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Consequences of unintended food policies: Food price dynamics subject to the Israeli–Palestinian conflict

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  • Ihle, Rico
  • Rubin, Ofir D.

Abstract

Israel’s imposition of military security measures in the Palestinian territories as a consequence of the long-lasting violent conflict between them has negative economic effects on all parties concerned. One crucial outcome is the limited ability to carry out trade, which brings about welfare losses. Conflict-induced policies such as security measures can result in sizable unintended externalities that shape the markets of and the trade in food. We assess the dynamics of daily wholesale prices of food produced in Israel and the West Bank that is traded between them and is therefore subject to restrictions on movement. To do so, we suggest a regime switching cointegration model which is estimated using a novel extension of the Johansen estimation method. We find that the two major wholesale markets of the two regions are integrated with regard to these main trading products. Deviations from price equilibria are quickly adjusted. The model suggests that movement restrictions temporarily cut off markets from each other. Implications of conflict-induced closures for welfare depend on the direction of trade and are harming both Palestinian and Israeli consumers.

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  • Ihle, Rico & Rubin, Ofir D., 2013. "Consequences of unintended food policies: Food price dynamics subject to the Israeli–Palestinian conflict," Food Policy, Elsevier, vol. 42(C), pages 96-105.
    • Handle: RePEc:eee:jfpoli:v:42:y:2013:i:c:p:96-105
    DOI: 10.1016/j.foodpol.2013.07.007
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    3. Ihle, Rico & Finkelshtain, Israel & Rubin, Ofir David, 2014. "Markup pricing in the context of a violent conflict: differentiated apples in Hebron wholesale market," 2014 International Congress, August 26-29, 2014, Ljubljana, Slovenia 182657, European Association of Agricultural Economists.
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    5. Béné, Christophe & d'Hôtel, Elodie Maître & Pelloquin, Raphaël & Badaoui, Outman & Garba, Faroukou & Sankima, Jocelyne W., 2024. "Resilience – and collapse – of local food systems in conflict affected areas; reflections from Burkina Faso," World Development, Elsevier, vol. 176(C).
    6. Kimsanova, Barchynai & Sanaev, Golib & Herzfeld, Thomas, 2024. "Dynamics of food demand during political instability: Evidence from Kyrgyzstan," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 55(1), pages 41-53.
    7. Alejandro Acosta & Carlos Barrantes & Rico Ihle, 2020. "Animal disease outbreaks and food market price dynamics: Evidence from regime‐dependent modelling and connected scatterplots," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 64(3), pages 960-976, July.
    8. Willeke Veninga & Rico Ihle, 2018. "Import vulnerability in the Middle East: effects of the Arab spring on Egyptian wheat trade," Food Security: The Science, Sociology and Economics of Food Production and Access to Food, Springer;The International Society for Plant Pathology, vol. 10(1), pages 183-194, February.
    9. Yang, Bixuan & Asche, Frank & Li, Tao, 2021. "Food Price Inflation and Demand Shocks: Evidence from Chinese Cities during the Covid-19 Epidemic," 2021 Annual Meeting, August 1-3, Austin, Texas 314067, Agricultural and Applied Economics Association.
    10. Johanes Agbahey & Khalid Siddig & Harald Grethe, 2016. "Consequences of conflict: the impact of the closure regime on the economy of the West Bank economy," EcoMod2016 9197, EcoMod.
    11. Kimsanova, Barchynai & Sanaev, Golib & Herzfeld, Thomas, 2022. "Dynamics of food consumption during political instability: evidence from Kyrgyzstan," 96th Annual Conference, April 4-6, 2022, K U Leuven, Belgium 321213, Agricultural Economics Society - AES.
    12. Fratto,Chiara & Giannone,Elisa, 2020. "Market Access and Development of the ICT Sector in the West Bank," Policy Research Working Paper Series 9426, The World Bank.
    13. Agbahey, Johanes & Siddig, Khalid & Grethe, Harald & Boysen, Ole, 2016. "Consequences of conflict: the impact of the closure regime on the West Bank’s economy," Conference papers 332728, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    14. Acosta, Alejandro & Barrantes, Carlos & Ihle, Rico, 2020. "Animal disease outbreaks and food market price dynamics: Evidence from regime-dependent modelling and connected scatterplots," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 64(3), July.
    15. Ofir D. Rubin & Rico Ihle, 2017. "Measuring Temporal Dimensions of the Intensity of Violent Political Conflict," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 132(2), pages 621-642, June.
    16. Ziv Bar-Nahum & Israel Finkelshtain & Rico Ihle & Ofir D. Rubin, 2020. "Effects of violent political conflict on the supply, demand and fragmentation of fresh food markets," Food Security: The Science, Sociology and Economics of Food Production and Access to Food, Springer;The International Society for Plant Pathology, vol. 12(3), pages 503-515, June.
    17. Rudolfsen, Ida & Bartusevičius, Henrikas & van Leeuwen, Florian & Østby, Gudrun, 2024. "War and food insecurity in Ukraine," World Development, Elsevier, vol. 180(C).

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