Nonlinear Relationship Between Food Price Uncertainty and Food Security in Iranian Households: Evidence from GAS Modelling

Document Type : Research Article

Authors

1 Lecturer, Department of Economics, Faculty of Economics and Management, Urmia University, Iran

2 Professor, Department of Economics, Faculty of Economics and Management, University of Tabriz, Tabriz, Iran

Abstract

The main purpose of this study is to investigate the effect of food price uncertainty on food security in Iranian householdsduring the period 1981-2018 in a nonlinear model. To estimate uncertainty, the Generalized Autoregressive Score Model, and to estimate the effect of food price uncertainty on food security, the Smooth Transition Autoregressive model has been used. The results show that food price uncertainty in the first regime (low level of investment in agriculture) has a negative and significant effect and in the second regime (high level of investment in agriculture) has a negative and non-significant effect on food security. In the first regime, where the level of investment in the agricultural sector is below the threshold, as food price fluctuations increase, market uncertainty increases and signals with less transparency to producers and consumers. Under these circumstances, consumers will face the problem of reduced purchasing power and insecurity in access to food, which has a negative impact on food security. While, in the second regime and increasing the level of investment in the agricultural sector, the negative effects of uncertainty on food security can be partially offset. According to the results of the present study, officials should take effective steps on one hand, by prioritizing the financing of investment in the agricultural sector and facilitating the conditions of activity of the private and cooperatives sector in this field like moving from traditional to industrial agriculture. On the other hand, to reduce the price gap, regulate the market demand of agricultural products, and create conditions for food price stability, create a kind of protection against short-term fluctuations and shocks.

Keywords

References

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Journal of Applied Economics Studies in Iran
Volume 10, Issue 38
June 2021
Pages 95-116

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