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1 – 10 of over 8000Opeoluwa Adeniyi Adeosun, Mosab I. Tabash and Suhaib Anagreh
This study examines the influence of the global geopolitical risk (GPR) on the relationship between oil prices and domestic food prices under the augmented Phillips curve…
Abstract
Purpose
This study examines the influence of the global geopolitical risk (GPR) on the relationship between oil prices and domestic food prices under the augmented Phillips curve framework.
Design/methodology/approach
Using monthly data on Nigeria from January 1995 to December 2021, the authors accommodate symmetry and asymmetry by adopting the linear and nonlinear autoregressive distributed lag, linear and nonlinear Granger causality tests.
Findings
The study establishes the positive and significant effects of both oil prices and GPR on food prices in the long and short run, though with a small magnitude in the short run. The asymmetric model shows that, while oil price shocks (positive and negative) exert a positive influence on food prices in the long-run, the effects of oil price shocks differ when accounting for GPR in the short-run. The coefficients of the interactive term, being the moderator of GPR between oil-food prices, are positively significant across models, suggesting that they jointly influence food prices when assuming linearity. The nonlinear model shows that the positive and negative components of interactive terms exert a positively significant influence on food prices, even though food prices tend to be more reactive to positive oil price shocks. The robustness checks show a unidirectional causal flow from oil prices and GPR to food prices under the linear and nonlinear models.
Originality/value
The authors examine the moderating effect of the newly developed global GPR index of Caldara and Iacoviello (2022) on the oil–food inflation relationship in Nigeria by applying the symmetric and asymmetric approaches.
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Chengsi Zhang, Chunming Meng and Lisa Getz
China has witnessed low and stable consumer price inflation in conjunction with high and volatile food price inflation over the past decade. The purpose of this paper is to…
Abstract
Purpose
China has witnessed low and stable consumer price inflation in conjunction with high and volatile food price inflation over the past decade. The purpose of this paper is to examine questions about whether or not the link between consumer price inflation and food price inflation has weakened and the determinants of consumer price inflation.
Design/methodology/approach
This paper explores these questions by estimating error correction terms for monetary and external sectors using the Johansen cointegration method.
Findings
Empirical results suggest that the link between consumer price inflation and food prices has not been weakened, food price inflation, especially cereal price inflation, remains a significant driving force for overall consumer price inflation, and international food prices also play a significant role in determining China's inflation dynamics.
Originality/value
The paper construct a multivariate dynamic model that features the link between consumer price inflation and its potential driving variables. It also develops error correction models for food price, non-food price and consumer price inflation, which can accommodate dynamic interactions among the underlying variables.
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Vivek Moorthy and Shrikant Kolhar
The purpose of this paper is to analyse the implications of sharply rising food prices for monetary policy in India and similar emerging economies at present.
Abstract
Purpose
The purpose of this paper is to analyse the implications of sharply rising food prices for monetary policy in India and similar emerging economies at present.
Design/methodology/approach
This paper uses analytical arguments from relevant macroeconomic literature and evidence from late 1960s US data to examine whether the 1970s stagflation was due to the OPEC price hike. It develops a two person (rich and poor), two commodity (food and non‐food) model to examine the impact of rising food prices on GDP, on measures of inflation, and on welfare, in the model.
Findings
Previously neglected evidence indicates that stagflation (simultaneously rising unemployment and inflation) preceded the OPEC price hike. The model results indicate that when food prices rise, the GDP deflator falls relative to the consumer price index (CPI).
Research limitations/implications
The impact of supply shocks should be investigated by carefully examining links between abnormal rainfall and weather and output and prices on commodity by commodity basis. Further, technical issues pertaining to construction of a composite CPI representative of the population need to be explored.
Practical implications
Monetary policy in India (and similar emerging economies) should focus upon a population weighted CPI or some variant thereof.
Social implications
High GDP growth should not lead to complacency, since when food prices are rising, the overall welfare impact may be negative.
Originality/value
The model presented in this paper explains the sustained divergence in India, in recent years, between the CPI versus the GDP deflator measures of inflation. It also highlights a possible similar divergence between GDP and overall welfare.
