IDEAS home Printed from https://ideas.repec.org/p/pra/mprapa/37707.html
   My bibliography  Save this paper

Food prices, government subsidies and fiscal balances in south Mediterranean countries

Author

Listed:
  • Peeters, Marga
  • Albers, Ronald

Abstract

Soaring food and energy prices sparked the revolts in Northern African countries at the end of 2010. Despite government subsidies, consumer price inflation rose, which reduced consumers’ purchasing power. This article empirically investigates the impact of world food prices on inflation and government subsidies for Algeria, Egypt, Israel, Jordan, Lebanon, Morocco, the occupied Palestinian territories and Tunisia during the ten-year period 2002-2011. Our findings show an asymmetry in the response of consumer price inflation to world food price shocks, in that soaring world food prices made inflation rise fast while nominal rigidities prevented inflation from falling. Moreover, this paper shows that government balances deteriorated up to 2% of GDP in 2008 and 2011 due to the incremental government food subsidies while they hardly improved in value terms when world food prices sharply fell in 2009.

Suggested Citation

  • Peeters, Marga & Albers, Ronald, 2011. "Food prices, government subsidies and fiscal balances in south Mediterranean countries," MPRA Paper 37707, University Library of Munich, Germany, revised 20 Mar 2012.
    • Handle: RePEc:pra:mprapa:37707
    as

