Food price volatility in developing countries and its determinants
AbstractThe work at hand contributes to the ongoing discussion on the drivers of food price volatility. Based on theoretical considerations, economical, agricultural, and political determinants of domestic price volatility are identified and discussed. A dynamic panel is estimated to account for country fixed effects and persistence of volatility. Two approaches are followed in order to consistently estimate the impact of time-invariant variables. First, system GMM using levels instead of first differences and, second, a two step IV estimation using the residuals from the system GMM estimation. Findings suggest that stocks, production, international price volatility, and governance significantly affect domestic price variability. Furthermore, improved functionality of markets and reduced transaction costs can stabilise prices. With respect to agricultural policies, public stockholding seems to be associated with less volatility, whereas trade restrictions do not enhance price stabilisation. Lastly, landlocked countries experience less variability in grain prices, while African countries have more volatile prices than countries on other continents.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by German Association of Agricultural Economists (GEWISOLA) in its series 53rd Annual Conference, Berlin, Germany, September 25-27, 2013 with number 156132.
Date of creation: 2013
Date of revision:
Determinants of food price volatility; public buffer stock; competitive storage; system GMM; Agricultural and Food Policy; Demand and Price Analysis; International Relations/Trade;
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Williams,Jeffrey C. & Wright,Brian D., 2005.
"Storage and Commodity Markets,"
Cambridge University Press, number 9780521023399, October.
- Mason, Nicole M. & Myers, Robert J., 2011.
"The Effects of the Food Reserve Agency on Maize Market Prices in Zambia,"
Food Security Collaborative Policy Briefs
120766, Michigan State University, Department of Agricultural, Food, and Resource Economics.
- Nicole M. Mason & Robert J. Myers, 2013. "The effects of the Food Reserve Agency on maize market prices in Zambia," Agricultural Economics, International Association of Agricultural Economists, vol. 44(2), pages 203-216, 03.
- Mason, Nicole M. & Myers, Robert J., 2011. "The Effects of the Food Reserve Agency on Maize Market Prices in Zambia," Food Security Collaborative Working Papers 120771, Michigan State University, Department of Agricultural, Food, and Resource Economics.
- Félix Badolo, 2011. "Transmission des chocs de prix internationaux : le cas du riz au Burkina Faso," Working Papers halshs-00627189, HAL.
- Christopher B. Barrett & Jau Rong Li, 2002. "Distinguishing between Equilibrium and Integration in Spatial Price Analysis," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 84(2), pages 292-307.
- Ianchovichina, Elena & Loening, Josef & Wood, Christina, 2012. "How vulnerable are Arab countries to global food price shocks ?," Policy Research Working Paper Series 6018, The World Bank.
- Ng, Serena, 1996.
"Looking for evidence of speculative stockholding in commodity markets,"
Journal of Economic Dynamics and Control,
Elsevier, vol. 20(1-3), pages 123-143.
- Ng, S., 1995. "Looking for Evidence of Speculative Stockholding in Commodity Markets," Cahiers de recherche 9514, Centre interuniversitaire de recherche en économie quantitative, CIREQ.
- Ng, S., 1995. "Looking for Evidence of Speculative Stockholding in Commodity Markets," Cahiers de recherche 9514, Universite de Montreal, Departement de sciences economiques.
- Kripfganz, Sebastian & Schwarz, Claudia, 2013.
"Estimation of Linear Dynamic Panel Data Models with Time-Invariant Regressors,"
Annual Conference 2013 (Duesseldorf): Competition Policy and Regulation in a Global Economic Order
79756, Verein für Socialpolitik / German Economic Association.
- Kripfganz, Sebastian & Schwarz, Claudia, 2013. "Estimation of linear dynamic panel data models with time-invariant regressors," Discussion Papers 25/2013, Deutsche Bundesbank, Research Centre.
- Daron Acemoglu & Simon Johnson & James Robinson & Pierre Yared, 2005.
"Income and Democracy,"
NBER Working Papers
11205, National Bureau of Economic Research, Inc.
- Lee , Hyun-Hoon & Park, Cyn-Young, 2013. "International Transmission of Food Prices and Volatilities: A Panel Analysis," ADB Economics Working Paper Series 373, Asian Development Bank.
- Wright, Brian D & Williams, Jeffrey C, 1982. "The Economic Role of Commodity Storage," Economic Journal, Royal Economic Society, vol. 92(367), pages 596-614, September.
