EXPLAINING CROSS COUNTRY DIFFERENCES IN DOMESTIC FOOD PRICE VOLATILITY: A PANEL DATA APPROACH
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2022-02-10
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en
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This study investigates cross-country differences in domestic food price volatility. Over the last two decades, international food price volatility has been perceived as increasing. High food price volatility can have severe consequences, mainly affecting the poor. Several explanations for the increased volatility in food prices have been proposed. However, not every country has been hit equally hard as the transmission from international to domestic prices differs significantly between countries. This paper investigates what factors drive this perceived cross-country discrepancy in domestic food price volatility.
Consequently, we step out of the main body of literature dedicated to global food prices. This thesis focuses on domestic food price volatility, using CPI’s of a worldwide country sample retrieved from the ILO. We conclude that apart from the international food prices, income contributes largely to cross-country differences. Developing countries experience a much higher food price volatility than developed countries. However, the income level does not moderate the international food price transmission, indicating that the transmission of the much more volatile international food price is not dependent on income. Third, we find that tariff rates imposed on primary products reduce transmission, but not when higher than 13%. Finally, imposing tariff rates are much more effective in developing countries.
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Faculteit der Managementwetenschappen