    Download full text from publisher

    File URL: https://mpra.ub.uni-muenchen.de/37707/2/MPRA_paper_37707.pdf
    File Function: original version
    Download Restriction: no
    File URL: https://mpra.ub.uni-muenchen.de/38138/1/MPRA_paper_38138.pdf
    File Function: revised version
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Adams, Richard H., 2000. "Self-targeted subsidies - the distributional impact of the Egyptian food subsidy system," Policy Research Working Paper Series 2322, The World Bank.
    2. Gutner, Tamar, 2002. "The political economy of food subsidy reform: the case of Egypt," Food Policy, Elsevier, vol. 27(5-6), pages 455-476.
    3. Mr. Alex Segura-Ubiergo & Miss Taline Koranchelian & Mr. Carlos Mulas-Granados, 2008. "Reforming Government Subsidies in the New Member States of the European Union," IMF Working Papers 2008/165, International Monetary Fund.
    4. Albers, Ronald & Peeters, Marga, 2011. "Food and energy prices, government subsidies and fiscal balances in south Mediterranean countries," MPRA Paper 28788, University Library of Munich, Germany.
    5. Juthathip Jongwanich & Donghyun Park, 2011. "Inflation in developing Asia: pass‐through from global food and oil price shocks," Asian-Pacific Economic Literature, The Crawford School, The Australian National University, vol. 25(1), pages 79-92, May.
    6. World Bank, 2009. "Global Economic Prospects 2009 : Commodities at the Crossroads," World Bank Publications - Books, The World Bank Group, number 2581.
    7. Jha, Raghbendra & Gaiha, Raghav & Pandey, Manoj K. & Kaicker, Nidhi, 2013. "Food subsidy, income transfer and the poor: A comparative analysis of the public distribution system in India's states," Journal of Policy Modeling, Elsevier, vol. 35(6), pages 887-908.
    8. Peeters, Marga & Strahilov, Kiril, 2008. "Macro-economic policy reactions to soaring food prices in Mediterranean countries, Russia, the CIS and the GCC," MPRA Paper 23860, University Library of Munich, Germany.
    9. Tuck, L. & Lindert, K., 1996. "From Universal Food Subsidies to a Self-Targeted Program: A Case Study in Tunisian Reform," World Bank - Discussion Papers 351, World Bank.
    10. Jongwanich, Juthathip & Park, Donghyun, 2009. "Inflation in developing Asia," Journal of Asian Economics, Elsevier, vol. 20(5), pages 507-518, September.
    11. Yitzhaki, Shlomo, 1990. "On the Effect of Subsidies to Basic Food Commodities in Egypt," Oxford Economic Papers, Oxford University Press, vol. 42(4), pages 772-792, October.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Jiayi Joey Yu & Christopher S. Tang & ManMohan S. Sodhi & James Knuckles, 2020. "Optimal Subsidies for Development Supply Chains," Manufacturing & Service Operations Management, INFORMS, vol. 22(6), pages 1131-1147, November.
    2. Metin Atmaca & Engin Demirel, 2017. "Economic Impact on Financial Ratios of Food Industry at Istanbul Stock Exchange Listed Firms," International Journal of Economics and Financial Issues, Econjournals, vol. 7(3), pages 537-541.
    3. Jeffrey Alwang & Samy Sabry & Kamel Shideed & Atef Swelam & Habib Halila, 2018. "Economic and food security benefits associated with raised-bed wheat production in Egypt," Food Security: The Science, Sociology and Economics of Food Production and Access to Food, Springer;The International Society for Plant Pathology, vol. 10(3), pages 589-601, June.
    4. Jiayi Joey Yu & Christopher S. Tang & Zuo-Jun Max Shen, 2018. "Improving Consumer Welfare and Manufacturer Profit via Government Subsidy Programs: Subsidizing Consumers or Manufacturers?," Manufacturing & Service Operations Management, INFORMS, vol. 20(4), pages 752-766, October.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. repec:pra:mprapa:37705 is not listed on IDEAS
    2. Ronald Albers & Marga Peeters, 2011. "Food and Energy Prices, Government Subsidies and Fiscal Balances in South Mediterranean Countries," European Economy - Economic Papers 2008 - 2015 437, Directorate General Economic and Financial Affairs (DG ECFIN), European Commission.
    3. Debnath, Deepayan & Babu, Suresh & Ghosh, Parijat & Helmar, Michael, 2018. "The impact of India’s food security policy on domestic and international rice market," Journal of Policy Modeling, Elsevier, vol. 40(2), pages 265-283.
    4. García, Carlos J. & Mejía, Jesisbé, 2018. "Macroeconomic stabilization of primary commodities price cycles in developing economies," Journal of Policy Modeling, Elsevier, vol. 40(5), pages 1050-1066.
    5. Bibi, Sami & Duclos, Jean-Yves, 2007. "Equity and policy effectiveness with imperfect targeting," Journal of Development Economics, Elsevier, vol. 83(1), pages 109-140, May.
    6. Sami Bibi & Jean-Yves Duclos, 2007. "Poverty-decreasing indirect tax reforms: Evidence from Tunisia," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 14(2), pages 165-190, April.
    7. Abdullah, Muhammad & Gul, Zarro & Waseem, Faiza & Islam, Tanweer, 2021. "The State of Pakistan’s Economy and the Ineffectiveness of Monetary Policy," MPRA Paper 112678, University Library of Munich, Germany.
    8. Chintapalli, Prashant, 2023. "Optimal multi-period crop procurement and distribution policy with minimum support prices," Socio-Economic Planning Sciences, Elsevier, vol. 89(C).
    9. Abdulaziz Shehu & Shafii Sayuti Abdullah & Nasiru Alhaji Yau, 2019. "Asymmetric Effect of Oil Shocks on Food Prices in Nigeria: A Non Linear Autoregressive Distributed Lags Analysis," International Journal of Energy Economics and Policy, Econjournals, vol. 9(3), pages 128-134.
    10. Sherine Al-Shawarby & Hoda Selim, 2013. "Are International Food Price Spikes the Source of Egypt’s High Inflation?," Financial and Monetary Policy Studies, in: Marga Peeters & Nidal Sabri & Wassim Shahin (ed.), Financial Integration, chapter 0, pages 61-83, Springer.
    11. Sami Bibi, 2008. "Could the Behavioral Responses Justify the Absence of Direct Transfers to Fight Poverty in MENA Region?," Working Papers 396, Economic Research Forum, revised 03 Jan 2008.
    12. Karami, Ayatollah & Esmaeili, Abdoulkarim & Najafi, Bahadin, 2012. "Assessing effects of alternative food subsidy reform in Iran," Journal of Policy Modeling, Elsevier, vol. 34(5), pages 788-799.
    13. Mehta, Aashish & Jha, Shikha & Quising, Pilipinas, 2013. "Self-targeted food subsidies and voice: Evidence from the Philippines," Food Policy, Elsevier, vol. 41(C), pages 204-217.
    14. Adam, P. & Rianse, U. & Harafah, Ĺ. M. & Cahyono, E. & Rafiy, M., 2016. "A Model of the Dynamics of the Effect of World Crude Oil Price and World Rice Price on Indonesia’s Inflation Rate," AGRIS on-line Papers in Economics and Informatics, Czech University of Life Sciences Prague, Faculty of Economics and Management, vol. 8(1), pages 1-10, March.
    15. John Baffes & Cristina Savescu, 2014. "Monetary conditions and metal prices," Applied Economics Letters, Taylor & Francis Journals, vol. 21(7), pages 447-452, May.
    16. Govinda R. Timilsina & John C. Beghin & Dominique van der Mensbrugghe & Simon Mevel, 2012. "The impacts of biofuels targets on land‐use change and food supply: A global CGE assessment," Agricultural Economics, International Association of Agricultural Economists, vol. 43(3), pages 315-332, May.
    17. Carsten Hefeker & Sebastian G. Kessing, 2017. "Competition for natural resources and the hold-up problem," Canadian Journal of Economics, Canadian Economics Association, vol. 50(3), pages 871-888, August.
    18. Mohajan, Haradhan, 2013. "Food, Agriculture and Economic Situation of Bangladesh," MPRA Paper 54240, University Library of Munich, Germany, revised 18 Aug 2013.
    19. Jan J. J. Groen & Paolo A. Pesenti, 2011. "Commodity Prices, Commodity Currencies, and Global Economic Developments," NBER Chapters, in: Commodity Prices and Markets, pages 15-42, National Bureau of Economic Research, Inc.
    20. Carine Meyimdjui, 2017. "Food Price Shocks and Government Expenditure Composition: Evidence from African Countries," Working Papers halshs-01457366, HAL.
    21. Raghbendra Jha, 2013. "Welfare Schemes and Social Protection in India," ASARC Working Papers 2013-10, The Australian National University, Australia South Asia Research Centre.

    More about this item

    Keywords

    food prices; energy prices; inflation; public finances; government subsidies;
    All these keywords.

    JEL classification:

    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • L71 - Industrial Organization - - Industry Studies: Primary Products and Construction - - - Mining, Extraction, and Refining: Hydrocarbon Fuels
    • L66 - Industrial Organization - - Industry Studies: Manufacturing - - - Food; Beverages; Cosmetics; Tobacco
    • H2 - Public Economics - - Taxation, Subsidies, and Revenue
    • E3 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:pra:mprapa:37707. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Joachim Winter (email available below). General contact details of provider: https://edirc.repec.org/data/vfmunde.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.