Trade Policy and Food Security with Climate and Geopolitical Risk

This paper evaluates the effects of trade openness on reliable access to affordable food. We start by showing that the transmission of extreme heat shocks to domestic food prices is weaker in countries with greater trade integration, even conditional on level of development, because productivity shocks are not highly correlated across space. On the other hand, importing countries face disproportionate vulnerability to weather and policy shocks in countries from which they source. We show that global wheat prices diverged in the aftermath of the disruption to Ukrainian exports in 2022, with price increases strongly concentrated in countries importing directly from Ukraine. More broadly, importers face similar effects from extreme heat shocks in source countries, suggesting that global agricultural markets are segmented and countries face adjustment costs to establishing new import sources. We plan to calibrate a quantitative trade model that rationalizes the patterns observed in the data and use it to compare the stability of food prices under varying levels of trade openness, as well as in policy scenarios that specifically subsidize import source diversification.

Bio

Ishan Nath is an Assistant Professor of Public Policy at the Harvard Kennedy School and a Faculty Associate of the Salata Institute for Climate and Sustainability. His research focuses broadly on climate change, international trade, and the macroeconomics of development. He currently serves as an associate editor of the Journal of International Economics and the Review of Economics and Statistics. Prior to joining Harvard, Ishan worked as an economist at the Federal Reserve Bank of San Francisco and completed postdoctoral fellowships with the Climate Impact Lab at the University of Chicago and in the International Economics section at Princeton University. He received his PhD in Economics from the University of Chicago, an MPhil in Economics from the University of Oxford, and a B.A. in Economics and B.S. in Earth Systems from Stanford University. When he is not thinking about economics, Ishan can be found playing, watching, or talking about basketball.