Household Welfare During Crisis and Adjustment in Ghana

A model of the producing and consuming household is developed and used to derive comparative static indicators of real welfare changes between periods that depend on observable data. Supply and demand models are then used to extend the model to a piecewise linear approximation of multi-period non-linear welfare changes. The framework is applied to Ghana, by specifying three poor and two non-poor groups based on micro-survey data, that comprise the whole population. Analysis of representative households suggests that real incomes of all households declined in the period before the Economic Recovery Program, and have risen afterwards. The changes in real incomes, however, are due to different reasons for each household class, depending on their structure of income.