Three essays on price instability and agents' behaviour

The ability of a country to grow at non-increasing food prices is a fundamental pre-condition for economic growth. When food commodity prices are high and volatile, they can impair the political and economic stability of a developing country, as they have significant impacts at both micro and macro level. What happened over the last decade in the world agricultural commodity markets, can largely be explained by analyzing the trends in global supply and demand for these commodities. The recent and vast literature on this topic came to different and contrasting conclusions on the transmission mechanisms of the crisis. However, there are doubts about the key role played by price movements and their increased volatility. Therefore, the general aim of the thesis is to provide some insights into recent price instability and its role in spurring the crisis and its consequences both at macro and micro level. The work includes three different essays focusing respectively on: (i) the understanding of financial markets as channels of transmission of economic crisis behaviour, by providing new insights on the dynamics behind financial markets stylized facts, and on how the behaviour of investors and market makers contributes to generate instability within the financial system; (ii) the potential effect of food prices upsurges and their volatility on staple food supply at global level; and finally (iii) the ultimate effect on rural and urban households in a developing country, focusing in particular on their food caloric intake and dietary composition.