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Three bubbles and a panic: An explanatory review of recent food commodity price events

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  • Piesse, Jenifer
  • Thirtle, Colin

Abstract

This paper is a summary of the behaviour of food commodity prices in 2007-2008 and a review of the causes of the price increases, extracted from a report to the Chief Scientific Advisor to Her Majesty's Government [Thirtle, C., Piesse, J., 2008. An Explanatory Review of the World Food Commodity Price Events of 2007-2008. A Report to the Chief Scientific Advisor. Department for Innovation, Universities and Skills, London]. The historical background shows that the price spike was much less severe than in the 1970s. The conventional wisdom that prices of the main food commodities were falling prior to 2006 is questioned. Most ceased falling and were quite stable from the 1980s. The paper separates the causes of the spike from the underlying changes driving the long run trends. The literature on the causes of the spike is critically reviewed and summarised. There is a reasonably broad consensus on most of the causes, but much less on the impact of the depreciation of the US Dollar. There are also concluding speculations on the future.

Suggested Citation

  • Piesse, Jenifer & Thirtle, Colin, 2009. "Three bubbles and a panic: An explanatory review of recent food commodity price events," Food Policy, Elsevier, vol. 34(2), pages 119-129, April.
  • Handle: RePEc:eee:jfpoli:v:34:y:2009:i:2:p:119-129
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    References listed on IDEAS

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    1. Gordon C. Rausser & James A. Chalfant & H. Alan Love & Kostas G. Stamoulis, 1986. "Macroeconomic Linkages, Taxes, and Subsidies in the U.S. Agricultural Sector," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 68(2), pages 399-412.
    2. Abbott, Philip C. & Hurt, Christopher & Tyner, Wallace E., 2008. "What's Driving Food Prices?," Issue Reports 37951, Farm Foundation.
    3. Mitchell, Donald, 2008. "A note on rising food prices," Policy Research Working Paper Series 4682, The World Bank.
    4. Colin Thirtle & Lin Lin Lin & Jim Holding & Lindie Jenkins & Jenifer Piesse, 2004. "Explaining the Decline in UK Agricultural Productivity Growth," Journal of Agricultural Economics, Wiley Blackwell, vol. 55(2), pages 343-366.
    5. Christopher L. Gilbert, 2008. "Commodity Speculation and Commodity Investment," Department of Economics Working Papers 0820, Department of Economics, University of Trento, Italia.
    6. Pardey, Philip G. & Beintema, Nienke M. & Dehmer, Steven & Wood, Stanley, 2006. "Agricultural research: a growing global divide?," Food policy reports 17, International Food Policy Research Institute (IFPRI).
    7. William R. Cline, 2007. "Global Warming and Agriculture: Impact Estimates by Country," Peterson Institute Press: All Books, Peterson Institute for International Economics, number 4037.
    8. John Baffes, 1997. "Explaining stationary variables with non-stationary regressors," Applied Economics Letters, Taylor & Francis Journals, vol. 4(1), pages 69-75.
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