The Puzzle of Food Inflation: Exploring the Asymmetric Nexus Between Economic Policy Uncertainty and Food Prices in the Expanded BRICS Countries.

Abstract

Fluctuations in economic policy often create ripple effects that can significantly impact commodity prices, including those of essential food items, with potential consequences for food security. The five emerging nations outlined as BRICS (Brazil, Russia, India, China, and South Africa) have most recently extended by including four new members (Egypt, Ethiopia, Iran, and the UAE) on January 1, 2024. Additionally, Argentina and Saudi Arabia are anticipated to join the group soon. This enlargement will alter the geopolitical scenario, potentially fostering fresh collaboration and competition dynamics. This expansion will reshape the geopolitical landscape, possibly leading to new cooperation and competition dynamics. The core objective of the present work is to measure how economic policy uncertainty asymmetrically influences food prices in the expanded BRICS countries. Previous investigations have primarily relied on panel data methods, often overlooking heterogeneities in the policy uncertainty-food prices nexus across different countries. Conversely, this research applies the Quantile-on-Quantile method, which permits a more exact examination, providing a thorough worldwide overview and specific insights tailored to each country. The results indicate a significant increase in food prices due to economic policy uncertainty throughout different quantile ranges in the chosen economies. These outcomes accentuate the essentiality for policymakers to execute all-inclusive appraisals and effectively manage approaches connected to economic policy uncertainty and food inflation.