Local Food Prices and International Price Transmission

Bekkers, Eddy Henricus; Brockmeier, Martina; Francois, Joseph; Yang, Fan (2017). Local Food Prices and International Price Transmission. World development, 96, pp. 216-230. Elsevier 10.1016/j.worlddev.2017.03.008

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World food prices spiked in the periods 2007–8 and 2010–11. The impact of these spikes in world food prices on local food prices and thus on local consumers is determined by the food price pass through. Pass through is defined as the extent to which changes in world food prices lead to changes in local food prices. We examine the determinants of variation in food price pass through from global to local consumer prices in a global sample of 147 countries, using FAO data on world food prices and ILO data on food prices for consumers. While market integration matters, our study finds that income per capita is the dominant factor explaining cross-country variation in pass through of food prices. We estimate an elasticity of about −0.3 of pass through with respect to income per capita. This means far greater price transmission of food price shocks at the commodity level to final consumers in low-income countries than in high-income countries. The implication is that future swings in world food prices will in particular jeopardize food security in poor countries. Trade policy measures of market integration also affect the pass through significantly, whereas infrastructure and geography measures play no significant role.

Item Type:

Journal Article (Original Article)

Division/Institute:

02 Faculty of Law > Department of Economic Law > World Trade Institute
10 Strategic Research Centers > World Trade Institute

03 Faculty of Business, Economics and Social Sciences > Department of Economics
02 Faculty of Law > Department of Economic Law > NCCR International Trade Regulation

UniBE Contributor:

Bekkers, Eddy Henricus and Francois, Joseph

Subjects:

300 Social sciences, sociology & anthropology > 380 Commerce, communications & transportation
300 Social sciences, sociology & anthropology > 330 Economics

ISSN:

0305-750X

Publisher:

Elsevier

Language:

English

Submitter:

Rebecca Anne Gilgen

Date Deposited:

31 May 2017 16:47

Last Modified:

24 Jul 2019 09:07

Publisher DOI:

10.1016/j.worlddev.2017.03.008

Related URLs:

BORIS DOI:

10.7892/boris.100925

URI:

https://boris.unibe.ch/id/eprint/100925

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