- Berna Karali & Gabriel J. Power, 2013. "Short- and Long-Run Determinants of Commodity Price Volatility," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 95(3), pages 724-738.
- Friederike Greb & Nelissa Jamora & Carolin Mengel & Stephan von Cramon-Taubadel & Nadine Würriehausen, 2012.
"Price transmission from international to domestic markets,"
Courant Research Centre: Poverty, Equity and Growth - Discussion Papers
125, Courant Research Centre PEG, revised 08 Oct 2012.
- Greb, Friederike & Jamora, Nelissa & Mengel, Carolin & von Cramon-Taubadel, Stephan & Wurriehausen, Nadine, 2012. "Price transmission from international to domestic markets," Discussion Papers 137101, Georg-August-Universitaet Goettingen, GlobalFood, Department of Agricultural Economics and Rural Development.
- Martin, Will & Anderson, Kym, 2011.
"Export restrictions and price insulation during commodity price booms,"
Policy Research Working Paper Series
5645, The World Bank.
- Will Martin & Kym Anderson, 2012. "Export Restrictions and Price Insulation During Commodity Price Booms," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 94(2), pages 422-427.
- Anderson, Kym & Martin, Will, 2011. "Export Restrictions and Price Insulation During Commodity Price Booms," CEPR Discussion Papers 8494, C.E.P.R. Discussion Papers.
- Getaw Tadesse & Atle G. Guttormsen, 2011. "The behavior of commodity prices in Ethiopia," Agricultural Economics, International Association of Agricultural Economists, vol. 42(1), pages 87-97, 01.
- Robert F. Engle & Jose Gonzalo Rangel, 2008. "The Spline-GARCH Model for Low-Frequency Volatility and Its Global Macroeconomic Causes," Review of Financial Studies, Society for Financial Studies, vol. 21(3), pages 1187-1222, May.
- Newbery, David M G & Stiglitz, Joseph E, 1982. "Optimal Commodity Stock-piling Rules," Oxford Economic Papers, Oxford University Press, vol. 34(3), pages 403-27, November.
- Makki, Shiva S. & Tweeten, Luther G. & Miranda, Mario J., 2001. "Storage-trade interactions under uncertainty: Implications for food security," Journal of Policy Modeling, Elsevier, vol. 23(2), pages 127-140, February.
- Roy Bailey and Marcus Chambers, .
"A Theory of Commodity Price Fluctuations,"
Economics Discussion Papers
432, University of Essex, Department of Economics.
- Gerald E. Shively, 1996. "Food Price Variability and Economic Reform: An ARCH Approach for Ghana," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 78(1), pages 126-136.
- Deaton, A. & Laroque, G., 1989.
"On The Behavior Of Commodity Prices,"
145, Princeton, Woodrow Wilson School - Public and International Affairs.
- R Blundell & Steven Bond, .
"Initial conditions and moment restrictions in dynamic panel data model,"
W14&104., Economics Group, Nuffield College, University of Oxford.
- Blundell, Richard & Bond, Stephen, 1998. "Initial conditions and moment restrictions in dynamic panel data models," Journal of Econometrics, Elsevier, vol. 87(1), pages 115-143, August.
- Blundell, R. & Bond, S., 1995. "Initial Conditions and Moment Restrictions in Dynamic Panel Data Models," Economics Papers 104, Economics Group, Nuffield College, University of Oxford.
- Richard Blundell & Steve Bond, 1995. "Initial conditions and moment restrictions in dynamic panel data models," IFS Working Papers W95/17, Institute for Fiscal Studies.
- Ruijs, Arjan & Schweigman, Caspar & Lutz, Clemens, 2004. "The impact of transport- and transaction-cost reductions on food markets in developing countries: evidence for tempered expectations for Burkina Faso," Agricultural Economics, Blackwell, vol. 31(2-3), pages 219-228, December.
- Christopher Gilbert & Wyn Morgan, 2010. "Has food price volatility risen?," Department of Economics Working Papers 1002, Department of Economics, University of Trento, Italia.
- Pietola, Kyösti & Liu, Xing & Robles, Miguel, 2010. "Price, inventories, and volatility in the global wheat market," IFPRI discussion papers 996, International Food Policy Research Institute (IFPRI).
- Sophie Mitra & Jean-Marc Boussard, 2011.
