The Response of Consumption to Income Shocks: Evidence from the Indian Trade Liberalization

This paper uses the Indian tariff reforms of the early nineties to estimate how households responded to the negative income shocks caused by the tariff decreases. Households more hurt by the tariff reform decreased overall expenditure, but the response is not uniform across food items. In particular, households more hurt by the reform did not change their consumption of cereals, but decreased their consumption of all other food items. Although this coping mechanism helped maintain overall levels of calorie consumption, diet diversity and the associated benefits were sacrificed.

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Conference Paper/ Presentation
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JEL Codes:
D7; D8; H2; O2

 Record created 2017-04-01, last modified 2018-01-22

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