differ in terms of exposure to a recent, exogenous domestic staple food price shock.

More specifically, the agricultural season in Malawi spans two calendar years, lasting anytime from November to July, depending on the spatial differences in the timing of the rains as well as the type of crops cultivated. The harvest season typically covers the period of March to July, again depending on the same factors underlying the definition of the overall agricultural season. August 2001 marks the approximate beginning of the post-harvest period following the 2000/2001 agricultural season, during which unfavorable rainfall outcomes underlined a 35 percent drop in maize production compared to the 1999/2000 season (Dorward et al., 2008). The effects of poor harvest were compounded in the post-harvest period by mismanagement/premature exports of strategic grain reserves, import delays, and slow donor response (Devereux, 2002; Minot, 2010). Poor rains, combined with a 44 percent reduction in the amount of fertilizer disbursed under the government’s subsidy program with respect to the prior season, led to even lower levels of maize harvest tied to the subsequent 2001/2002 agricultural season (Dorward et al., 2008). Historical rainfall patterns, depicted in figure 3, demonstrate the back-to-back agricultural seasons with unfavorable rainfall outcomes with respect to the long-term average.<sup>20</sup> These trends are also supported by depressed annual maize production and maize yield estimates associated with the 2000/2001 and 2001/2002 agricultural seasons, as shown in figure 4. From the available monthly data on maize prices portrayed in figure 4, we observe that the heightened prices were sustained from August 2001 to March 2003, which would mark the start of the 2002/2003 agricultural season harvest period. The period of August 2001-March 2003 is in turn assumed to underlie the exogenous food price shock of interest.<sup>21</sup>

> 20Rainfall summaries for figures 3 and 2 were produced from unbiased RFE v 2.0, using GeoWRSI v 3. GeoWRSI v 3 is stand-alone software implemented by the USGS for the FEWS NET Activity, and distributed by the Climate Hazards Group at University of California, Santa Barbara. During the 2000/2001 and the 2001/2002 rainy seasons, 28 and 70 percent of the pixels across the country had a rain shortfall of at least 5 percent with respect to the pixel-specific long term seasonal average, respectively. The comparable statistics at the national-level for the severe rain shortfall of at least 25 percent with respect to the pixel-specific long term seasonal average stand at 6 and 39 percent for the 2000/2001 and the 2001/2002 rainy seasons, respectively. The rainfall-related statistics for the 2000/2001 season, however, masks other forms of abnormal rainfall outcomes that had materialized, including late, heavy rains in February-March 2001 leading to localized flooding and waterlogging of fields (Dorward et al., 2008; Devereux, 2002). During that season, the official maize production estimates were revised downwards three times, disguising the severity of the production shortfall to both consumers and assistance organizations (Devereux, 2002).

21Figure 5 reports reports nominal average maize prices computed across the data from markets in Chitipa, Karonga, Lilongwe, Nkhata Bay, Rumphi, Mzuzu, Mitundu, and Lunzu. The dynamics are consistent with the nominal and real price trends reported in World Bank (2007). While maize prices varied throughout Malawi, Hartwig and Grimm (2011) characterize this specific food crisis to be one of the worst in recent Malawian history. Dorward and Kydd (2004) provide a comprehensive discussion regarding the necessary changes to the market intervention and liberalization 15