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Oil and Food Prices for a Net Oil Importing-country: How Are Related in Indonesia?

Author

Listed:
  • Agus Widarjono

    (Department of Economics, Universitas Islam Indonesia, Yogyakarta, Indonesia)

  • Indah Susantun

    (Department of Economics, Universitas Islam Indonesia, Yogyakarta, Indonesia)

  • Sarastri M. Ruchba

    (Department of Economics, Universitas Islam Indonesia, Yogyakarta, Indonesia)

  • Ari Rudatin

    (Department of Economics, Universitas Islam Indonesia, Yogyakarta, Indonesia)

Abstract

Our study examines the asymmetric responses of food prices to oil prices in Indonesia as a net oil and food-importing country. We apply non-linear autoregressive distributed lag to investigate the responses of food prices to oil prices. Due to the different impacts of oil price on sub-component of the food price index, this study decomposes the general food prices index into 11 sub-components food price indices. The oil prices asymmetrically affect food prices but incomplete pass-through except the preserved fish prices. The highest impact of oil price is on beans and nuts prices, followed by cereals, roots, and their product prices. More interestingly, the response of food price to an increase in oil price is higher than the response of food price to a decrease in oil price known as rockets and feathers phenomenon for general food prices, cereals, roots, and their product prices, meat and its product prices, eggs, milk, and their product prices, bean and nuts prices, fruit prices, and fats and oil prices.

Suggested Citation

  • Agus Widarjono & Indah Susantun & Sarastri M. Ruchba & Ari Rudatin, 2020. "Oil and Food Prices for a Net Oil Importing-country: How Are Related in Indonesia?," International Journal of Energy Economics and Policy, Econjournals, vol. 10(5), pages 255-263.
    • Handle: RePEc:eco:journ2:2020-05-30
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    References listed on IDEAS

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    More about this item

    Keywords

    Food Prices; Oil price; Non-Linear Autoregressive Distributed Lag; Net oil-importing country; Indonesia;
    All these keywords.

    JEL classification:

    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • Q11 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Aggregate Supply and Demand Analysis; Prices

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