access to markets and rural poverty evidence from household consumption in china abstract this paper presents evidence on the effects of access to domestic and international markets on per capita consumption of households using data from rural china the econometric analysis uses alternative identification schemes to address the potential endogeneity of access to markets we use straight line distances to coastline and navigable river along with the topography of the intervening counties as sources of exogeneous variations we also use identification through heteroskedasticity which does not rely on standard exclusion restrictions the results from alternative identification schemes show that better access to both domestic and international markets has positive effects on per capita consumption the domestic market effect is significantly larger in magnitude and there is complementarity between the access to domestic and international markets

realizing the gains from trade export crops marketing costs and poverty this paper explores the role of export costs in the process of poverty reduction in rural africa the authors claim that the marketing costs that emerge when the commercialization of export crops requires intermediaries can lead to lower participation into export cropping and thus to higher poverty they test the model using data from the uganda national household survey the findings show that i farmers living in villages with fewer outlets for sales of agricultural exports are likely to be poorer than farmers residing in marketendowed villages ii market availability leads to increased household participation in export cropping coffee tea cotton fruits and iii households engaged in export cropping are less likely to be poor than subsistence based households the authors conclude that the availability of markets for agricultural export crops helps realize the gains from trade this result uncovers the role of complementary factors that provide market access and reduce marketing costs as key building blocks in the link between the gains from export opportunities and the poor

effectiveness of fertilizer policy reforms to enhance food security in kenya a macro micro simulation analysis food security represents a key challenge in most sub saharan african countries and in kenya in particular where still a relevant share of the population lives below a minimum dietary energy consump

how should control theory be used to calculate a time consistent government policy we study different solutions to a simple one dimensional linear quadratic game with a large number of private agents and a government a time consistent solution is defined as a solution to the hamilton jacobi bellman equation i e as a policy for which the government has noprecommitment capability this solution is compared to a policy where the government has an instantaneous pre commitment i e an equilibrium in which the government has a period by period leadership in both cases we show how control theory should be applied to calculate the equilibrium and how to relate these equilibria to the differential game literature

on the transmission of world agricultural prices two questions are asked about the relationship between domestic prices and world prices of agricultural commodities are variations in world prices transmitted to domestic prices domestic prices are regressed on world prices in various forms taking into account the possible effects of exchange rates and inflation the empirical analysis is based on data from the food and agriculture organization of the united nations for 58 countries from 1968 78 and for the countries of the european community from 1961 85 the results show that most of the variations in world prices are transmitted and that they constitute the dominant component in the variations of domestic prices

the response of the informal sector to trade liberalization this paper studies the relationship between trade liberalization and informality it is often claimed that increased foreign competition in developing countries leads to an expansion of the informal sector defined as the sector that does not comply with labor market legislation using data from two countries that experienced large trade barrier reductions in the 1980 s and 1990 s brazil and colombia we examine the response of the informal sector to liberalization in brazil we find no evidence of a relationship between trade policy and informality in colombia we do find evidence of such a relationship but only for the period preceding a major labor market reform that increased the flexibility of the colombian labor market these results point to the significance of labor market institutions in assessing the effects of trade policy on the labor market

the end of cheap chinese labor abstract in recent decades cheap labor has played a central role in the chinese model which has relied on expanded participation in world trade as a main driver of growth at the beginning of chi

pro poor trade policy in sub saharan africa abstract this paper examines the presence of a pro poor bias in the existing structure of protection of six sub saharan african ssa countries burkina faso cameroon cote d ivoire ethiopia gambia and madagascar we build on a simple agricultural household production model and we propose an extension to include adjustments in labor income our approach which can be implemented without repeated cross sections of household level data suits well the data constraints in ssa it also allows us to capture the heterogeneity in trade protection at the tariff line level the pro poor bias indicators suggest that ssa s trade policies tend to be biased in favor of poor households as these policies redistribute income from rich to poor households this is because protection increases the agricultural prices of goods that are sold by african households and this effect dominates both the impacts of higher consumption prices and the strong stolper samuelson effects that benefit skilled over unskilled workers

