Food Price Volatility in Developing Countries and its Determinants

This article 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.


Issue Date:
2013-11
Publication Type:
Journal Article
DOI and Other Identifiers:
ISSN 0049-8599 (Other)
PURL Identifier:
http://purl.umn.edu/173649
Published in:
Quarterly Journal of International Agriculture, Volume 52, Number 4
Page range:
277-308
Total Pages:
32
JEL Codes:
O13; Q11; Q18
Series Statement:
QJIA
4




 Record created 2017-04-01, last modified 2017-08-22

Fulltext:
Download fulltext
PDF

Rate this document:

Rate this document:
1
2
3
 
(Not yet reviewed)