Global Food Price Shocks and Pass-throughs in Climate Vulnerable Countries

with Fulvia Marotta and Jasper Verschuur

Abstract: In light of the growing climate and non-climate related pressures on the global food system, this paper addresses three related questions: To what extent do global food price shocks pass through to domestic food prices, how are these pass-throughs conditioned by country-level idiosyncrasies and climate shocks, and can fiscal or trade policy effectively support shock response and longer-term price stabilisation? We estimate global-to-local food price pass-throughs in a Bayesian VAR for most countries in the world using publicly available data sources. To further investigate cross-dependencies in vulnerable countries, we proceed by estimating a Panel BVAR to include multiple covariate shocks for the Sub-Saharan African sub-sample and test whether exogenous shocks to temperature add inflationary pressure to the system. Lastly, we test the interaction of contemporaneous food price and temperature shocks in country-level linear projections.