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Global Development Institute

WP175/2012

The impact of food and economic crises on diet and nutrition

Ralitza Dimova, Ira N. Gang, Monnet B. P. Gbakou, Daniel Hoffman

Skyrocketing staple food prices in combination with falling incomes around the world raised serious concerns among policy makers, media and the public at large over the past few years. We rigorously explore the dietary and nutritional implications of such shocks in a before, during and after manner. We find not only a tendency of households to reallocate their consumption baskets during a crisis, but also a dramatic change in the income and price elasticities of demand for both food and nutrients. Our results challenge the implicit assumption of relatively low and invariable price and income elasticities of demand for food and nutrition in the existing literature and have potentially important policy implications.