International Trade and Domestic Price Stability in the Presence of Large Scale Climate Shocks

Nelson Villoria

No 338552, 2023 Inter-Conference Symposium, April 19-21, 2023, Montevideo, Uruguay from International Association of Agricultural Economists

Abstract: This paper explores the role of international trade in alleviating food price spikes when supply shocks are correlated across trading partners. Gravity-derived maize supply and consumer prices in Southern and Eastern Africa increase significantly in response to El Ni˜no Southern Oscillation (ENSO), a global climate phenomenon that induces weather correlation across continents. Hypothetical scenarios of freer trade reduce the volatility and levels of maize consumer prices but do not eliminate their sensitivity to ENSO. The results highlight that the ability of trade to alleviate price spikes depends as much on the volume of trade as on the spatial location of trading partners.

Keywords: Environmental Economics and Policy; International Relations/Trade (search for similar items in EconPapers)
Date: 2023
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