trade liberalization and local labor market adjustment in south africa abstract despite a large literature analyzing trade liberalization in developing countries little evidence exists around its effects in sub saharan african economies characterized by high levels of baseline unemployment and weak manufacturing sectors using a local labor market approach we investigate the causal effects of tariff reforms implemented in south africa between 1994 and 2004 on labor market outcomes at the individual level more specifically we construct a district level measure of exposure to tariff reductions equal to a weighted average of industry tariffs using baseline industry shares as weights and estimate the effect of this shock on local economies we find that workers in districts facing larger tariff reductions experience a significant decline in both formal and informal employment in the tradable sector driven primarily by a decline in manufacturing employment relative to workers in districts less exposed to these reductions there is no evidence of any significant effect on wages for those who remain employed however displaced workers do not show any evidence of transitions into other sectors or migration to less affected regions rather they are more likely to become discouraged workers or exit the labor force entirely and show an increased probability of accessing government transfers

trade reform and poverty the case of mexico we use a two step computationally simple procedure to analyse the effects of mexico s s potential unilateral tariff liberalisation on real incomes first we use the cge model provided by the global trade analysis project gtap as the new price generator second we apply the price changes to mexican household data in order to assess the effects of the policy simulation on poverty and income distribution although mexico widely liberalised most of its imports by the mid 90s one salient feature is its membership in the north american free trade agreement nafta with canada and united states by choosing gtap as the price generator we are able to model the differential tariff structure even starting with a low level of tariff protection simulation results show that the impact of tariff reform on welfare will be positive in general for all expenditure deciles we find that when we assume non homothetic individual preferences trade liberalisation benefits people in the poorer deciles more than those in the richer ones

prices rise faster than they fall output prices tend to respond faster to input increases than to decreases this tendency is found in more than two of every three markets examined it is found as frequently in producer goods markets as in consumer goods markets in both kinds of markets the asymmetric response to cost shocks is substantial and durable on average the immediate response to a positive cost shock is at least twice the response to a negative shock and that difference is sustained for at least five to eight months unlike past studies which documented similar asymmetries in selected markets gasoline agricultural products etc this one uses large samples of diverse products 77 consumer and 165 producer goods accordingly the results suggest a gap in an essential part of economic theory as a start on filling this gap the study finds no asymmetry in the resonse of an individual decision maker a supermarket chain to its costs but it finds above average asymmetry where a cost shock is filtered through a fragmented w

non equivalent pass through of anti dumping duties countervailing duties and import tariffs we directly compare the short run pass through of tariffs anti dumping ad duties and countervailing cv duties into us import prices consistent with the theoretical predictions we find clear pattern of non equivalence in import price reaction to the three duty types with the most notable difference detected between ad duties and tariffs according to our estimates a tariff rate would have to be approximately two times higher than an ad duty rate in order to have the same effect on the delivered import price

food prices wages and welfare in rural india this paper considers the welfare and distributional consequences of higher relative food prices in rural india through the lens of a specific factors general equilibrium trade model applied at the district level the evidence shows that nominal wages for manual labor both within and outside agriculture respond elastically to increases in producer prices that is wages rose faster in rural districts growing more of those crops with large price run ups over 2004 09 accounting for such wage gains the analysis finds that rural households across the income spectrum benefit from higher agricultural commodity prices indeed rural wage adjustment appears to play a much greater role in protecting the welfare of the poor than the public distribution system india s giant food rationing scheme moreover policies like agricultural export bans which insulate producers as well as consumers from international price increases are particularly harmful to the poor of rural india conventional welfare analyses that assume fixed wages and focus on households net sales position lead to radically different conclusions

the effects of a large discrete maize price increase on the distribution of household welfare and poverty in rural kenya1 this study estimates the effects of a large discrete maize price increase on the welfare of a sample of rural kenyan households the usual first order welfare approximation formula is extended to a second order formula that allows for supply and demand responses to the price change results show that many rural households are not affected greatly by the price change and there are about as many gainers as losers however these full sample results mask important differences across regions welfare gains generally take place in major production areas while losses are in areas where most households are net buyers of maize semiparametric methods are used to investigate the relationship between income and the size of the welfare effect and poverty dominance techniques are applied to study the impacts of the maize price increase on rural poverty

unfair trade the increasing gap between world and domestic prices in commodity markets during the past 25 years the early literature on international trade has debated extensively the constraints facing exporting countries in the major commodity markets this article goes one step further by suggesting that the final demand for these products can not have increased because the declines in world commodity prices were not transmitted or were transmitted imperfectly to domestic consumer prices in contrast upward movements in world prices were clearly passed on to domestic prices as a result the spread between world and domestic prices almost doubled in all major commodity markets during 1975 94 this asymmetry seldom discussed in the literature does not seem to be caused at least systematically by changes in trade and tax policies or factors such as transport processing and marketing costs this article argues therefore that a special effort should be made to better understand the transmission from world to domestic prices especially the role of large international trading companies that may have the capability to influence such spreads through one or several stages of processing in most major commodity markets

