Income Versus Prices: How Does The Business Cycle Affect Food (In)-Security?

IMF Working Papers, September 24, 2021

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Canonical URL: Income Versus Prices: How Does The Business Cycle Affect Food (In)-Security?

Study examines two aspects of food insecurity: caloric insufficiency and diet composition.
Uses cross-country panel data to identify macroeconomic determinants of food insecurity.
Income shocks are the most relevant driver of food insecurity, displaying high elasticities at the early stages of economic development.
The role of food price shocks is more limited.
Social protection has a direct effect and mitigates the impact of income shocks.
Effects are highly heterogeneous across a range of structural characteristics of the economy, highlighting the role of distributional aspects and of food import dependency.

Macroeconomic determinants analyzed: Income shocks versus food price shocks.
Outcomes studied: Caloric insufficiency and diet composition.
Methodology: Cross-country panel approach to provide a global perspective on identification of determinants.
Heterogeneity factors emphasized: Structural characteristics, distributional aspects, food import dependency.

Prioritize policies that address income volatility to reduce food insecurity, especially in early stages of economic development where income elasticities are high.
Strengthen social protection systems as they both directly reduce food insecurity and mitigate the adverse effects of income shocks.
Consider distributional policies and measures addressing food import dependency to account for heterogeneous effects across countries.

Subject: Food prices, Food security, Income, Inflation, National accounts, Poverty, Prices, Purchasing power
Keywords: coefficient estimate, coefficient estimates of the interaction terms, descriptive statistics, diet and health, elasticity of undernourishment, FD estimate, food inflation, Food insecurity, food prices, Food security, Global, growth, Income, income elasticity, income share, Inflation, inflation elasticity, least squares, ln GDP pc, Purchasing power, rising prices, social protection, South Asia

Imf Working Paper No. 2021/238; Christian Bogmans, Andrea Pescatori, and Ervin Prifti; September 24, 2021.