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International Trade and Domestic Price Stability in the Presence of Large Scale Climate Shocks

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  • Villoria, Nelson B.

Abstract

This paper explores the role of international trade in alleviating food price spikes when supply shocks are correlated across trading partners. Gravity-derived maize supply and consumer prices in Southern and Eastern Africa increase significantly in response to El Ni˜no Southern Oscillation (ENSO), a global climate phenomenon that induces weather correlation across continents. Hypothetical scenarios of freer trade reduce the volatility and levels of maize consumer prices but do not eliminate their sensitivity to ENSO. The results highlight that the ability of trade to alleviate price spikes depends as much on the volume of trade as on the spatial location of trading partners.

Suggested Citation

  • Villoria, Nelson B., 2023. "International Trade and Domestic Price Stability in the Presence of Large Scale Climate Shocks," 2023 Inter-Conference Symposium, April 19-21, 2023, Montevideo, Uruguay 338552, International Association of Agricultural Economists.
    • Handle: RePEc:ags:iaae23:338552
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    References listed on IDEAS

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    1. Williams,Jeffrey C. & Wright,Brian D., 2005. "Storage and Commodity Markets," Cambridge Books, Cambridge University Press, number 9780521023399, January.
    2. Porteous, Obie, 2017. "Empirical effects of short-term export bans: The case of African maize," Food Policy, Elsevier, vol. 71(C), pages 17-26.
    3. Obie Porteous, 2019. "High Trade Costs and Their Consequences: An Estimated Dynamic Model of African Agricultural Storage and Trade," American Economic Journal: Applied Economics, American Economic Association, vol. 11(4), pages 327-366, October.
    4. Noah Diffenbaugh & Martin Scherer, 2011. "Observational and model evidence of global emergence of permanent, unprecedented heat in the 20th and 21st centuries," Climatic Change, Springer, vol. 107(3), pages 615-624, August.
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