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GTAP Resource #4228

"Pass-Through, Food Prices, and Food Security"
by Bekkers, Eddy, Martina Brockmeier, Joseph Francois and Fan Yang

In this paper we examine the extent to which world price movements actually impact on final consumption prices. Final consumption prices include not only the final commodities themselves, but the service inputs (transport, distribution, food processing services) that change basic commodities into final, delivered consumption goods. These margin activities are more expensive in high income countries, yielding insulation from volatility of commodity prices at the final consumption level. Yet CGE models typically ignore the bundling of margin services and commodities in consumption. We engage in a two-step exercise. The first step involves econometric analysis of price pass-through. Here, we work with commodity price data, consumption price data, and service price data to quantify the extent to which commodity prices are translated into final consumer price volatility. These estimates are used in a second-stage CGE exercise with the Global Trade Analysis Project (GTAP) Framework, where we include adjustments based on our pass-through estimates. We then examine critically the importance of including, or not-including, pass-through and margin effects when quantifying both trend and volatility-based increases in food prices for food security.

Resource Details (Export Citation) GTAP Keywords
Category: 2013 Conference Paper
Status: Published
By/In: Presented at the 16th Annual Conference on Global Economic Analysis, Shanghai, China
Date: 2013
Created: Yang, F. (4/15/2013)
Updated: Yang, F. (4/18/2013)
Visits: 1,923
- Economic development
- Agricultural policies
- Food prices and food security
- Trade in services

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