Economic Shocks and Trade Policy: Analyzing Household Food Insecurity in Nigeria Following the 2015 Oil Price Decline

ABSTRACT This study investigates the dynamics of household food insecurity in Nigeria using panel data from three waves (2012, 2015, and 2018) of the General Household Survey, situating micro‐level evidence within the broader macroeconomic context. This survey is a nationally representative sample of approximately 5000 households that have been surveyed six times across the three waves. We document that the sharp deterioration in food security after 2015 coincided with three major national developments: a steep naira depreciation, a 57.3% increase in the food consumer price index, and a collapse in real food imports from $11.34 billion in 2012 to $4.21 billion in 2018, largely shaped by the 2015 oil price collapse and foreign exchange restrictions on food imports. These indicators highlight a macro‐monetary transmission channel through which the oil price collapse and subsequent policy responses amplified retail food price pressures, raising household vulnerability. To identify the distributional impact of these shocks, we employ a difference‐in‐differences design that exploits the differential exposure of urban versus rural households. Urban households, more reliant on monetized and import‐exposed food markets, serve as the treatment group, while rural households, with partial self‐provisioning capacity, act as the control. Results reveal a significant post‐shock rise in food insecurity across all households, with an additional and statistically robust increase among urban households. These findings clarify the mechanism by which macroeconomic and trade shocks transmit through urban retail markets to household welfare, underscoring the importance of targeted policy responses. By linking national price and trade disruptions directly to household outcomes, the paper offers a concrete evidence‐based framework to guide interventions aimed at mitigating the welfare costs of macroeconomic shocks.