This article examines food price volatility in Greece and how it is affected
by short-run deviations between food prices and macroeconomic factors. The
methodology follows the GARCH and GARCH-X models. The results show that
there exists a positive effect between the deviations and food price
volatility. The results are highly important for producers and consumers
because higher volatility augments the uncertainty in the food markets. Once
the participants receive a signal that the food market is volatile, this
might lead them to ask for increased government intervention in the
allocation of investment resources and this could reduce overall
welfare.