The Impact of Food Price Crisis on Government Debt in the Arab Region

This study explores the Impact of Food Prices Crisis on budget deficits in the Arab region. Panel data is used for the period of 2000 to 2012 in sixteen countries in the region. We rum multi regression models are used to estimate the Impact of food crisis on government debt in high, middle and low income countries before and after the food crisis period in 2006. The analysis reveals that the changes in food prices have a negative and significant impact only on the low and middle income countries’ government debt before the crisis. We also found that the slow growth in GDP after the global economic and food crisis period, political instability, lagged deficits, real interest rates, and unemployment were also important determinants of government debt in most of the models estimated.