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Evaluating price transmission between global agricultural markets and consumer food price indices in the European Union

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  • Sol García-Germán
  • Isabel Bardají
  • Alberto Garrido

Abstract

This paper uses error correction models to evaluate the extent to and speed at which world agricultural commodity price movements affect consumer food prices in the European Union member states. We consider three types of world commodity price indices, each containing different commodities and weighting criteria. Results reveal a long-run relationship between world agricultural commodity and consumer food prices in over half of the member states. Consumer prices in different member states and categories of member states respond differently to specific world price indices, suggesting that there are disparities in the structure and the efficiency of their food markets. The eurozone founders generally have lower transmission elasticities. This should be taken into account when predicting the impacts of extreme world price volatility and consumer food price rises, prompting governments to pay attention to the most vulnerable households.

Suggested Citation

  • Sol García-Germán & Isabel Bardají & Alberto Garrido, 2016. "Evaluating price transmission between global agricultural markets and consumer food price indices in the European Union," Agricultural Economics, International Association of Agricultural Economists, vol. 47(1), pages 59-70, January.
    • Handle: RePEc:bla:agecon:v:47:y:2016:i:1:p:59-70
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    File URL: http://hdl.handle.net/10.1111/agec.12209
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    References listed on IDEAS

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    3. Sergio H. Lence & GianCarlo Moschini & Fabio Gaetano Santeramo, 2018. "Threshold cointegration and spatial price transmission when expectations matter," Agricultural Economics, International Association of Agricultural Economists, vol. 49(1), pages 25-39, January.
    4. Shon Ferguson & David Ubilava, 2022. "Global commodity market disruption and the fallout," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 66(4), pages 737-752, October.
    5. Dariusz Kusz & Bożena Kusz & Paweł Hydzik, 2022. "Changes in the Price of Food and Agricultural Raw Materials in Poland in the Context of the European Union Accession," Sustainability, MDPI, vol. 14(8), pages 1-21, April.
    6. Tamirat, Aderajew AS & Trujillo-Barrera, Andres A. & Pennings, Joost M. E., 2018. "Do Profit Rates Converge? Evidence on the Persistence of Farm Profit in the Long-run," 2018 Annual Meeting, August 5-7, Washington, D.C. 273791, Agricultural and Applied Economics Association.
    7. Zheng, Xuyun & Pan, Zheng, 2022. "Responding to import surges: Price transmission from international to local soybean markets," International Review of Economics & Finance, Elsevier, vol. 82(C), pages 584-597.

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