Geopolitical risks, institutional environment, and food price inflation

Abstract: This study investigates the relationship between heightened geopolitical risks and food price inflation using a panel data model that includes 33 countries from 2001 to 2020. Key findings show that geopolitical risks significantly raise the level of food price inflation, with a more pronounced effect observed in developing countries, and a reduced effect in countries characterized by high levels of individualism and masculinity. Furthermore, the effect of geopolitical risks on food inflation is moderated during economic booms and amid climate change concerns. In addition, we find that countries with strong connections to major food producers experience less impact from geopolitical risks. The study concludes that geopolitical risks are a crucial factor in food price inflation, particularly for vulnerable countries, suggesting that they should incorporate geopolitical considerations into their economic policies and strengthen ties with major food producers to mitigate this risk.