a prism into the ppp puzzles the micro foundations of big mac real exchange rates we match big mac prices with prices of its ingredients as a unique prism to study real exchange rates rers this approach has several advantages first the levels of the big mac rer can be measured meaningfully second as the exact composition of a big mac is known the contributions of its tradable and non tradable components can be estimated relatively precisely third the dynamics of the rer can be studied in a setting free of several biases inherent in cpi based rers finally a large cross country dimension allows us to overturn the engel result on what drives rers in most economies the exchange rate is the single most important relative price one that potentially feeds back into a large range of transactions obstfeld and rogoff 2000

china s exchange rate trap japan redux today s american mercantile pressure on china to appreciate the renminbi against the dollar is eerily similar to the american pressure on japan to appreciate the yen that began over 30 years ago indeed the yen went all the way from 360 to the dollar in august 1971 at the end of the bretton woods period of fixed exchange rate parities to touch 80 to the dollar in april 1995 then the american government relented and announced a strong dollar policy that signaled the end of japan bashing but the overvalued yen and the expectation of appreciation destabilized the japanese financial system the bubble economy of the late 1980s was followed by a deflationary slump and a zero interest liquidity trap in the 1990s mckinnon and ohno 1997 at least some of today s critics of east asian countries pegging to the dollar would agree that international saving imbalances rather than misaligned exchange rates are the root cause of the u s current account deficit one can argue whether it is mainly a saving deficiency in the united states or a saving glut in the rest of the world bernanke 2005 either way the central position of the united states under the world dollar standard gives it alone an unlimited international line of credit in its own currency however suppose that the u s trade deficit is misdiagnosed to result from a misaligned exchange rate so that a surplus country on the dollar s periphery is forced to appreciate against the world s dominant money it will suffer a slowdown in economic

slow adjustment and the level of government spending abstract a distortionary tax finances a public service and because of an adjustment cost the tax base adjusts slowly to any change in the tax rate i compare the steady state public service level with the level achieved using lump sum taxation first best utility is assumed to be additively separable if the government can commit the public service is unaffected by the adjustment rate and is likely to be less than the first best level however if the government cannot commit this outcome is time inconsistent if the government cannot commit but reoptimizes continuously the public service is affected by the adjustment rate a very slow adjustment rate causes the marginal cost of funds to be approximately unity and the public service to strictly exceed the first best level

household welfare and the pricing of cocoa and coffee in cote d ivoire lessons from the living standards surveys cocoa and coffee are the most important crops in cote d ivoire until recently the difference between world and administered producer prices provided an important source of government revenue as a result of a continued decline of world prices of both crops however the ivoirien government was forced to cut producer prices in half because 40 percent of ivoirien households grow either cocoa or coffee this cut can be expected to have a considerable impact on the welfare level of these households the authors use the 1985 living standards measurement survey to estimate the welfare effects of producer price changes for ivoirien households permitting an evaluation of the probable consequences of the recent price cut using nonparametric econometric techniques they find that although many households will suffer losses of income the cuts will not have adverse distributional effects cocoa and coffee farmers are scattered throughout the income distribution but most are concentrated in the middle

using survey data to assess the distributional effects of trade policy the author develops and applies a methodology to empirically explore the effects of trade policies on the distribution of income and poverty in developing countries he uses a methodology based on two links one connecting trade policies to prices and another connecting prices to household welfare the author applies the methodology to the study of the distributional effects of mercosur on argentine families the main finding is that mercosur benefits the average argentine household across the entire income distribution there is evidence of a pro poor bias of the regional trade agreement on average poor households gain more from the reform than middle income households whereas the effects on rich families are positive but not statistically significant prior to the reform argentine trade policy protected the rich over the poor and after the reform granted some protection to the poor as relative pre mercosur tariffs are higher on relatively skill intensive goods the tariff removals tend to benefit the poor over the rich these findings indicate that trade reforms may actually help improve the distribution of income and reduce poverty in the country

