Research

Weather shocks are exogenous to the macroeconomy, but their market-wide effects are rarely isolated and studied empirically. Given its exposure and sensitivity to these shocks, the agriculture sector offers a useful source of such variation. We develop a new instrument based on market responses to confidential government crop reports, to measure their impact on the broader economy. Although it holds more sector-level explanatory power, our results indicate that a commodity news shock normalized to the impact of news about an upcoming poor harvest reduces domestic real GDP, industrial production, equity prices, grain exports, global oil production, the price of dry bulk shipping services, and the quantity of food-at-home consumed, while raising core CPI, stock market volatility, the price for U.S. field crop commodities, and food-at-home.

We study how U.S. biofuel policy affects food markets and consumer prices. Drawing on the institutional structure of U.S. biofuel policy and high-frequency price movements, we isolate biofuel policy shocks and estimate their effects on upstream commodity markets and downstream retail prices. A stringent biofuel policy shock generates statistically significant inflation across upstream and downstream markets, raising ethanol, oil, and field crop prices, as well as consumer food prices and the CPI. Real food expenditures decline in response to the shock. Weaker statistical evidence indicates that the biofuel policy shock may also raise fats and oils prices more than those of other food subcategories and that retail fuel and gasoline prices increase. Consumer inflation expectations rise following the shock. The welfare burden fails disproportionately on lower-income households—nearly five times larger than the highest income group—reflecting their disproportionately high food expenditure share. These findings reveal a fundamental distributional trade-off in biofuel policy: while higher commodity prices may support agricultural producer revenues, consumers finance these gains through higher retail prices for fuel and food, with lower-income households bearing a disproportionate burden.

Drought-induced low water on the Mississippi River in fall 2022 disrupted barge shipments from interior grain regions to Gulf export terminals. Using the relative price of a substitute (RPS) method on daily cash bids from 68 U.S. counties and the New Orleans export hub, we estimate the economic incidence of the disruption on producers and downstream purchasers. Producer prices fell by $0.54/bu (95% CI:-$0.62, -$0.44) for corn and $1.02/bu (95% CI: -$1.51, -$0.51) for soybeans, while hub prices rose by $0.26 per bushel (95% CI: $0.12, $0.39) for corn and $0.06 (CI: -$0.10, $0.22) for soybeans. Translated into aggregate dollar terms, the disruption reduced producer revenues by around $134 million for corn and $414 million for soybeans, against procurement-cost increases of $64 million for corn purchasers and $26 million for soybean purchasers. The asymmetric incidence, particularly stark for soybeans, is consistent with relatively inelastic U.S. supply meeting elastic foreign demand. Local heterogeneity is substantial. Counties near ethanol plants (corn) or crushing facilities (soybeans) experienced 25-46 percent smaller producer losses through access to alternative domestic outlets, while counties near barge-loading terminals or Gulf ports, those most dependent on the river export route, bore proportionally larger losses. 

The Southeastern region of the United States is a major livestock producer but faces a grain deficit. Analyzing transportation demand for field crops in this region is important for evaluating the factors influencing the livestock industry’s profitability. Among the available transportation modes, rail is one of the most commonly used and cost-efficient options for shipping grain from the Midwest to the Southeast. We estimate rail transportation demand for grains and oilseeds, which are primarily used as animal feed. We find that higher rail rates between a state outside the Southeast and a state within the Southeast reduce grain rail shipments to the region, although the price elasticity of rail demand is inelastic. Furthermore, increased demand for poultry feed in the southeast drives up grain rail shipments to the region.

Surging food prices disproportionately burden low-income households, affect inflation expectations, and influence political outcomes. Between January 2020 and August 2025, U.S. food prices increased 30%, the steepest rise in more than four decades. We show this episode was structurally different from prior surges, including the 2008 Global Financial Crisis. Decomposing prices into supply- and demand-driven components and attributing each to macroeconomic channels, we find that labor scarcity and logistics disruptions—not commodity prices—dominated the supply side, while fiscal transfers and then wage growth account for an unprecedented demand-side contribution. Wage growth sustained elevated prices for four years through both labor costs and household income, a pattern absent in earlier episodes. Our work reveals underappreciated vulnerabilities in food-system resilience, illuminates how compound shocks generate persistent inflation, and shows why effective response must address logistics, labor, and wage pressure—not commodity availability alone.