Are Foreign Aid and Remittances a Hedge against Food Price Shocks in Developing Countries?

Jean-Louis Combes, Christian Hubert Ebeke (cebeke@imf.org), Mireille S. Ntsama Etoundi (ntsama@gmail.com) and Urbain Thierry Yogo
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Mireille S. Ntsama Etoundi: CERDI - Centre d'Études et de Recherches sur le Développement International - UdA - Université d'Auvergne - Clermont-Ferrand I - CNRS - Centre National de la Recherche Scientifique
Urbain Thierry Yogo: UY1 - Université de Yaoundé I

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Abstract: This paper measures the effects of food price shocks on both the level of household consumption per capita and the instability of the household consumption per capita growth rate in developing countries. In this vein, the paper explores the role of aid and remittance inflows in the mitigation of the effects of food price shocks in the recipient economies. Using a large sample of developing countries observed over the period 1980-2009 and mobilising dynamic panel data specifications, the econometric results yield three important findings. First, food price shocks significantly affect both the level and the instability of household consumption in highly vulnerable countries. Second, remittance and aid inflows significantly dampen the effect of food price shocks in the most vulnerable countries. Third, a lower remittance-to-GDP ratio is required in order to fully absorb the effects of food price shocks compared to the corresponding aid-to-GDP ratio.

Keywords: food price shocks; Household consumption; vulnerability; Aid; Remittances (search for similar items in EconPapers)
Date: 2012-01-04
Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-00608128v2
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Related works:
Working Paper: Are Foreign Aid and Remittances a Hedge against Food Price Shocks in Developing Countries? (2012)
Working Paper: Are Foreign Aid and Remittances a Hedge against Food Price Shocks in Developing Countries? (2011)
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