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World prices and domestic food price spikes

Author

Listed:
  • Zoltan Bakucs

    (Institute of Economics Research Centre for Economic and Regional Studies Hungarian Academy of Sciences)

  • Imre Ferto

    (Institute of Economics Research Centre for Economic and Regional Studies Hungarian Academy of Sciences)

Abstract

In this paper we aim to assess the mechanics of the global food price increases experienced in the recent years, most profoundly during the 2007-2008 food price spikes. At this stage, we aim to test, whether there is an empirically assessable relationship between World agricultural commodity prices, World oil prices and Hungarian producer and consumer food prices. After briefly discussing the background of the food price surge, and some studies empirically assessing it, we estimate a Vector Error Correction Model (VECM) with two long-run relationships, modelling vertical and horizontal price relationships (price transmissions). Preliminary results express (as somewhat expected for a small open economy as Hungary) that global developments have direct and significant effects upon price levels in Hungary regardless whether a vertical or horizontal price dimension is used. Further research will focus on determination of the magnitude, speed of occurrence and duration (needed to return to equilibrium) of the abovementioned global shifters express upon domestic agricultural and food price levels.

Suggested Citation

  • Zoltan Bakucs & Imre Ferto, 2013. "World prices and domestic food price spikes," CERS-IE WORKING PAPERS 1304, Institute of Economics, Centre for Economic and Regional Studies.
    • Handle: RePEc:has:discpr:1304
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    References listed on IDEAS

    as
    1. Alex F. McCalla, 2009. "World Food Prices: Causes and Consequences," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 57(1), pages 23-34, March.
    2. Mitchell, Donald, 2008. "A note on rising food prices," Policy Research Working Paper Series 4682, The World Bank.
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    Cited by:

    1. Ali, Hoda Abd El Hamid, 2014. "The Impact of Food Crisis on Government Debt in the Arab Region," MPRA Paper 59923, University Library of Munich, Germany, revised 2014.

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    More about this item

    Keywords

    agricultural prices; crude oil prices; cointegration; vector error correction;
    All these keywords.

    JEL classification:

    • Q1 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture

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