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The purpose of this study paper is to focus on developing novel ways to monitor an economy in real time during the COVID-19 pandemic. A fully automated framework is proposed for…
Abstract
Purpose
The purpose of this study paper is to focus on developing novel ways to monitor an economy in real time during the COVID-19 pandemic. A fully automated framework is proposed for collecting and analyzing online food prices in Poland. This is important, as the COVID-19 outbreak in Europe in 2020 has led many governments to impose lockdowns that have prevented manual price data collection from food outlets. The study primarily addresses whether food price inflation can be accurately measured during the pandemic using only a laptop and Internet connection, without needing to rely on official statistics.
Design/methodology/approach
The big data approach was adopted to track food price inflation in Poland. Using the web-scraping technique, daily price information about individual food and non-alcoholic beverage products sold in online stores was gathered.
Findings
Based on raw online data, reliable estimates of monthly and annual food inflation were provided about 30 days before final official indexes were published.
Originality/value
This is the first paper to focus on measuring inflation in real time during the COVID-19 pandemic. Monthly and annual food price inflation are estimated in real time and updated daily, thereby improving previous forecasting solutions with weekly or monthly indicators. Using daily frequency price data deepens understanding of price developments and enables more timely detection of inflation trends, both of which are useful for policymakers and market participants. This study also provides a review of crucial issues regarding inflation that emerged during the COVID-19 pandemic.
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Xuecheng Fan, Xinxin Wang, Zeshui Xu and Marinko Skare
The purpose of this paper is to investigate the food price inflation convergence across countries and regions. This study aims to identify the key drivers for food price inflation…
Abstract
Purpose
The purpose of this paper is to investigate the food price inflation convergence across countries and regions. This study aims to identify the key drivers for food price inflation across countries and regions.
Design/methodology/approach
We test whether the international food price inflations are converging over time using the log t convergence test and clustering analysis. These inflation data are collected from the Food and Agriculture Organization of the United Nations.
Findings
The test results suggest that there is little evidence of overall convergence. Then we utilize a clustering algorithm and the results support that there is strong evidence of multiple convergence clubs. In addition, we examine the transition path of the various convergence and find that social stability regulation together with economic conditions are important determinants of convergence club membership.
Research limitations/implications
First off, local conflict and economic environment result in food supply and prices, but this study is limited to the dynamics of prices.
Practical implications
Food prices inflations are not converging to single common price inflation, but there exist subgroups of countries or regions within which food price inflation tends to converge. These groupings tend to be related to the economic development and social stability of countries and regions.
Social implications
The authors believe that any analysis of food price inflations that does not consider the political environment and economic conditions dynamics will likely be omitting important components of food price dynamics.
Originality/value
This study uses a unique data set covering 198 countries and regions and provides a comprehensive analysis of international food price inflation convergence identifying the key drivers of convergence club membership.
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Mansor H. Ibrahim and Rusmawati Said
The purpose of this paper is to analyze the oil price pass‐through into consumer price inflation for a developing country: Malaysia. The focus is on whether aggregate consumer…
Abstract
Purpose
The purpose of this paper is to analyze the oil price pass‐through into consumer price inflation for a developing country: Malaysia. The focus is on whether aggregate consumer prices and different consumer price components or sub‐price indexes are related in different ways to oil price in the long run and in the short run.
Design/methodology/approach
The analysis adopts the Phillips curve framework augmented to include the oil price. In modeling, a proper consideration is given to the integration and cointegration properties of the variables under consideration. Moreover, the asymmetric effects of oil price changes are also examined.
Findings
The paper finds evidence for a long run relation or cointegration of the oil price with only the aggregate consumer price and food price indexes. Moreover, in the short run, the oil price changes have significant bearings on the consumer price inflation, the food price inflation, the rent, fuel and power price inflation and the transportation and communication price inflation. In addition, the short‐run asymmetry in the oil price – food price inflation is also evident. Finally, the authors observe the neutrality of the medical care and health price index to the oil price changes.
