Food prices, government subsidies and fiscal balances in south Mediterranean countries
AbstractSoaring food and energy prices sparked the revolts in Northern African countries at the end of 2010. Despite government subsidies, consumer price inflation rose, which reduced consumers’ purchasing power. This article empirically investigates the impact of world food prices on inflation and government subsidies for Algeria, Egypt, Israel, Jordan, Lebanon, Morocco, the occupied Palestinian territories and Tunisia during the ten-year period 2002-2011. Our findings show an asymmetry in the response of consumer price inflation to world food price shocks, in that soaring world food prices made inflation rise fast while nominal rigidities prevented inflation from falling. Moreover, this paper shows that government balances deteriorated up to 2% of GDP in 2008 and 2011 due to the incremental government food subsidies while they hardly improved in value terms when world food prices sharply fell in 2009.
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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 37707.
Date of creation: Jan 2011
Date of revision: 20 Mar 2012
food prices; energy prices; inflation; public finances; government subsidies;
Other versions of this item:
- Marga Peeters & Ronald Albers, 2013. "Food Prices, Government Subsidies and Fiscal Balances in South Mediterranean Countries," Development Policy Review, Overseas Development Institute, vol. 31(3), pages 273-290, 05.
- E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy
- L71 - Industrial Organization - - Industry Studies: Primary Products and Construction - - - Mining, Extraction, and Refining: Hydrocarbon Fuels
- L66 - Industrial Organization - - Industry Studies: Manufacturing - - - Food; Beverages; Cosmetics; Tobacco
- H2 - Public Economics - - Taxation, Subsidies, and Revenue
- E3 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles
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.:
- Ronald Albers & Marga Peeters, 2011.
"Food and Energy Prices, Government Subsidies and Fiscal Balances in South Mediterranean Countries,"
European Economy - Economic Papers
437, Directorate General Economic and Monetary Affairs (DG ECFIN), European Commission.
- Albers, Ronald & Peeters, Marga, 2011. "Food and energy prices, government subsidies and fiscal balances in south Mediterranean countries," MPRA Paper 28788, University Library of Munich, Germany.
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