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What matters for global food price volatility?

Author

Listed:
  • Lafang Wang

    (Hunan University)

  • Wenjing Duan

    (Hunan University)

  • Dan Qu

    (Hunan University)

  • Shaojun Wang

    (Hunan University)

Abstract

Applying ensemble empirical mode decomposition (EEMD) to the study of global food price volatility, this article decomposes an original food price series into a set of intrinsic mode functions, from high to low frequency, and a residual, which provides an explanation of how different factors contribute to each component of food price volatility. A time series analysis complements the EEMD investigation and reveals that the low-frequency component contributes more than 49% to food price volatility; notable events or food trade policies are the primary reasons for such changes. The high-frequency component is determined mainly by small events and regular market adjustments for economic growth. In the long term, food prices are determined by an intrinsic trend, triggered by economic development throughout the world. Distinct factors are involved in explaining the low and high frequencies of food prices, which makes food price volatility a complicated story to tell.

Suggested Citation

  • Lafang Wang & Wenjing Duan & Dan Qu & Shaojun Wang, 2018. "What matters for global food price volatility?," Empirical Economics, Springer, vol. 54(4), pages 1549-1572, June.
    • Handle: RePEc:spr:empeco:v:54:y:2018:i:4:d:10.1007_s00181-017-1311-9
    DOI: 10.1007/s00181-017-1311-9
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    More about this item

    Keywords

    Food price; Ensemble empirical mode decomposition; Low frequency; High frequency; Trend;
    All these keywords.

    JEL classification:

    • N50 - Economic History - - Agriculture, Natural Resources, Environment and Extractive Industries - - - General, International, or Comparative
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • Q11 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Aggregate Supply and Demand Analysis; Prices

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