tariff pass through and the distributional effects of trade liberalization abstract this paper estimates the distribution of welfare gains due to the trade reforms in india by simultaneously considering the effect on prices of tradable goods and wages the cost of consumption for each household is affected by the domestic price changes while wage incomes adjust to these price changes in equilibrium three rounds of the indian employment and consumption surveys are used for the analysis the price transmission mechanisms are estimated for both rural and urban areas to understand the extent to which the trade reforms are able to affect the domestic prices in order to assess the distributional effects a series of nonparametric local linear regressions are estimated the findings show that households at all per capita expenditure levels had experienced gains as a result of the trade liberalization while the average effect was generally pro poor and varied significantly across the per capita expenditure spectrum

can africa compete with china in manufacturing the role of relative unit labor costs in this paper examine sub saharan africa s ssa bilateral trade and cost competitiveness with china we review patterns of bilateral trade between ssa and china showing an extraordinary imbalance in the structure of trade in that china overwhelmingly exports manufactured products to ssa and almost exclusively imports primary products in return our principal means of assessing the competitiveness of ssa s manufacturing sector vis a vis china are measures of relative unit labor costs rulc we find that african rulc levels have generally been very high relative to china but declined over the 2000s as china s wages have risen faster than chinese productivity while the reverse is true for the ssa countries in our sample nevertheless rulc vis a vis china remained elevated for many ssa countries as of 2010 generally high rulc along with weaknesses in the business climate suggest that most ssa countries are unlikely to be competitive in labor intensive manufacturing any time soon

household impacts of tariffs data and results from agricultural trade protection how do trade reforms impact households in different parts of the income distribution this paper presents a new database the household impacts of tariffs data set which contains harmonized household survey and tariff data for 54 low and lower middle income countries the data cover highly disaggregated information on household budget and income shares for 53 agricultural products wage labor income nonfarm enterprise sales and transfers as well as spending on manufacturing and services using a stylized model of the first order impacts of import tariffs on household real income this paper quantifies the welfare implications of agricultural trade protection on average unilateral elimination of agricultural tariffs would increase household incomes by 2 50 percentage points import tariffs have highly heterogeneous effects across countries and within countries across households consumers and income earners the average standard deviation of the gains from trade within a country is 1 01 percentage points

the effect of peru s cdm investments on households welfare an econometric approach abstract the clean development mechanism cdm under the kyoto protocol has two main objectives reducing emissions of greenhouse gases ghgs and contributing to sustainable development sd in developing countries the empirical evidence indicates that the first goal has been fulfilled however the literature mostly provides ex ante evidence regarding the second goal this paper contributes to the literature by assessing the ex post quantitative effect that cdm projects have had on sd employment and monetary welfare in peru a country ranked among the most important cdm investment host countries worldwide the econometric model estimates the direct and indirect effects of the cdm projects investments on peruvian households monetary welfare for 2011 2015 our results suggest that cdm investments had a slight effect on household consumption expenditure and had no effect neither on employment nor in poverty alleviation our findings suggest the need to strengthen cdm s institutional framework by identifying key development definitions and indicators

just how low are china s labour costs this paper provides a new perspective on chinese international competitiveness in manufacturing using relative unit labour costadvantage than that implied by a comparison of wages alone china s cost advantage derives from large currency devaluations thas t preceded the establishment of a de facto peg around 1995 and rapid productivity growth in the period since 1995 we nd that chinese unit labour costs are about 25 40 per cent of us labour costs they are also low relative to costs in the eu japan mexico korea and most other newly industrialising countries however china s relative unit labour costs indicatea substantially smaller cost

analysing the impact of price shocks in rural economies do household responses matter abstractwe analyse the impact of higher food prices on rural households in tanzania focusing on the often neglected role of households behavioural responses we introduce a new framework which considers the production response jointly with substitution effects in consumption and takes into account households market participation choices taking into account behavioural responses on consumption and production can significantly alter the sign and magnitude of the welfare impact in the long run

rising food prices and coping strategies household level evidence from afghanistan this paper investigates the impact of rising wheat prices on household food security in afghanistan exploiting a unique nationally representative household survey the authors find evidence of large declines in the real value of per capita food consumption smaller price elasticities with respect to calories than with respect to food consumption suggest that households trade off quality for quantity as they move away from nutrient rich foods such as meat and vegetables toward staple foods the authors work improves upon country level simulation studies by providing estimates of actual household food security during a price shock in one of the world s poorest most food insecure countries

