Imported Food Price Shocks and Socio-Political Instability: Do Fiscal Policy and Remittances Matter?

November 13, 2020

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Format: Chicago

Carine Meyimdjui. Imported Food Price Shocks and Socio-Political Instability: Do Fiscal Policy and Remittances Matter?, (USA: International Monetary Fund, 2020) accessed December 22, 2024

Disclaimer: IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

Summary

Using a panel of 101 low- and middle-income countries with data covering the period 1980-2012, this paper applies various econometric approaches that deal with endogeneity issues to assess the impact of food price shocks on socio-political instability once fiscal policy and remittances have been accounted for. It focuses on import prices to reflect the vulnerability of importer countries / net-buyer households to food price shocks. The paper finds that import food price shocks strongly increase the likelihood of socio-political instability. This effect is greater in countries with lower levels of private credit and income per capita. On the other hand, while remittances seem to dampen the adverse effect of import food price shocks on socio-political instability in almost all countries, the mitigating role of fiscal policy is significant only in countries with low-levels of private credit.

Subject: Balance of payments, Commodity price shocks, Expenditure, Fiscal policy, Government consumption, National accounts, Prices, Remittances

Keywords: Africa, Asia and Pacific, Commodity price shocks, Consumption expenditure, Europe, Expenditure growth, Fiscal policy, Fiscal policy., Food price shock, Government consumption, Government crisis, Government reaction, Import food price shocks, Political instability, Remittances, WP

Publication Details

Pages:

35
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2020/248
Stock No:

WPIEA2020248
ISBN:

9781513561219
ISSN:

1018-5941

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