Underlying Trends and International Price Transmission of Agricultural Commodities
51 Pages Posted: 3 Jul 2011
Date Written: May 2011
This paper examines the extent to which increases in international food prices during the past few years have been transmitted to domestic prices in selected Asian developing countries. In analyzing the historical data, evidence on price transmission for important food commodities such as rice, wheat, and edible oil have been considered. The price transmission elasticity has been estimated using regression models coupled with recent econometric techniques such as unit root tests and error correction models with threshold adjustment. Finally, the paper draws some policy implications from the empirical results. This study provides the numerical estimates on the empirical relationship between international prices and domestic prices. The analysis uses commodity-specific monthly data rather than annual data during a period of substantial policy reforms in order to understand both long-run and short-run relationships between world and domestic prices.
Keywords: global commodity crises, international food prices, domestic food prices, price transmission, commodity price trends, agricultural commodities, Economic Working Paper 257
JEL Classification: C22, Q02, Q11
Suggested Citation: Suggested Citation