions. Economic and Political Weekly, 1129–1135.Google Scholar
Rockwood, Kenneth, Mitnitski, Arnold (2007) Frailty in relation to the accumulation of deficits. The Journals of Gerontology: Series A, 62, 722–727.CrossRefGoogle ScholarPubMed
Strauss, John, Thomas, Duncan (2008) Health over the Life Course. In Handbook of Development Economics, Chapter 54, Volume 4, 3375–3474. Elsevier.CrossRefGoogle Scholar
Ter-Minassian, Teresa, Allen, Mark, Johnson, Simon (2008) Food and fuel prices-recent developments, macroeconomic impact, and policy responses. International Monetary Fund Washington, DC: IMF.CrossRefGoogle Scholar
The Economist (10 February 2018) The price is wrong. URL: https://www.economist.com/news/middle-east-and-africa/21736552-egyptians-are-addicted-subsidies-make-them-poorer-whatfuel-bread-and.Google Scholar
Tokarick, Stephen (2008) Dispelling some misconceptions about agricultural trade liberalization. Journal of Economic Perspectives, 22, 199–216.CrossRefGoogle Scholar
Verma, Rubina (2012) Can total factor productivity explain value added growth in services? Journal of Development Economics, 99, 163–177.CrossRefGoogle Scholar
Weil, David N (2014) Health and economic growth. In Handbook of Economic Growth, Volume 2, 623–682. Elsevier.Google Scholar
Yaniv, Gideon, Rosin, Odelia, Tobol, Yossef (2009) Junk-food, home cooking, physical activity and obesity: The effect of the fat tax and the thin subsidy. Journal of Public Economics, 93, 823–830.CrossRefGoogle Scholar