Last updated on August 24, 2014
From a longer column by Pramit Bhattacharya published last week in Mint, one of India’s leading financial newspapers:
While many acknowledge the key role of dearer food in destabilizing regimes, right from the time of the French Revolution in the 18th century to the Arab Spring in 2011, there are only a few studies that have sought to study the links between food prices and social unrest empirically. In a recent research paper, the economist Marc Bellemare of the University of Minnesota attempts to fill that gap by establishing a causal link between rising food prices and social unrest. …
Bellemare collates monthly cross-country data on food riots between 1990 and 2011 to show that it is the level of food prices rather than the volatility in food prices that drives food riots across countries. …
In most democracies, policymakers are aware of the links between food inflation and political upheavals. But food policies designed to prevent price volatility can be very different from those designed to prevent food price increases. India is a case in point. As my colleague TCA Sharad Raghavan pointed out in a recent article, while India’s closed door policies have managed to limit volatility in food prices, they have led to an increase in food prices by preventing imports of cheaper food. Perhaps, it is time to embrace more openness and volatility, if it brings with it lower prices on average, and greater political stability.
You can read the whole thing here. Much to his credit, Pramit is the only person to have reported on this who has grasped (and clearly explained) the levels vs. volatility distinction. See the bolded part above for a great example that I wish I would have thought about when writing my paper, as it would have made my life much easier.
ht: Rajib Sutradhar.