The Transmission of Oil and Food Prices to Consumer Prices – Evidence for the MENA Countries
AbstractThis paper investigates the effects of global oil and food price shocks to consumer prices in Middle East-North African (MENA) countries using threshold cointegration methods. Oil and food price shocks increase domestic prices in the long run, whereby the impact of food prices dominates. While global prices are weakly exogenous, consumer prices respond to deviations from the equilibrium relationship. The shortrun adjustment pattern exhibits asymmetries and is particularly strong after positive shocks. Downward rigidities on wages may play a crucial role in this regard, as the relatively weak reactions of consumer prices after negative shocks are related to labour market institutions and public subsidies. The more rigid the regulations the more pronounced are the asymmetries. Robustness checks show that international price shocks do not affect GDP growth.
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Bibliographic InfoPaper provided by Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen in its series Ruhr Economic Papers with number 0448.
Length: 26 pages
Date of creation: Oct 2013
Date of revision:
Other versions of this item:
- Ansgar Belke & Christian Dreger, 2013. "The Transmission of Oil and Food Prices to Consumer Prices: Evidence for the MENA Countries," Discussion Papers of DIW Berlin 1332, DIW Berlin, German Institute for Economic Research.
- C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models &bull Diffusion Processes
- E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
- Q02 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - General - - - Global Commodity Market
This paper has been announced in the following NEP Reports:
- NEP-AFR-2013-11-16 (Africa)
- NEP-AGR-2013-11-16 (Agricultural Economics)
- NEP-ALL-2013-11-16 (All new papers)
- NEP-ARA-2013-11-16 (MENA - Middle East & North Africa)
- NEP-ENE-2013-11-16 (Energy Economics)
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