"A Simple Model of Endogenous Agricultural Commodity Price Fluctuations with Storage,"
Fordham Economics Discussion Paper Series
dp2011-05, Fordham University, Department of Economics.
- Sophie Mitra & Jean‐Marc Boussard, 2012. "A simple model of endogenous agricultural commodity price fluctuations with storage," Agricultural Economics, International Association of Agricultural Economists, vol. 43(1), pages 1-15, 01.
- Rashid, Shahidur & Lemma, Solomon, 2011. "Strategic grain reserves in Ethiopia: Institutional design and operational performance," IFPRI discussion papers 01054, International Food Policy Research Institute (IFPRI).
- Deaton, Angus & Laroque, Guy, 1996. "Competitive Storage and Commodity Price Dynamics," Journal of Political Economy, University of Chicago Press, vol. 104(5), pages 896-923, October.
- Abhijit V. Banerjee & Esther Duflo, 2007.
"The Economic Lives of the Poor,"
Journal of Economic Perspectives,
American Economic Association, vol. 21(1), pages 141-168, Winter.
- Albert Park, 2006. "Risk and Household Grain Management in Developing Countries," Economic Journal, Royal Economic Society, vol. 116(514), pages 1088-1115, October.
- Marilyne Huchet-Bourdon, 2011. "Agricultural Commodity Price Volatility: An Overview," OECD Food, Agriculture and Fisheries Papers 52, OECD Publishing.
- Brian D. Wright, 2011. "The Economics of Grain Price Volatility," Applied Economic Perspectives and Policy, Agricultural and Applied Economics Association, vol. 33(1), pages 32-58.
- Rashid, Shahidur & Cummings Jr., Ralph & Gulati, Ashok, 2007. "Grain Marketing Parastatals in Asia: Results from Six Case Studies," World Development, Elsevier, vol. 35(11), pages 1872-1888, November.
- Scheinkman, Jose A & Schechtman, Jack, 1983. "A Simple Competitive Model with Production and Storage," Review of Economic Studies, Wiley Blackwell, vol. 50(3), pages 427-41, July.
- Peterson, Hikaru Hanawa & Tomek, William G., 2003.
"How Much Of Commodity Price Behavior Can A Rational Expectations Storage Model Explain?,"
30712, Kansas State University, Department of Agricultural Economics.
- Hikaru Hanawa Peterson & William G. Tomek, 2005. "How much of commodity price behavior can a rational expectations storage model explain?," Agricultural Economics, International Association of Agricultural Economists, vol. 33(3), pages 289-303, November.
- Gouel, Christophe & Jean, Sebastien, 2012.
"Optimal food price stabilization in a small open developing country,"
Policy Research Working Paper Series
5943, The World Bank.
- Christophe Gouel & Sébastien Jean, 2012. "Optimal Food Price Stabilization in a Small Open Developing Country," Working Papers 2012-01, CEPII research center.
- Haile, Mekbib G. & Kalkuhl, Matthias & von Braun, Joachim, 2013. "Short-term global crop acreage response to international food prices and implications of volatility," Discussion Papers 145308, University of Bonn, Center for Development Research (ZEF).
- Trostle, Ronald, 2008. "Factors Contributing to Recent Increases in Food Commodity Prices (PowerPoint)," Seminars 43902, USDA Economists Group.
- Cafiero, Carlo & Bobenrieth H., Eugenio S.A. & Bobenrieth H., Juan R.A. & Wright, Brian D., 2011. "The empirical relevance of the competitive storage model," Journal of Econometrics, Elsevier, vol. 162(1), pages 44-54, May.
- Gabre-Madhin, Eleni Z., 2001. "Market institutions, transaction costs, and social capital in the Ethiopian grain market:," Research reports 124, International Food Policy Research Institute (IFPRI).
- Shiva S. Makki & Luther G. Tweeten & Mario J. Miranda, 1996. "Wheat Storage and Trade in an Efficient Global Market," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 78(4), pages 879-890.
- Kalkuhl, Matthias, 2014. "How Strong Do Global Commodity Prices Influence Domestic Food Prices in Developing Countries? A Global Price Transmission and Vulnerability Mapping Analysis," Discussion Papers 168591, University of Bonn, Center for Development Research (ZEF).
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (AgEcon Search).
If references are entirely missing, you can add them using this form.