Three Bubbles and a Panic: An Explanatory Review of Recent Food Commodity Price Events
11 Pages Posted: 22 Feb 2014
Date Written: April 1, 2009
Abstract
This paper is a summary of the behaviour of food commodity prices in 2007-8 and a review of the causes of the price increases. The historical background shows that the price spike was much less severe than in the 1970s. The conventional wisdom that prices of the main food commodities were falling prior to 2006 is questioned. Most ceased falling and were quite stable from the 1980s. The paper separates the causes of the spike from the underlying changes driving the long run trends. The literature on the causes of the spike is critically reviewed and summarised. There is a reasonably broad consensus on most of the causes, but much less on the impact of the depreciation of the US Dollar. There are also concluding speculations on the future.
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