a pigovian rule for the optimum provision of public goods abstract the integrated treatment of optimal taxation and public expenditure presented here is based on the dual relationship between the prices of private goods and the quantities of public goods the conditions for optimum public good provision can be expressed as a modification of the samuelson conditions with extra terms representing a the distortionary effect of taxes on the willingness to pay for the public good and b distributional effects the former captures pigou s notion of the indirect damage caused by the need to finance public expenditure out of distortionary taxes and we call this the pigou term in certain cases a very simple benefit cost ratio for public projects emerges that is equivalent to measuring benefits as if they were taxed

goods prices and exchange rates what have we learned import prices typically change by a smaller proportion than the exchange rate between the exporting and importing country recent research indicates that common currency relative prices for similar goods exported to different markets are highly correlated with exchange rates between those markets this evidence suggests that incomplete pass through is a consequence of third degree price discrimination while distance matters for market segmentation borders have independent effects the source of the border effect has not been clearly identified furthermore there is little evidence yet to suggest substantial market power is implied by the observed price discrimination

rice prices and income distribution in thailand a non parametric analysis rice is a staple crop in thailand significantly entering both household production and consumption this paper examines the effect of rice prices on the distribution of real income across households taking into account household characteristics and geographical location the data set is a large scale survey of 11 893 households simple nonparametric techniques for regression and density estimation are used these methods depend on few assumptions and generate flexible graphical results that are directly informative about the problem at hand the main results are that higher rice prices should benefit all rural households but the largest benefits accrue to rural households in the middle of the income distribution copyright 1989 by royal economic society

the development trinity how regional integration impacts growth inequality and poverty developing countries today have become more active participants in regional trade agreements this raises questions about how the benefits of integration are distributed and the extent to which lower income countries are able to capture development gains historically such impacts have been difficult to identify with precision this paper seeks to address this gap by empirically analysing the impact of regional integration on development particularly the effects on growth and welfare using both bilateral and regional integration measures we show that the ability to capture gains from integration varies across developing country regional groups with developing asia benefiting on par with developed countries the findings in the paper indicate that trade and trade policy play an important role in reducing inequality and poverty in developing countries it also shows that regionalism can function as a channel to make multilateralism a more adept way of addressing national challenges

local food prices and international price transmission world food prices spiked in the periods 2007 8 and 2010 11 the impact of these spikes in world food prices on local food prices and thus on local consumers is determined by the food price pass through pass through is defined as the extent to which changes in world food prices lead to changes in local food prices we examine the determinants of variation in food price pass through from global to local consumer prices in a global sample of 147 countries using fao data on world food prices and ilo data on food prices for consumers while market integration matters our study finds that income per capita is the dominant factor explaining cross country variation in pass through of food prices we estimate an elasticity of about 0 3 of pass through with respect to income per capita this means far greater price transmission of food price shocks at the commodity level to final consumers in low income countries than in high income countries the implication is that future swings in world food prices will in particular jeopardize food security in poor countries trade policy measures of market integration also affect the pass through significantly whereas infrastructure and geography measures play no significant role

optimal public good provision in the ramsey tax model a generalization abstract for the single consumer ramsey tax model the use of distortionary taxation to finance public good provision is shown to lower the optimal level of public good provision below its optimal value ina first best economy where lump sum taxation is available the assumptions used in the proof include a previous cobb douglas example as a special case

poverty impacts of changes in the international prices of agricultural commodities recent evidence for argentina an ex ante analysis abstractargentina has benefited greatly from the increase in prices of agricultural commodities with a large share of its population with low and medium low incomes however a sizable part of households is likely to be adversely affected by the accompanying rise in the price of the consumption basket an ex ante analysis suggests that this is the case changes through a less obvious channel that is in factor incomes are likely to be more beneficial to middle income households in general all households experience losses with poorer households being the most affected when accounting for transfers financed through the collection of export taxes poorer households benefit in the absence of compensatory measures increases in the prices of agricultural commodities could potentially have an important impact in terms of indigence and poverty

why is china so competitive measuring and explaining china s competitiveness this paper evaluates factors responsible for the competitiveness of china in the world economy and relative to its east asian rivals china has been highly successful in capturing world export markets chinese competitiveness is not just a matter of an undervalued exchange and extremely low labor costs it reflects primarily the coincidence of favorable cost conditions with improvements in china s ability to produce products that meet world market specifications these improvements are closely related to foreign participation in china s economy through foreign direct investment and joint venture enterprises

