COVID-19 policy responses, mobility, and food prices: Evidence from local markets in 47 low to middle income countries
Stephan Dietrich, Valerio Giuffrida, Bruno Martorano & Georg Schmerzeck
#2021-008
Governments around the world have taken drastic measures to contain the
spread of the new Coronavirus. Policy responses to the pandemic could
affect local food prices in sensitive ways. We hypothesize that mobility
restrictions reduce trade, which increases food price dispersion and
prices in regionally integrated markets, but not in segmented markets.
We use WFP price data of 798 retail markets in 47 low to middle income
countries to test if and how food prices were affected by the stringency
of COVID- 19 measures. We assess market segmentation based on
pre-COVID-19 price data and measure government responses using the
Oxford Coronavirus Government Response Tracker. Our results show that
more stringent policy responses increase food prices for integrated and
less remote markets but not for segmented markets. The impact of the
stringency of policy reposes on food prices is mediated by reductions in
mobility and moderated by markets' pre-Corona dependency on trade.
Keywords: COVID-19, Prices, Food, Market Integration, Public Policy
JEL Classification: H12, D4, Q11, Q18, D04