Practical implications
The result that the inflationary consequence of oil price hikes is likely to work mainly through the food prices has important implications on the effects of oil price changes on the poor and policy directions to contain inflation.
Originality/value
The paper contributes to existing literature that has a predominant focus on the inflationary effect of oil prices at the aggregate level by looking at the relations between oil price and disaggregated good prices in the long run, short run, or both.
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Adviti Devaguptapu and Pradyumna Dash
In this paper, we study the effect of global energy and food inflation on household inflation expectations during the period 1988M01–2020M03 for a set of European economies.
Abstract
Purpose
In this paper, we study the effect of global energy and food inflation on household inflation expectations during the period 1988M01–2020M03 for a set of European economies.
Design/methodology/approach
We use multifractal de-trended cross-correlation analysis to estimate the non-linear and time-varying cross-correlation. We provide additional robustness tests using the Autoregressive-Distributed Lag method.
Findings
We find that household inflation expectations, global energy inflation and global food inflation are all multifractal. We also find that the household inflation expectations, global energy inflation and global food inflation are positively correlated (i.e., they are persistent). However, household inflation expectations respond more when the volatility of the global energy inflation is lower than when the volatility is higher. The correlation between household inflation expectations and global food inflation does not depend on the level of volatility.
Research limitations/implications
First, paying attention to the global commodity inflation might help anchor inflation expectations better. It is so because Central Bank's efficacy in achieving price stability may be weakened if there is a relationship between commodity inflation and inflation expectation. This task would become even more difficult in the average inflation targeting regime than inflation targeting regime if actual inflation is persistently different from the target inflation. Second, our results also emphasize the importance of effective strategy for communicating to households about actual inflation, inflation target and keep them updated about how monetary policy functions.
Originality/value
We contribute to the literature by estimating the cross-correlation between household inflation expectations with the global commodity inflation, conditional to the volatility of the commodity inflation under consideration.
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Opeoluwa Adeniyi Adeosun, Olaolu Richard Olayeni and Olumide Steven Ayodele
This paper aims to examine the transmission from oil price to local food price returns in Nigeria from January 1995 to May 2019.
Abstract
Purpose
This paper aims to examine the transmission from oil price to local food price returns in Nigeria from January 1995 to May 2019.
Design/methodology/approach
To circumvent erratic behaviours and account for possibilities of noises at the edge of the wavelet signals, the paper combines wavelet and Markov-switching techniques to determine the significance and magnitude of oil–food price dynamics across different time scales.
Findings
It is shown that oil to food price pass-through changed across frequencies. Notably, results reveal a swift pass-through which signals the dominance of the direct effect of oil price shocks on food prices with evidence of weak spillover in the short term. The medium- and long-term horizons witness the dominance of the indirect effect of oil price shocks with much sluggish transmission to food prices; the highest significant pass-through of about 4% are also observed when the oil price is denominated in the naira–USD exchange rate.
Originality/value
The study improves understanding of the relationship between oil price shocks and domestic food price returns. It shapes policy prescription on appropriate inflation targeting strategies of monetary authorities.
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Joseph Mawejje and Musa Mayanja Lwanga
The purpose of this paper is to develop an empirical model for inflation in Uganda, highlighting the role of supply side factors in the domestic agricultural sector.
Abstract
Purpose
The purpose of this paper is to develop an empirical model for inflation in Uganda, highlighting the role of supply side factors in the domestic agricultural sector.
Design/methodology/approach
The adopted empirical analysis is based on a single equation model that exploits cointegration techniques and general-to-specific modeling. The analysis controls for historical, seasonal as well as policy factors such as the effects of the global financial crisis, change in monetary policy regime to inflation targeting and monthly seasonal effects.
Findings
Results indicate that disequilibrium in the money, external and agricultural sectors feed into the Ugandan inflation process in the long run. However, the external and monetary sectors have larger long-run effects on inflation than the agricultural sector. Other factors that influence inflation in the short run include: inflation inertia, real output, money supply, exchange rate movements, foreign prices, monetary policy instruments and seasonal factors. In addition, the paper shows that the inflation-targeting policy has been successful in containing inflationary pressures.
