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Food Price Shocks and Household Consumption in Developing Countries: The Role of Fiscal Policy

Author

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  • Carine Meyimdjui
  • Jean-Louis Combes

Abstract

This paper studies whether fiscal policy plays a stabilizing role in the context of import food price shocks. More precisely, the paper assesses whether fiscal policy dampens the adverse effect of import food price shocks on household consumption. Based on a panel of 70 low and middle-income countries over the period 1980-2012, the paper finds that import price shocks negatively and significantly affect household consumption, but this effect appears to be mitigated by discretionary government consumption, notably through government subsidies and transfers. The results are particularly robust for African countries and countries with less flexible exchange rate regimes.

Suggested Citation

  • Carine Meyimdjui & Jean-Louis Combes, 2021. "Food Price Shocks and Household Consumption in Developing Countries: The Role of Fiscal Policy," IMF Working Papers 2021/012, International Monetary Fund.
    • Handle: RePEc:imf:imfwpa:2021/012
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    Citations

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    Cited by:

    1. Kym Anderson, 2023. "Agriculture's globalization: Endowments, technologies, tastes and policies," Journal of Economic Surveys, Wiley Blackwell, vol. 37(4), pages 1314-1352, September.
    2. Dimitris Skalkos & Zoi C. Kalyva, 2023. "Exploring the Impact of COVID-19 Pandemic on Food Choice Motives: A Systematic Review," Sustainability, MDPI, vol. 15(2), pages 1-16, January.
    3. Dimitris Skalkos & Zoi C. Kalyva & Ioanna S. Kosma, 2023. "The Impact of the COVID-19 Pandemic on College Students’ Food Choice Motives in Greece," Sustainability, MDPI, vol. 15(13), pages 1-11, June.
    4. Yalew, Amsalu Woldie & Nechifor, Victor & Ferrari, Emanuele, 2024. "The implications of the Russian invasion of Ukraine for African economies: A CGE analysis for Ethiopia," Bio-based and Applied Economics Journal, Italian Association of Agricultural and Applied Economics (AIEAA), vol. 13(3), October.
    5. Anderson, Kym, 2022. "Trade-related food policies in a more volatile climate and trade environment," Food Policy, Elsevier, vol. 109(C).

    More about this item

    Keywords

    Import Food Price Shocks; Fiscal Policy.; WP; government consumption expenditure; government transfer; government expenditure; government subsidy; price shock;
    All these keywords.

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