the price effect of tariff liberalization measuring the impact on household welfare abstract trade policy literature has for many years emphasized open policies positive impact on economic growth and development while these results generally hold when measured on averages empirical evidence suggests that trade liberalization is unlikely to produce beneficial results across all households this study adds to the literature by providing an analysis of the distributive effects of tariff liberalization in mexico the paper examines the effect of tariff liberalization from the perspective of households both as consumers and factor owners allowing for imperfect domestic price transmission the results indicate the overall positive effect of tariff liberalization masks significant differences in the distribution of gains both across income levels and across geographic regions richer households are found to have gained relatively more urban areas as well as mexican states closest to the united states border are also found to be larger beneficiaries while southernmost states have been largely bypassed by the effects of tariff liberalization those results can be explained not only in relation to the different endowments of the households but also by the diverse effects on local prices that has resulted from mexican trade liberalization

implications of higher global food prices for poverty in low income countries in many poor countries the recent increases in prices of staple foods raise the real incomes of those selling food many of whom are relatively poor while hurting net food consumers many of whom are also relatively poor the impacts on poverty will certainly be very diverse but the average impact on poverty depends upon the balance between these two effects and can only be determined by looking at real world data results using household data for ten observations on nine low income countries show that the short run impacts of higher staple food prices on poverty differ considerably by commodity and by country but that poverty increases are much more frequent and larger than poverty reductions the recent large increases in food prices appear likely to raise overall poverty in low income countries substantially

south africa s international cost competitiveness and exports in manufacturing abstract the new south african government has embraced globalization with mixed results to date controversies center on south africa s international cost competitiveness and whether south african exports respond to changes in competitiveness we measure competitiveness by relative unit labor costs we find that south african relative unit labor costs declined in the 1990s but are still high relative to other developing countries econometric analysis reveals a strong effect of relative unit labor costs on exports

poverty effects from trade liberalisation in argentina abstract this paper aims at analysing the linkages between trade liberalisation and poverty in argentina under a specific factors setting a two step procedure is presented in the first stage the change in prices of goods and factors in both tradable and non tradable sectors after a trade liberalisation episode is considered in a second step these variations are applied to assess the changes in poverty and household welfare a micro simulation approach using household survey data is applied in this last stage poverty is reduced as a result of the policy and the households that benefit from this reduction are those linked to the non tradable sectors

distributive effects of regional trade agreements on the small trading partners mercosur and the case of uruguay and paraguay abstract it is disputed whether trade liberalisation processes are sufficient for reducing poverty and inequality we explore how gains from trade have been distributed in the two minor trade partners of mercosur uruguay and paraguay by analysing the impact of trade liberalisation on poverty and inequality through two main transmission channels prices and income in the case of uruguay trade liberalisation favoured a reduction in poverty indicators but had an almost zero effect on income inequality in the case of paraguay trade liberalisation had a markedly negative impact in terms of poverty yet income distribution improved we conclude that in the case of mercosur the effect of trade on poverty and income inequality varies per country and per region in particular we conclude that trade integration policies cannot be regarded as poverty alleviating per se

the imperfections of a credit market in agriculture in the article the relations of the credit market with the agricultural sector were evaluated the significance of the imperfections in the allocation of resources with help of the credit market was presented the attention was paid to both the specificity of the very agriculture and the external conditions which were created as a result of the process of globalization the effects of the impact of the selected macroeconomic indicators on the adjustments within the interest rate calculated with use of the changes of the prices of agricultural products were examined ten highly developed countries were analyzed for regard of the similar conditions of functioning the research period referred to 1990 2010 the conducted deliberations allowed to distinguish a group of factors influencing the terms of creating the costs of obtaining the credit money the character of the existing correlations was analyzed the different meaning of particular relations was proved the presented results raise the significance of retransfers dedicated to agriculture with help of the state

how vulnerable are arab countries to global food price shocks this paper presents new estimates of pass through coefficients from international to domestic food prices by country in the middle east and north africa the estimates indicate that despite the use of food price subsidies and other government interventions a rise in global food prices is transmitted to a significant degree into domestic food prices in many countries in the middle east and north africa although cross country variation is significant in nearly all countries domestic food prices are highly downwardly rigid the finding of asymmetric price transmission suggests that not only international food price levels matter but also food price volatility high food pass through tends to increase inflation pressures where food consumption shares are high domestic factors often linked to storage logistics and procurement have also played a major role in explaining high food inflation in the majority of countries in the region