Abstract
In its most recent report, FAO (2017) documents that the problem of price instability in Sub-Saharan Africa has been aggravated by El Niño events (2016 event being the worst on record), however, the importance of such climate anomalies, deviations from normal climate conditions, in the region have not received adequate attention in empirical studies. This paper considers 127 price series from more than 900 markets from 28 SSA countries covering 14 staple foods, as well as multivariate ENSO index (MEI), as a proxy for ENSO. A persistent positive (negative) MEI deviation from the historical average denotes the El Niño (La Niña) phase. The paper uses a time-varying smooth transition autoregressive (TV-STAR) model to investigate the asymmetric nature of ENSO in relation to the non-linear dynamics of food prices in SSA. The resultant models reveal strong asymmetric properties with shock-inflicted persistence, which appear not to converge over the simulation period. Moreover, in terms of the location of the burden of ENSO impact, we find a geographical and food product divide. Although the paper finds some in-sample evidence for most of the food prices, the out-of-sample forecasting ability of SST anomaly is inadequate.
Presenters
Lotanna EmediegwuLecturer in Economics, Economics, Policy and International Business, Manchester Metropolitan University, Manchester, United Kingdom
Details
Presentation Type
Paper Presentation in a Themed Session
Theme
2021 Special Focus: Responding to Climate Change as an Emergency
KEYWORDS
ENSO, Prices, MEI, SSA, TV-STAR
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