The Impact of Food Prices on Conflict Revisited

31 Pages Posted: 14 Oct 2019

See all articles by Jasmien De Winne

Jasmien De Winne

Ghent University

Gert Peersman

Ghent University - Department of Financial Economics

Date Written: 2019

Abstract

Studies that examine the impact of food prices on conflict usually assume that (all) changes in international food prices are exogenous shocks for individual countries or local areas. By isolating strictly exogenous shifts in global food commodity prices, we show that this assumption could seriously distort estimations of the impact on conflict in African regions. Specifically, we show that increases in food prices that are caused by harvest shocks outside Africa raise conflict significantly, whereas a "naive" regression of conflict on international food prices uncovers an inverse relationship. We also find that higher food prices lead to more conflict in regions with more agricultural production. Again, we document that failing to account for exogenous price changes exhibits a considerable bias in the impact. In addition, we show that the conventional approach to evaluate such effects; that is, estimations that include time fixed effects, ignores an important positive baseline effect that is common for all regions.

Keywords: conflict, food prices, instrumental variables

JEL Classification: C230, D740, F440, Q110, Q340

Suggested Citation

Winne, Jasmien De and Peersman, Gert, The Impact of Food Prices on Conflict Revisited (2019). CESifo Working Paper No. 7864. Available at SSRN: https://ssrn.com/abstract=3467999

Jasmien De Winne (Contact Author)

Ghent University ( email )

Coupure Links 653
Gent, 9000
Belgium

Gert Peersman

Ghent University - Department of Financial Economics ( email )

W. Wilsonplein 5D
Ghent, 9000
Belgium
+3292643514 (Phone)

HOME PAGE: www.feb.ugent.be/fineco/gert.html

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