Impact of the total expenditure shocks on food security: VAR model

Abstract

Purpose. This study examines the causal relationship between total expenditures and food availability and identifies their shocks in food availability in Saudi Arabia. Methodology / approach. The study uses a multivariate modeling technique of the Vector Autoregression (VAR) and its environment, the Granger Causality Test, Forecast Error Variance Decomposition (FEVD), and Impulse Response Function (IRF) for the observation period of 2000–2020 in Saudi Arabia. Results. The results of the Granger causality show that investment expenditure has a significant impact on food availability in Saudi Arabia. However, consumption and government expenditures do affect food availability in Saudi Arabia, but have an indirect effect. The Impulse Response Functions show that the shocks of the selected variables require a long period to reach the long-run equilibrium level and the greatest response of the food availability variable is explained by its own shock and investment expenditure shocks. Originality / scientific novelty. The novelty of this study is related to the investigation of a new model and focus on a new perspective. While traditional food security research has mostly concentrated on agricultural production, availability, and accessibility of food, as well as nutrition and health outcomes factors, this research conveys a new dimension by highlighting the link between total expenditure and food security. Their contribution expands the scope of food security research and highlights the impact of recognising the role of total expenditure in implementing and supporting food security at the household level. Practical value / implications. It is important to design strategies and develop a budgeting plan to allocate a reasonable portion of total consumption and government expenditures on food items. Adding, regularly reviewing, and adapting the budgeting plan based on new challenges, and evolving priorities are essential to address the dynamic nature of food security.