Practical implications
These findings suggest that in the long-run monetary policy will continue to play an important role in managing Ugandan inflation through money demand management. The inflationary effects of agricultural supply shocks could be mitigated with appropriate domestic actions. In particular, fiscal policy that targets increased productivity and efficiency in agriculture through increased focus on production, irrigation, storage and transportation could reduce the effects of agricultural supply variability on inflation. In addition, policies intended to improve economic growth by expanding total output, control money supply growth and maintaining stability in the foreign exchange markets will help to reduce inflation.
Social implications
Studies of inflation and its determinants have dominated macroeconomic debates in the past decades because of the importance of price stability in economic growth and household welfare. The major conclusions from those studies are that: high inflation is detrimental to investment and growth; erodes the purchasing power; reduces household welfare; and exacerbates income inequality. Moreover there is a growing strand of literature establishing a causal link between inflation and conflict. Particularly for agricultural households, the effects of inflation are usually felt through the increase in food prices with implications for consumption and food security. These findings indicate the important macro and social implications of inflation. By focusing on the importance of agricultural supply shocks, the paper contributes to a better understanding of the drivers of inflation and how the macro and social effects can be addressed.
Originality/value
The major contribution of this paper is to try and model an equilibrium relationship in the domestic agricultural sector rather than using proxies such as an output gap measure or rainfall.
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Kazi Sohag, Md Monirul Islam, Ivana Tomas Žiković and Hoda Mansour
The study's objective is to measure the response of the food prices to the aggregate and disaggregate geopolitical risk events, Russia's geopolitical risks and global energy prices…
Abstract
Purpose
The study's objective is to measure the response of the food prices to the aggregate and disaggregate geopolitical risk events, Russia's geopolitical risks and global energy prices in the context of two European regions, i.e. Eastern and Western Europe covering the monthly data from January 2001 to March 2022.
Design/methodology/approach
The authors apply a novel and sophisticated econometric method, the cross-quantilogram (CQ) approach, to analyse the authors’ monthly data properties. This method detects the causal relationship between the variables under the bi-variate modelling approach. More importantly, the CQ procedure divulges the bearish and bullish states of the causal association between the variables under short, medium and long memories.
Findings
The authors find that aggregate measures of geopolitical risk reduce food prices in the short term in the Eastern Europe but increases food prices in the Western Europe. Besides, the decomposed measures of geopolitical risk “threats” and “acts” have heterogeneous effects on the food prices. More importantly, Russia's geopolitical risk events and global energy prices enhance the food inflation under long memory.
Research limitations/implications
The authors provide diverse policy implications for Eastern and Western Europe based on the authors’ findings. First, the European policymakers should take concrete and joint policy measures to tackle the detrimental effects of geopolitical risks to bring stability to the food markets. Second, this region should emphasize utilizing their unused agricultural lands to grow more crops to avoid external dependence on food. Third, the European Union and its partners should begin global initiatives to help smallholder farmers because of their contribution to the resilience of disadvantaged, predominantly rural communities. Fourth, geopolitically affected European countries like Ukraine should deal with a crippled supply chain to safeguard their production infrastructure. Fifth, fuel (oil) scarcity in the European region due to the Russia-Ukraine war should be mitigated by searching for alternative sources (countries) for smooth food transportation for trade. Finally, as Europe and its Allies impose new sanctions in response to the Russia-Ukraine war, it can have immediate and long-run disastrous consequences on the European and the global total food systems. In this case, all European blocks mandate cultivating stratagems to safeguard food security and evade a long-run cataclysm with multitudinous geopolitical magnitudes for European countries and the rest of the world.
Originality/value
This is the maiden study that considers the aggregated and disaggregated measures of the geopolitical risk events, Russia's geopolitical risks and global energy prices and delves into these dynamics' effects on food prices. Notably, linking the context of the Russia-Ukraine war is a significant value addition to the existing piece of food literature.
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