The Effect of Economic Policy Uncertainty on Food Prices: a Time-Varying Causality Analysis for Selected Countries

Abstract

Phenomena such as global warming and climate change have caused food prices to increase alongside the effects from the COVID-19 pandemic. Many driving forces have led food prices to increase, such as energy costs, exchange rates, and supply and demand quantities. Economic policy uncertainty has recently been discussed as one of these possible driving forces. This study aims to investigate the relationship between economic policy uncertainty and food prices. For this purpose, it examines the causal relationships between food inflation and global economic policy uncertainty in China, England, Germany, Hungary, South Africa, T & uuml;rkiye, and the United States. Symmetric causality findings point to the existence of a bidirectional causality relationship between global economic policy uncertainty and food inflation only in the United States. According to the time-varying causality analysis findings, time-varying causality relationships exist going from global economic policy uncertainty to food inflation in all countries. According to the analysis findings, the causality relationship from economic policy uncertainty to food prices was observed to have intensified during the COVID-19. Although the potential effects of economic policy uncertainty on food prices require more evidence, policymakers are considered to be able to stabilize food prices by using effective economic policy interventions.